6 Metrics On How Well Your Business Is Driving Demand

Every entrepreneur knows that good demand generation marketing is the key to growth these days, but very few have the discipline or know-how to measure return in a world of a thousand tools and techniques. Even those things that worked yesterday may not work tomorrow, as the market matures, the culture changes, and competitors appear with new solutions.

Business success is all about meeting the needs of the modern buyer, who is more informed, has access to more choices, and is ever smarter about making purchasing decisions. In fact, we now live in a buyer-led digital age, where the traditional media push-marketing efforts just don’t work. Peter Drucker’s old comment that “culture eats strategy for breakfast” is more true now than ever.

In the classic book, “Driving Demand: Transforming B2B Marketing to Meet the Needs of the Modern Buyer,” top marketing consultant Carlos Hidalgo updates the old guidelines on how to set up demand generation processes, keep them current, and measure results. While his insights have come from large organizations, I give many of the same recommendations to every startup:

1. Channel engagement performance. Selecting the right sales channels is one of the first strategic decisions that every startup faces. Understanding culture is paramount, but measuring results is even better. Hidalgo recommends a focus on engagement stage indicators including customers by channel, conversion ratio, and cost per revenue.

2. Lead-stage content performance. The fuel for any good demand generation program is relevant, buyer-centric content. You need to track what content is resonating with your prospective customers, through metrics including submit rate by content offer, elasticity, velocity, cost, and ultimately revenue by content program.

3. Nurturing stage email performance. The nurturing stage is the link between the engagement and conversion stages, and is most often the automated area of demand generation. That makes it easier to collect results indicators, including number of emails sent, open rate, click rate, and email bounce rates. Don’t just use these in isolation.

4. Lead management performance. This area of demand analysis is also called the “sales funnel” or “sales pipeline,” used for tracking the overall process from initial prospect engagement to close. Metrics which must be tracked include number of leads, conversion rates by lead stage, velocity, growth rate, and total lead database size.

5. Demand generation revenue performance. Revenue performance needs to be applied to each individual program, and also rolled up to show the overall performance per dollar invested. Individual measurements should include pipeline value by lead stage, closed revenue by program, pipeline growth, and overall win rate.

6. Return on investment for demand generation. Obviously, you are looking for demand generation programs that have a positive return on investment (ROI). In addition, the best companies compare the negative and positive cash flows over a period of time to determine the net present value (NPV) of planned future marketing spending.

Instead of looking at demand generation as a pure cost center, smart entrepreneurs ask their marketing team to measure themselves as a line of business, and to report on their profit and loss just like other business groups in the organization. This approach has the additional advantage of potentially saving their budget from arbitrary cost cuts during downturns.

Overall, demand generation and other marketing efforts must move from being a “necessary overhead item” managed by a guru with a crystal ball to a vital business function, managed quantitatively, like the products you sell, and included in your continuous innovation mantra. Are you evaluating your marketing returns today with the same discipline as your product returns?

Marty Zwilling

7 Benefits Of Working Consistently On Business Values

Most of the young entrepreneurs I know are classic proof of the old adage that people tend to overestimate what they can do in a short period, and underestimate what they can do over a long period. They become frustrated when they are unable to build their startup over a weekend, and give up way too soon when the path to real success seems to be interminable.

Both problems can be mitigated by learning the power of frequency, as defined in the classic book by Jocelyn K. Glei, “Manage Your Day-to-Day,” which asserts that working consistently and frequently on something makes it possible to accomplish more, with greater originality, than spasmodic bursts of effort. A successful startup needs to be a daily task, with consistent focus.

I suggest that the following key reasons from Glei for how the habit of frequency fosters both productivity and innovation in general, apply especially well to an entrepreneur starting a new business:

1. Frequency makes starting easier. Getting started is always a challenge. It’s hard to convert an idea into a business, and it’s also hard to get back into the groove with all the distractions of other activities and your “real job.” If you block out time every day to focus on your startup, you keep your momentum going, and start seeing long-term progress.

2. Frequency keeps insights current. You’re much more likely to spot opportunities for innovation and to see new trends in the marketplace, if your mind is constantly humming with issues related to the startup. Frequent discussions with peers and customers on open questions will keep you from being led astray by your own biases.

3. Frequency keeps the pressure off. If you’re producing just one page, one blog post, or one sketch a week, you expect it to be good and final, and you start to worry about quality. It’s better to write 100 lines of new code every day, recognizing that you will have to iterate to perfection, rather than expecting a week of work to happen all in one night.

4. Frequency sparks creativity. You might be thinking, “Having to work frequently, whether or not I feel inspired, will force me to lower my standards.” In my experience, the effect is just the opposite. Creativity arises from a constant churn of ideas, and one of the easiest ways to get results is to keep your mind engaged with your project.

5. Frequency nurtures frequency. If you develop the habit of working frequently, it becomes much easier to sit down and get something done even when you don’t have a big block of time; you don’t have to take time to acclimate yourself. The real enemy of progress is the procrastination habit, which should be replaced with the frequency habit.

6. Frequency fosters productivity. It’s no surprise that you’re likely to get more accomplished if you work daily. The very fact of each day’s accomplishment helps the next day’s work come more smoothly and pleasantly. By writing just 500 words a day in a blog, I suddenly realized that I had enough for a book in just a few months.

7. Frequency is a realistic approach. Frequency is helpful when you’re working on a startup idea on the side, with pressing obligations from a job or your family. It’s easier to carve out an hour a day, than to set all else aside for a week in the early stages of your startup.

Don’t be like many of the people that we all know who feel like they are working at a breakneck pace all day, every day, but have very few tangible results to show for their efforts. Every entrepreneur needs to build a proactive daily routine, while being able to field a barrage of messages, and still carve out the time to do the work that matters.

Another enemy of progress in startups is the curse of perfectionism. Some entrepreneurs never start, waiting for that ideal moment, when there are no distractions. Some are lost in the middle, obsessing over every step, and some never finish, always refining and adding, rather than learning from a minimum viable product. Thus the need to combine frequency with pragmatics.

If you can manage your day-to-day routine with frequency, rather than let reactive chaos manage you, you will find that your creative mind is sharpened, and your focus on the new venture will generate the “change the world” results that attracted you to this lifestyle in the first place.

Marty Zwilling

Startups Can Be Socially Mindful And Still Make Money

I’ve noticed that most young entrepreneurs are more socially conscious today than ever before, which is a great trend. Unfortunately, some are so focused on this principle that they forget that every business, even nonprofits, have to practice the basic principles of capitalism (build a business model to make money) to cover their costs to do good things another day.

Examples of profitable companies practicing this model include Trader Joe’s, led by Doug Rauch as retired president, and Conscious Capitalism® board member, and the Container Store, built by Kip Tindell. Both of these are purpose-driven businesses that boast high growth, high loyalty, and very low employee turnover. You can find dozens more on the Conscious Capitalism web site.

Of course a profitable model isn’t required if you intend to rely totally on donations, or have deep pockets to fund your socially conscious efforts yourself. Conscious capitalism is the rational alternative approach, dedicated to advancing humanity, while using tried and proven business principles. The idea has four principles guiding and underlying every business:

1. Higher purpose. Business can and should be done with a higher purpose in mind, not just with a view to maximizing profits. A compelling sense of purpose creates an extraordinary degree of engagement for all stakeholders and catalyzes tremendous organizational energy.

2. Stakeholder orientation. Recognizing the interdependent nature of life and the human foundations and business, a business needs to create value with and for its various stakeholders (customers, employees, vendors, investors, communities, etc.). Like the life forms in an ecosystem, healthy stakeholders lead to a healthy business system.

3. Conscious leadership. Conscious leaders understand and embrace the higher purpose of business and focus on creating value for and harmonizing the human interests of the business stakeholders. They recognize the integral role of culture and purposefully cultivate a conscious culture.

4. Conscious culture. This is the ethos – the values, principles, practices – underlying the social fabric of a business, which permeates the atmosphere of a business and connects the stakeholders to each other and to the purpose, people and processes that comprise the company.

I see conscious capitalism providing leadership at just the right time – for young entrepreneurs who are a bit disillusioned with the image of “business” today, but want to be profitable without sacrificing trust, reputation, and credibility with their peers and stakeholders important to them. They want their business potential to support the overall human potential as well.

None of these positives obviate the need for a viable business model, in order to survive. I would expect that to seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with no clear business model. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.

Soon, companies that also want legal recognition of their socially conscious focus will be able to incorporate as a Benefit Corporation (B-Corp). The B-Corp status, already available in thirty-five states, including New York and California, is meant to reduce investor suits, and gives consumers an easy way to spot genuine social commitment, without assuming it is a nonprofit.

Entrepreneurs and startups are all about innovation, in business principles as well as in products and services. I see conscious capitalism as a great innovation to the foundations of capitalism, bringing compassion and collaboration to the heart of value creation. Maybe it’s time to take a hard look at your own startup, and see if you have fully and consciously capitalized on capitalism.

Marty Zwilling

9 Distinct Leadership Styles You Find In New Ventures

Entrepreneurs inherently understand that they have to be the initial leader of their startup, but often they don’t have the experience or the training to know where their leadership competencies lie, or how to build a leadership team. For new entrepreneurs, leadership development efforts may be more valuable for achieving startup success than business skills development.

Very few people know their own leadership style, or strengths and weaknesses, despite their many years of living and working in the real world. To assess where you are, and to unlock your full potential, there are many courses available, as well as seminars and gurus, but a good place to start is a book on the subject, like the classic one from John Mattone, “Intelligent Leadership.”

Mattone has a wealth of insights, based on years of helping Fortune 500 leaders overcome their self-imposed limiting leadership habits. He identifies and distinguishes between nine distinct leadership styles that I see in all entrepreneurs to some degree. The most effective entrepreneurs know their own predominant style, and how to build a team with all the rest required:

1. Helper. Mature Helpers are considerate and genuinely the most sensitive and caring of all the leadership types. They are excellent mentors and coaches, but have a strong need to be admired and respected in return. Strengthen this trait by being more conscious of your need to be liked, and don’t be possessive or controlling.

2. Entertainer. Entertainers gain the respect of others with drive, determination, hard work, and the ability to win over people. But they can become fixated with appearing successful, showing more style than substance, or undermine themselves by exaggeration, inflating their importance, or trying to win or one-up all the time.

3. Artist. Artists are perhaps the most creative and innovative leaders. They tend to move people deeply, and bring out the most in people. As they become more mature, they draw less inspiration from themselves, and more from others. Improve your artist side by avoiding negativity, procrastination, and focus on self-discipline.

4. Thinker. Thinkers like to analyze the world around them, and may prefer thinking to doing. Mature Thinkers quickly understand problems, can explain them to others, and make sound and logical decisions. Strengthen this trait by not jumping to conclusions, seeking advice, and working cooperatively with others you trust.

5. Disciple. Disciples are able to form strong and cohesive work groups, but sometimes appear incapable of action without permission of an authority figure or belief system, and don’t seek out leadership positions. This trait can be strengthened by accepting accountability, reducing reaction to stress, and cutting ties to authority.

6. Activist. Activists are good at lifting the spirits of team members and managers, and are usually optimistic and confident. They tend to bury themselves in activities, but can be impulsive and select quantity over quality. Improvement efforts would include listening more to people, thinking about details, and learning to say no.

7. Driver. Drivers are the most openly aggressive leaders, who enjoy taking charge, and can make things better with their immense self-confidence. Unfortunately, they may feel the need to dominate every situation, and make every decision. Mature ones act with more self-restraint, let others win, and work with others.

8. Arbitrator. Arbitrators tend to be the most open of all types. What you see is what you get. They find ways to bring people together, and ways to involve everyone. To be a better Arbitrator, you need to be more assertive, more open, share your feelings, and work on developing your listening skills.

9. Perfectionist. Mature perfectionists are capable of being highly noble leaders, with their deep sense of right and wrong and ethical principles. They are usually highly critical of themselves and others, and often frustrated by reality. To improve, they need to learn to relax, listen to others, and remember that no one is perfect.

In all cases, to reach your highest leadership potential, you have to stay true to yourself, rather than trying to conform to other people’s images of the best you. If you truly commit to learning more about yourself and becoming the best that you can be, while possessing a great attitude, you will discover that all challenges are really the seeds of opportunity.

Most recognized entrepreneur leaders admit that their biggest challenge was to break through their self-imposed limiting thoughts, emotions, and habits, to reach the next level. How many of these leadership traits have you mastered, how many are you working on, and how many of the other strengths have you built into your team to help you? That’s intelligent leadership.

Marty Zwilling

5 Considerations For Driving Growth In A New Business

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Twitter showed no focus on revenue in the first five years, but was able to parlay 500M users into a $53B public company, and now growing revenue.

Every startup dreams of achieving that milestone, when they can focus more on scaling the business and enjoying their earnings, rather than fighting for another investment infusion. Most are still confused about the right priority. Should they focus on increasing revenues and profitability, or entice more and more users with “free” services, to increase their valuation.

Traditionally, it was simple. A business only achieved critical mass by becoming cash-flow positive. Revenue growth (top line) then had to be converted into profit growth (bottom line), before a business was deemed to be self-sustaining and worthy of public investment.

It’s only been in the last decade or two, that social media companies, like Facebook and Twitter, have achieved market valuations in billions of dollars (unicorn status), while clearly sacrificing revenue to gain users. In my view, the pendulum is swinging back, with investors looking more for the traditional indications of business integrity, stability, and growth:

1. Some element of organic growth is a good thing. The purest form of capitalism has always meant charging a fair price and making a fair profit. Re-investing profits to grow the business is organic growth. The concept of free goods and services to get you hooked, financed by deep pockets, or advertising, seems marginally ethical to many.

2. Long-term stability requires revenue growth and profit. Most modern investors still look for a business model that embodies a gross margin over 50%, and a net margin in the 20% range. A healthy business, ready to scale, has been doing this for a year or more, with an existing customer set generating a non-trivial and growing revenue stream.

3. High customer loyalty and high team passion. Startup productivity is embodied in key ratios, including low cost of customer acquisition, high retention, and high revenue per employee. High customer churn and lackluster team members are still indicators of a high-risk investment opportunity, to be avoided by both public and private investors.

4. Growing appreciation for the value of the solution provided. These days, you need customer evangelists who see the value and will pull in their friends through viral actions to keep the business growing. Too many of the high user growth startups have been fads, and numbers can go down as fast as they go up, as per Friendster and MySpace.

5. Understanding competitive early mover requirements. First movers in a new space need users more than revenue to maintain market share, so investment pitches need to highlight this priority in requests for funding resources. More complex and defensible businesses should highlight their organic drive to profitability and brand leadership.

Unfortunately, the Internet and heavily funded startups have nurtured a customer expectation of free web services and free smartphone apps. In these domains, it is now difficult to monetize at all until you have a large critical mass of users. In these cases, growth scaling is important, both before and after revenue flow begins. The business plan must reflect both growth phases.

Thus even after a startup has achieved a critical mass of users, the expectation of long-term revenue growth and profitability does not go away. Twitter is facing this challenge right now, as the large majority of public investors expect a near-term financial return on their investment, every quarter of every year.

So a higher focus on user growth may be necessary early, but is never sufficient. If you are in it for the long run, don’t forget the basic business principle that if you lose money on every customer, you can’t make it up in volume.

Martin Zwilling

8 Indicators Of The Innovation Focus In Your Business

Every organization I get asked to help these days seems to realize that innovation is required on their part to survive and thrive in this age of constant change. Their challenge to me is how to integrate innovation into the thinking and process of every team, and measure the “risk versus reward” of resources expended. They also want to know how they stack up to competitors.

Unfortunately, there are other organizations that still don’t see the need to innovate. Typically, these companies are relishing prior successes, as did Blockbuster and Kodak in their heyday, or are totally risk-averse, as is the case with many mature businesses and government entities. I’m convinced these won’t change until the pain level gets high enough, and that may be too late.

I’ve always recommend a self-assessment of where you and your organization are along the innovation spectrum, and I was pleased to see a realistic proficiency scale in a recent book, “Seeing Around Corners,” by Rita McGrath. She is a longtime professor at Columbia Business School, best-selling author, and is considered by many to be an expert on innovation and growth.

Here is a paraphrased summary of the eight-level scale she offers, with my own insights and experience added, for your consideration in starting your own self-assessment and move up:

1. Extreme bias toward status quo as the right way. The focus at this level, primarily in companies that have a long history of success, usually in very stable markets, is to continue sustaining and exploiting existing advantages. Innovation seems risky and unattractive. I see this often in highly regulated markets, and ones driven by bureaucrats.

2. Desire to improve and innovate exists in islands. At this level, I see sporadic efforts by lower level leaders and small groups to introduce some innovative thinking in an otherwise conservative organization. There may be a lot of talk and activity, some initial workshops, boot camps, and visits to Silicon Valley, but there is no sustained support.

3. Episodic innovative activity from a key sponsor. In these companies, you will see more sustained innovative activity, but little organization-wide recognition of innovation as a discipline. Typically efforts are dependent on a key sponsor and are fragile. A change of key executives, a setback, or a challenge in the core business, and they disappear.

4. Opportunistic innovation driven by senior leaders. While innovative practices are still not a central part of the corporate agenda, they are used to go after ideas for growth that are highlighted by competitors and market evolution. Resources are allocated across multiple business units, but the bulk of the organization still prioritizes the “day job.”

5. Sustained executive sponsorship with funding. Here we see the first early-stage corporate governance of innovation, with funding and processes for innovation as separate activities from business as usual. This requires dedicated resources of both time and money. The result is an emerging proficiency, and recognition of the potential.

6. Maturing proficiency with innovation metrics. At this level, innovation becomes an important part of executive compensation and promotion discussions. Here we see an increased utilization of tools, training, and connections across organizational silos, extending to external sources of ideas. Teams have a set of repeatable best practices.

7. Strategic empowered innovation publicly articulated. At this stage, the CEO and executive team declares that innovation is being integrated into the company’s central defining mission. Innovation becomes a basic part of the company culture, and a critical mass of employees recognize their role in the process, and feel empowered to innovate.

   In many cases, this new focus on innovation has the potential to kill your “cash cow.” The former Blackberry CEO, for example, admits that he hesitated on innovation, and is now struggling to remake Blackberry for survival as an enterprise security software company.

8. Organization cited for “best practices” in innovation. Here corporate commitment of innovation at all levels creates a portfolio of wins, as well as cadres of highly skilled practitioners. The organization is heralded as an example for others, and stakeholders reward the growth potential with a higher valuation and increased investment funding.

In all cases, remember that building innovation proficiency and moving up a level or two is an organizational learning endeavor, and learning does not happen instantly. It takes time and effort, and usually requires a painful reminder that something has changed in the market, jeopardizing the business if action is not taken. Your challenge is to see an inflection point before it is too late.

Marty Zwilling

*** First published on Inc.com on 3/10/2023 ***

8 Elements Of Ownership Thinking And Startup Success

If you feel trapped in an unsatisfying and limiting role as a business professional, I urge you to assess your own interest and level of ownership thinking as a means of enhancing your career or growing your own business. I have personally worked as an employee of large businesses, as well as a partner in new ventures, and found the latter to have more potential for satisfaction.

Many business leaders today, including Howard Schultz, didn’t start the businesses they are now known for, but worked their way up the corporate ranks with ownership thinking. Others, including Jeff Bezos, spent time in a big company or two before breaking away to form their own. Jeff Bezos now manages Amazon, which encompasses over 40 subsidiaries and operates worldwide.

There are many components of an ownership thinking strategy, but here are some of the key ones from my own perspective, as a mentor and advisor to aspiring entrepreneurs and new business owners:

1. Willing to take smart risks which lead to long-term growth. Some people expect instant gratification and are stressed out by any risk. Smart business owners realize that no returns occur without some investment and risk. Top performers are constantly looking for new opportunities and are willing to evaluate risk versus reward potential.

2. Count business results as a measure of personal growth. For some people, business is just a job, whereas with ownership thinking, your business health is the real measure of your personal success and growth. Rather than a focus on salary and perks, your focus is on customers, revenue, and operations. Your personal goal is to succeed in business.

3. Seek out a higher purpose for the business and live it. Business owners whose priority is only a financial gain will struggle to find satisfaction and happiness. A better purpose is to be your own boss, or advance a cause that you are passionate about, such as helping the disadvantaged or reducing the negative impact of climate change.

   For example, founder Blake Mycoskie of TOMS shoes inspired everyone by highlighting and effectively communicating the higher purpose from of helping the needy by donating a pair of shoes for every pair sold. The return and satisfaction were greater than the cost.

4. Relish the fun of innovatively shaping the business. As an employee, you only get to execute what others tell you, even if you enjoy the challenge of new requirements and customer feedback. Enjoy the personal learning and growth of new business models, more efficient processes, and existing customers who remain loyal due to your initiatives.

   Amazon and Jeff Bezos credit much of their growth and success to incenting innovative business “experiments.” Bezos believes that if you double the number of experiments you do per year, you’re going to double your agility, and thus grow the business more rapidly.

5. Incent high employee engagement and accountability. Business success, and yours, requires collaboration and accountability at all levels, including vendors, partners, and other constituents. You must focus on nurturing a culture of working together, continuous learning, and constant change to keep up with new customer and market changes.

6. More new, repeat, and loyal customers means career success. Solving customer problems as a first priority is key to ownership thinking. Employee thinking is looking for higher pay and less work per customer. In my experience, the level of customer focus by the whole team is a good barometer of the overall business health, growth, and culture.

7. Use metrics and data to quantify progress and return. Ownership thinking requires tracking progress and seeking feedback on results. Unfortunately, continuing to perform without collecting business data or measuring customer metrics is a recipe for failure. I recommend customer satisfaction as well as financial metrics to track business health.

8. Don’t rely on micro-management for business efficiency. Successful ownership thinking requires an ability to delegate and coach others, rather than a dictatorial level of micro-management. You and the business both win when everyone takes responsibility for their actions, resulting in high productivity, customer satisfaction, and higher returns.

Thus, whether your objective is to rise to the top of your current company, or enjoy the challenge of building your own business, I recommend that you hone your ownership thinking abilities with the strategies outlined here, and related ones. Don’t jeopardize your health or your long-term satisfaction by pushing harder and harder on the wrong work elements, and enjoying it less.

Marty Zwilling

*** First published on Inc.com on 3/8/2023 ***

5 Tactics To Ensure Your Solution Is Customer Driven

Technical entrepreneurs love their technology, and often are driven to launch a startup on the assumption that everyone will buy any solution which highlights this technology. Instead, they need to validate a customer problem and real market need first. Don’t create solutions looking for a problem, since investors ignore these, and customers other than early adopters will be hard to find.

Exciting new technologies these days range from the niche social media software platforms I see almost every month, to new transportation models, like consumer space travel and driverless autos. These founders all seem to be pushing their technology, rather than highlighting their solution to a painful need. I say again, customers buy solutions, not technology.

In fact, outside of those few early adopters, technology by itself has negative value to the majority of potential customers. Most people are wary of change and know that new technologies take time to learn and stabilize, so customers prefer solutions based on tried and tested proven technologies. Smart entrepreneurs build market-driven solutions, per the following principles:

1. Size the opportunity and customer interest first. Your passion isn’t enough to create a market. If there is a growing opportunity, an accredited market research group like Forrester or Gartner will already have data to quantify your excitement, and help make your case. Prototype your solution for customers, and discount friends and family.

2. Look for customer willingness and ability to pay. Just because users support your free trial doesn’t mean they will pay for the solution. Nice to have does not motivate a revenue stream. Technologies that cure world hunger may find that that hungry people don’t have money, and government agencies as customers are a very long sales cycle.

3. Limit the features and complexity. Technologists tend to add more features, just because they can. More features usually means more complexity in operation and support. The best solutions, from a customer perspective, are able to mask the technology with a very simple and usable interface that focuses on their problem only.

4. Take a hard look at alternatives and competitors. New technology does not necessarily make better solutions. If you claim no competition, investors may perceive that you have no market, or you haven’t looked. Neither is positive. Customers may be perfectly happy with existing alternatives and competitors.

5. Work in a familiar domain, on a problem you have experienced. The most successful entrepreneurs tackle problems that have caused them personal pain, in an area they know well. Every business domain looks simpler to outsiders who have no insights into the complexities that increase your risk.

None of these principles is meant to imply that technology is not important in building new solutions. In fact, some technology leaps are so great that they enable a whole new class of products, or a whole new market. These are called disruptive technologies or the next big thing, in the sense that existing markets or economies of scale are disrupted by the scope of change.

Examples of solutions from disruptive technologies include the appearance of personal computers, smartphones, the Internet, and the first social media platforms. Even for these, which did indeed change the world, the aforementioned principles still apply, in conjunction with a couple of additional considerations:

• Time frames for acceptance are longer and the risk is higher. Based on history, the acceptance period for major technology changes is much longer than innovative evolutionary changes – sometimes taking 20 year or more for pervasive acceptance. Investors thus tend to shy away from these startups, meaning you need deeper pockets.

• Disruptive technologies require customer education to create a new market. Customers tend to think linearly, so existing customer feedback is unlikely to lead to, appreciate, or pay quickly for the new solutions from world-changing technology. This means more time and money for viral marketing, product iterations, and promotions.

So the more you emphasize the technology of your offering, the more you need to be prepared for increased costs, reduced investor interest, slow customer acceptance, and a longer wait for any return. On the other hand, the longer-term impact and return of disruptive technologies is likely to be huge, if they survive the early challenges.

My recommendation for first-time entrepreneurs, and the rest of us who don’t have deep pockets, is to focus on customer problems that are causing pain today, and customers who are willing and able to spend real money on a solution.

You will more likely get the investor resources you need, the guidance from existing experts, the opportunity to hone your business skills, and the confidence from success. Then when you sell your first company for several hundred million, you will be ready to tackle that favorite disruptive technology leading to the next big solution to change the world.

Martin Zwilling

7 Ways To Elevate Your Team Connection And Leadership

Entrepreneurs need to be effective team leaders, since no one can transform an idea into a product and a business without some help. Unfortunately many founders I work with as a mentor are experts on the technical side, but have no insight into leading a team. But fortunately, team building is a skill that can be learned and practiced, for those willing to put in some effort.

The only real alternative is to find a cofounder who can build and lead the team, while you focus on the product. Otherwise, in my experience, the startup will fail. The importance and the specifics of practical team leadership were re-confirmed to me a while back in the classic book, “Unlocked,” by Robert S. Murray, who is a recognized expert in the field of business leadership.

I recommend his checklist as a starting point for developing team connections and building engaged team members as a key step in becoming an effective team leader, even if your team is spread all over the country:

1. Consciously reduce time spent on outside activities. You won’t be viewed as the team leader if you spend most of your time on activities that are not relevant to your team. Being visible and engaged on a random part-time basis, due to other jobs, won’t do it. If your team has trouble finding you, you won’t make productive connections.

2. Be compulsive about scheduling time for your team. Even busy entrepreneurs need to schedule regular and predictable times which will be devoted only to working and interacting with the team. Possibly an hour in the morning and an hour in the afternoon may be enough, if you make it happen consistently.

3. Maintain a weekly “huddle meeting” with the entire team. This can even be done remotely via Zoom, but it’s important that every team member attends. You need to listen as each summarizes their accomplishments for the last week, and their plan for the week ahead. Leadership is making sure they have resources and understand the strategy.

4. Have monthly reviews with each team member. Team members need and crave feedback, much more frequently and informally than the annual performance review. I recommend scheduled monthly 30-minute informal checkpoints, as well as quarterly updates on objectives and performance. Ask what you can do for them in every review.

5. Practice leadership by walking around (LBWA). I personally have found this to be one of the most effective ways to find out what is going on, as well as an opportunity to provide feedback on strategy and direction. Go for walks every day and stop at people’s desks. Ask them what is going on, both in the team and outside of work. Listen.

6. Recognize team members for individual efforts. Communicate individual results as well as team results to everyone. Most leaders don’t say “thank you” enough. Recognition in front of peers is often more motivating that monetary awards. This is the time to talk about wins with customers and what is coming on the horizon, and the team role in each.

7. Be real and authentic in every interaction. If you are not, your team will see right through it and you will be worse off than if you stayed locked up in your office. Make sure you’re treating all team members as you would want to be treated. Be genuinely interested in learning something new every day from your team, and they will follow you.

The value of startup teams with the founder as an effective leader is many times the value of many strong individuals working independently. It’s not only your connection with the team, but their connection with each other that is critical. Only a dedicated leader can spot those special powers in each member and then build a well-oiled team which can win the startup war for you.

The result is not only more productivity, but also a startup where everyone loves to contribute, and the whole team feels the energy and satisfaction of accomplishing your dream. Now your product leadership becomes business leadership, which can actually change the world.

Marty Zwilling

5 Ways A Startup Benefits From Dual Partner Strengths

It seems like every entrepreneur I meet these days is quick to proclaim themselves a visionary, expecting that will give more credibility to their startup idea, and improve their odds with investors. In reality, I’m one of the majority of investors who believe that startup success is more about the execution than the idea. Thus, unless the visionary highlights a cofounder who can take the vision and execute, I assume the worst.

It’s true that gifted visionaries bring many good things to an organization, including big picture ideas, seeing around corners, and a hunter mentality. Yet they also come with a set of shortcomings. These were outlined well, with some good recommendations for overcoming them, in the classic book, “Rocket Fuel,” by Gino Wickman and Mark C. Winters, both with a wealth of experience in this domain.

My bottom-line recommendation and theirs is that every visionary entrepreneur needs to be matched with a cofounder or key team member who has the required execution attributes. Let’s take a hard look at the key potential weaknesses of a visionary, and the value of an execution-oriented partner, which the authors call an integrator:

1. Staying focused and following through. Visionaries tend to get bored easily. To spice things up, they start creating new ideas and direction, which gets everyone excited. This may cause a wonderful 90-day spike in performance, but in the end often sabotages their original vision. Many projects get started but few are completed, and momentum is lost.

   To compensate, every visionary entrepreneur needs to find a partner who gets great satisfaction from results, and loves the discipline of making things happen on a day-to-day basis. This person is the glue that can hold the people, processes, systems, priorities, and strategy of a developing startup together.

2. Too many ideas and an unrealistic optimism. Most true visionary entrepreneurs have unusual energy, creativity, enthusiasm, and a propensity for taking risks. This can be disruptive, as they love to break the mold. They often show little empathy for the negative impact this can have on capacity, resources, people, and profitability.

   Again, the solution is a partner who is the voice of reason, who filters all of the visionary’s ideas, and helps eliminate hurdles, stumbling blocks, and barriers for the whole leadership team. Titles for this role in a startup are not fixed, but usually show up as president, COO, or chief architect.

3. Cause organizational whiplash. Due to founder visibility, the team is so tuned in to the visionary and current direction that every turn to the right to pursue a new idea turns the whole team to the right. The organization can’t keep up the pace of change, and soon loses motivation, productivity, and all sense of where they are headed.

   Every organization needs a steady counter-force that is focused on directional clarity, and great at making sure people are communicating within the organization. Good integrators are fanatical about problem resolution and making decisions. When the team is at odds or confused, they need this steady force to keep them on track with the business plan.

4. Don’t manage details and hold people accountable. Visionaries typically don’t like running the day-to-day of the business on a long-term basis, and aren’t good at following through. Even communicating the vision itself can be quite a challenge, since it’s so crystal clear in their head that they can’t imagine having to repeat or clarify for others.

   Balance here comes again from the operational expert, who is very good at leading, managing, and holding people accountable. They enjoy being accountable for profit and loss, and for the execution of the business plan. When a major initiative is undertaken, they will anticipate the ripple of implications across the organization.

5. Tends to hire helpers and not develop talent. Idea people are so bright that they don’t see the need to leverage the capabilities of others, or hire people smarter than they are in any given domain. They are usually too self-centered to see the need for developing skills and leadership in the other members of the team, or building a succession plan.

   Here also the solution usually is a partner with prior experience, who has learned how and when to hire real help, and implement metrics and processes to measure results. They enjoy the coaching and development role, and are able to match work assignments to people’s strengths, promoting both people and company growth.

Of course, many will argue that the visionary entrepreneurs can simply fix their shortcomings, and thus save resources by satisfying both roles. But in my experience, very few entrepreneurs have the bandwidth to make this work, and the adapted entrepreneur ends up doing both jobs poorly.

I’m a proponent of capitalizing on your strengths, rather than focusing on fixing your weaknesses. If your strength is being a visionary, use that vision to attract a complementary partner, and make it a win-win opportunity for both of you.

Marty Zwilling

7 Secrets To Positioning Competition For Constituents

Most entrepreneurs spend far too much time thinking negatively about competitors, and can’t resist making derogatory statements to their own team, to investors, and even to customers. This approach only makes these important constituents question your integrity, intelligence, and your understanding of business basics. Pointing out flaws in others does not give you strength.

As an investor, I always listen carefully to what an entrepreneur says, and does not say, about competition. Every business area has competition and every customer has alternatives, so a smart entrepreneur needs to acknowledge these as a positive in defining a big market, and position the features of a new solution in this context. Here are seven key ways to do this:

1. Frame the competition as manageable. Investors want to see evidence of specific competitors who make the market, and your sustainable competitive advantage to hold your own. They don’t want to hear of no competitors, or a long list implying a crowded space. Use three generic categories, and relate your position to a key player in each.

2. Highlight your positives to frame competitor shortcomings. Talk about competitors with positive statements about the advantages of your own product. For example, “While Product X has worked well in the server market, my product also provides Cloud support, to drastically reduce IT costs and maintenance.”

3. Emphasize intellectual property and dynamic product line. Patents and trade secrets are more powerful advantages than missing competitive features, which might be quickly filled in as you gain traction. Be careful with the first-mover claim, since big competitors have deeper pockets and can accelerate to quickly eliminate this one.

4. Demonstrate expertise on the range of competitors. You don’t need to talk about every competitor, but you better know every one, just in case someone challenges you. Do your research thoroughly on the Internet, with industry experts, and advisors. Build your credibility by presenting balanced competitor leadership and team histories.

5. Become a thought leader on industry evolution. Make it evident that you have learned and evaluated competition from a higher perspective – meaning the evolution of industry technology and trends. Show that you have thought about indirect competitors and alternative solutions, like airplane technology versus a better train.

6. Develop a timeline showing continuous innovation. Make your competitive position a long-term advantage by presenting a timeline of technology evolution, rather than a comparison at time of first rollout. Investors don’t like an apparent “one-trick pony,” or a momentary advantage that can be quickly overcome by smart competitors.

7. Position your solution in the world market. Every market and every opportunity these days is global, so successful strategies and positioning are done with that in mind. Your rollout needs to be focused and targeted locally in the near-term, but competition needs to be addressed in a much broader long-term way.

Don’t forget that the primary objectives of every competitive positioning are to demonstrate your business acumen and integrity, as well as the strengths of your solution. Any overly negative comments you make about competitors doesn’t help you on either of these objectives, and will kill your momentum with investors and potential customers.

Spot comparisons are also less and less valuable these days, as the market tends to change quickly, and competitors can pivot and recover just as quickly. Remember that smart competitors are likely working on new features with resources greater than yours, and timeframes to delivery that may be shorter than yours.

In addition, thinking positively about competitors is what your customers will do, and what every smart investor or potential business partner does. You have to get on the same wavelength to optimize your solution, maximize your credibility, and minimize the competitive risk. The alternative of being an entrepreneur full of negativity is no fun for either side.

Martin Zwilling

8 Lessons For Entrepreneurs On Pitching To Investors

As an advisor to entrepreneurs and active angel investor, I often get questions about the realism of the Shark Tank TV series, compared to professional investor negotiations. The simple answer is that with all the staging of TV lights and billionaire investors, it’s nothing like Silicon Valley. Yet the process is eerily realistic, and every entrepreneur can glean some important lessons.

Here are eight key points that I believe should be taken from the show by every startup founder looking for investors in real life, across the range of venture capitalists, angel investors, or even friends and family:

1. You will be judged first as a person, then by your idea. If you’ve watched the show, I’m sure you remember entrepreneurs who appeared doomed by their presence, almost before they started. Others with the right confidence and personality were able to garner funding, despite a weak business plan. Investors invest in people, more than ideas.

2. Grab investor attention in the first couple of minutes. Skip the background story and customer pitch, which every investor has heard all too often. Investors want to hear a quantified problem, a simple solution description, opportunity size, competition, traction, team qualifications, how much money you need, and what equity you are willing to give.

3. Personalize your presentation, if possible, for every investor. Smart Shark Tank presenters have done their homework on each investor, and customize their sample product or anecdote for each. In a more general sense, find out as much as you can about every group and person you address, and tune your pitch ahead of time to match.

4. There is no substitute for knowing your business. We have all seen the entrepreneur who believes that passion and emotion will overcome all investor objections and requests for answers. The most common failures on the show, and in real life, are people who don’t know their margins, cost of customer acquisition, channels, or other key data.

5. Dress to impress and be credible to investors. A colorful costume may catch TV viewer attention, but may hurt your image and turn off investors. Remember that most business investors are from an era where sandals and frayed jeans were not associated with hard work and business success. Exceed the expectations of the investor.

6. Keep calm, and never get defensive when questioned. Entrepreneurs who interrupt investor questions, or show a temper, will quickly lose investor respect, and likely lose the deal. Be sure to pose your counterpoints as clarifications rather than disagreements. Agree to evaluate investor views on subjective issues, rather than just dismissing them.

7. The value of an investor goes far beyond cash. Many entrepreneurs feel that investor money is all green, and thus the same. On Shark Tank, you can easily see that some people need Lori and QVC, while others need Damon and his apparel connections. Investor knowledge and experience routinely have more value than the money.

8. The initial outcome is the beginning, not the end. All handshakes in investor forums, or on the show, are subject to follow-on due diligence reviews. According to early reports, only about a quarter of the deals close as you see them on the show. On the other hand, many who don’t get an initial deal win later through good visibility and connections. Based on my experience, both of these are also true in real life.

Thus, while the forums and investors are different in the real world, there are many relevant lessons than an astute entrepreneur should take away from Shark Tank. So if you plan to face any forum of potential investors in the near term, position and practice your own pitch with advisors until you are ready to calmly face the bright lights. The last thing you want to hear from any of them is “I’m out!”.

Marty Zwilling

8 Strategies To Maximize Team Trust In Your Business

As I have learned through my career in business, as well as years of business consulting, team trust in each other, as well as management, is critical to the long-term success of every venture. It is key to employee engagement, a positive culture, and the productivity necessary to survive and thrive in this rapidly changing worldwide economy which challenges every business today.

I have found that trust in business relationships doesn’t happen by default these days, no matter what your title, just like in private relationships. Everyone knows and admires a few trusted leaders in business, for example, Richard Branson, founder of Virgin Group and Warren Buffett, founder of Berkshire Hathaway. The rest of us are still earning the trust of our team members.

So what can you do today to build and maintain that trust, through hard times as well as good ones? Here is my list of eight key strategies and tactics, gleaned from my own observations and feedback, which I believe will define you as a trusted leader, and will result in loyal teams to amplify your business initiatives into long-term success and satisfaction:

1. Share your values and expectations to everyone. People need to know what is expected of them, and they actually prefer high expectations to low ones. Personal regular communication is best, rather than some nebulous written mission document. Make sure they understand how your values align with their own interests and needs.

2. Provide regular positive feedback in front of peers. We all need a show of appreciation from leaders and peers for our efforts and results. The best feedback is often not monetary, but simple verbal recognition in front of the team for a job well done. A culture of trust is built over the long-term by consistent sharing of results and efforts.

3. Simplify the organizational structure to reduce overhead. Too many levels of management create uncertainly and stress, increase political infighting, and minimize trust all around. With fewer levels, people are incented to accept more accountability for their actions and get more personal satisfaction from their contributions to results.

4. Build personal relationships with key team members. Trust requires a feeling of empathy and concern for team members, both inside and outside of work. Your actions speak louder than words in this regard. Suggestions include recognizing key individual needs for time off, personally rewarding exceptional efforts, or just saying hello.

5. Don’t try to micro-manage every team assignment. Empowering team members to do their own work their way is an important trust factor. Of course, you should always be available and willing to coach members when requested, or share your experience and skill. Make sure they have the tools and training to do the job requested and expected.

6. Don’t hide behind negative emotions and outbursts. Trusted leaders are seen as calm, approachable, and warm, rather than cold and egotistical. Too many teams I know live in constant fear of unjustified reprisals and repeated demands. They want to see you as occasionally vulnerable, and willing to accept feedback and team recommendations.

7. Proactively offer career growth options and feedback. Trusted leaders are always looking to push team members ahead, rather than holding them back from career advancement. Rotating key people between organizations, and providing temporary assignments for growth, are signals to your team members that they can trust you.

   In addition, you are doing yourself a favor by creating a trusting team and setting yourself up for loyalty and success down the line. Investing now in your employees makes them more valuable to you, whether that payoff comes now or later.

8. Include team members in regular business status updates. More transparency and openness from company executives on customers, competitors, and business results is key to engagement, loyalty, and trust. This requires active listening on your part, as well as responsiveness to team questions and concerns via all communications channels.

   While certain information is absolutely worth keeping on a "need to know" basis, those circumstances are few and far between. There is a huge difference between keeping initiatives under wraps, and employees not knowing the status of the company. The former is acceptable. The latter is not.

Even with these initiatives, please understand that trust doesn’t happen overnight, so be prepared for a journey, including some fallbacks and restarts. In my perspective, the bar has been raised by the new generation of workers, with their instant access to social media and global business cultures, but the principles are the same. Don’t count on your ego or position to save you.

Marty Zwilling

*** First published on Inc.com on 2/27/2023 ***

7 Considerations In Choosing A Startup Funding Source

Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited angel investors. They argue that the color of the money is the same from either source. They fail to realize that the considerations are quite different for each, which can make or break their investment efforts, and ultimately their startup.

Let’s consider some basic definitions. Accredited angel investors are non-professionals investing their own money, while venture capitalists are professionals who invest someone else’s money (usually from large institutions). The amounts from angels start as low as $25K, while minimum venture capital amounts usually start in the $2M range.

That doesn’t mean you should always go for the big bucks first. In fact, the reality is quite the opposite. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. Of course, between these extremes is a large overlap of interest and potential.

More importantly, the focus on numbers tends to hide other more subjective issues that could be more important for any given startup. These considerations include the following:

1. How much ownership and control are you willing to give up? VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles.

2. How big is your startup opportunity? If your targeted business plan opportunity is not at least a billion dollars, most VCs won’t even be interested. Both angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $20M mark by year five.

3. How large is the financial return you project? VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). That may sound high, but they know that up to 9 out of 10 startups fare poorly, so they are looking for one big win. Angel investors wish for the same return, but may accept a 5X deal.

4. How many investment rounds will be needed? Angel investors are usually constrained to making a single investment per startup, but very few entrepreneurs make it to cash-flow positive on a single round. VCs tend to protect their initial investment, and they have the resources to make several multi-million-dollar rounds as required.

5. How experienced is your team? First-time entrepreneurs rarely catch VC interest, unless they have one or more people on their team who have a track record of startup success, in the same business domain. Angel investors often have emotional motivation to give-back, and assume their own expertise and involvement will assure success.

6. How good are your connections in the investor community? Sending unsolicited business pitches to every angel and VC investor you can find on the Internet is a waste of your time as well as theirs. You need a warm introduction for most VCs, to get their attention. For angel investors, you only need to do some local networking to get interest.

7. How much help do you expect and need? Both VCs and angels can and will help you, but VCs are likely to be more “hands-on.” They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members. If you are looking for money alone, angels are the better alternative.

If your startup can’t yet relate for any of these considerations, then your alternative is that popular first tier of investors, called friends, family, and fools (FFF). With these, you are on your own in negotiating amounts, valuations, and roles. These are people who believe in you personally, without evidence of previous startup experience, no current traction, and lack of valuation.

In all cases, investors tend to invest in people, more than the idea, or even the stage of execution. They are looking for a win-win deal, with entrepreneurs that demonstrate a positive chemistry and open communication. The color of any investor’s money may look the same, but it won’t help you if the price you pay is higher than the value it brings.

Marty Zwilling

6 Reasons To Disclose Your Startup Idea Before Commit

Savvy entrepreneurs start testing their ideas on potential customers even before the concept is fully cooked. They have enough confidence in their ability to deliver that they don’t worry about someone stealing the idea to get there first, and they don’t forget to listen carefully to critical feedback. They become walking public relations machines for themselves, as well as their idea.

The alternative is to spend big money later on pivots, lost credibility with investors, and delays at rollout trying to build visibility and credibility. I’m not proposing that anyone promise things that they don’t intend to deliver, but it’s time that founders switch to start selling their product before they build it, rather than believing the old adage of “if we build it, they will come.”

I still hear too many excuses for not working early on the elevator pitch, like wanting to fly under the radar, don’t have the team together yet, or can’t afford an agency. In fact, you don’t need a third-party public relations agency at this stage. There is real value in doing the key things yourself, before your startup is even started:

1. Demonstrate thought leadership before selling a product. Highlight the problem and your concerns in industry blogs, speaking in public forums, and making yourself visible on social media and networking opportunities. You want people to see you as an evangelist for hydrogen fuel, for example, so your later auto engine will have credibility by default.

2. Craft and hone your elevator pitch early. Before the product is set in stone, you can test your message and continue to refine it until it connects well with investors, as well as customers. Later you may have the problem of being told by public relations firms to stay on message, even after you suspect it is not working.

3. Visibly be a bit controversial to test the limits. This early in the game, any coverage and peer review is better than just being another unknown entrepreneur. It’s human nature that challenging the status quo gets more attention than quiet concurrence. People tend to forgive controversial views if you aren’t perceived as pushing a product.

4. Proactively seek out thought leaders and journalists. Entrepreneurs who wait to be found are destined to spend a lot of time alone. Social media sites today, including Facebook, LinkedIn, and Twitter, provide ideal forums for presenting your cause and your concept. Start actively blogging on your own site, as well as on industry forums.

5. Make your business cards stand out in the crowd. Everyone exchanges business cards, and most are forgotten immediately or never really seen. These days, images are especially important, as well as a tag line, and your social media links. Unique and professional business cards are still well worth the investment.

6. Follow up personally on every new connection. Key introductions in a networking meeting will be quickly lost, unless you take the next step of calling or emailing later to request a personal meeting. Use these meetings to build the relationship, more by asking questions than by pitching your concept. Requests for investment come later.

Every entrepreneur has a story, perhaps the inspiration for your idea, or the path taken to get to this point, or a key lesson learned from past mistakes. Stories are the grist reporters look for, and they make you unique and memorable. Find your personal hook – it can be more key to your entrepreneurial success than any given product or service that you are about to offer.

If you are a social entrepreneur, a natural hook is the environmental or humanity cause that you espouse. Perhaps you can amplify your position by sponsoring an event, travelling to a visible location, or donating your time and other resources.

These days, winning in the crowded startup world is all about marketing. The sooner and more effectively you utilize all the available marketing channels, the more visibility and impact you will have later when your product or service arrives. As an entrepreneur, you are the most important part of your brand, not the other way around. Capitalize on yourself early.

Marty Zwilling

8 Signs Of A New Business Initiative And Not A Hobby

As a startup investor, I often see business proposals looking for funding that really look like expensive hobbies looking for donations. I recognize that entrepreneurs tend to substitute vision and passion for formal processes, but using no discipline or process in building something new is a sure way to spend money, rather than see any return and build a self-sustaining business.

I’m not suggesting that you model your startup after the complex corporate organizations you hated in your last job, but there are at least eight key functions and activities that every investor expects to find in a startup proposal with any real potential to change the world. Each of these requires some ongoing effort, so I expect at least a rudimentary process associated with each:

1. Record of spending and business assets. I still see entrepreneurs who spend money and time for months on a new business idea without any separation of personal and business funds, and any formal accounting system for their new business. This is the first business process that every startup needs, that I wouldn’t expect to find for a hobby.

2. Managing to specific goals, priorities, and a plan. Technologists building cool new platforms, just because they can, won’t find investor interest. Entrepreneurs need to document a process of responding to a market need, sizing opportunity, assigning a specific business model, and planning for marketing, sales, and customer satisfaction.

3. Solution development and delivery. Products and services for a business need to be attuned to customer requirements, cost and quality tradeoffs, with milestones for pricing and completion. Typically some production and delivery is outsourced, requiring formal contracts and documentation. Hobbies are developed ad-hoc, driven by personal needs.

4. Preparation and management of funding. Even if you are not requesting outside funding, I would expect a clear process for sourcing and managing the investment you plan to apply. External investors expect a documented business plan, with clear targets on funding needed, use of funds, revenue projections, return potential, and exit strategy.

5. Team building status and plan. Solo entrepreneurs, with a team of helpers, will be assumed to be a hobby rather than a business. I recommend every startup plan for at least two or three decision level team members, and at least a couple of highly-qualified external advisors. Show that you have a process to hire, fire, and train others as required.

6. Formalize the use of tools and information technology. Productivity and repeatability is the hallmark of a good business, whereas a hobby usually assumes everything is custom built and personal. I look for business startups to already have their website up and running, administrative tools purchased, and basic procedures automated.

7. Customer receivables collection and vendor payments. These are critical processes for any business, so they need to be implemented even before investor requests are sized or solicited. For progress and success assessment, each of these needs some metrics defined, a training plan, and responsibility assignments within your team.

8. Marketing, sales, support, and service operations. I’m assuming that most of you will see these as intuitively obvious elements of a business, but not needed for a hobby. Yet I continue to get funding requests that never mention any specific plans or costs to be associated with these elements. No mention usually means no plan and not competitive.

For all of these, your objective should always be a minimum viable process to start, with the expectation that each will be enhanced and pivoted as you learn from customers and competition that works and what doesn’t. The key is to be proactive, rather than assuming that you can react to each crisis as it happens. Customers today are easy to lose, and expensive to replace.

It’s a myth in the startup world that not having processes makes you more competitive. In my experience, no defined process means unable to respond in a timely fashion, unpredictable quality, and high operating costs. None of these are attractive to investors, and jeopardize the success of even the best initial idea. A hobby may take your idea to a product, but a startup has to take the idea to a business.

Marty Zwilling

5 Business Leadership Styles To Avoid For Real Impact

One of the keys to your success as a business professional and leader is your ability to nurture relationships and select associates who have the attributes to help you build your career or lead a team, rather than people who will never challenge you or may be looking out only for themselves. I have concluded as a business advisor that the right people are better than the best strategy.

I found some excellent guidance on picking the right people, and fixing yourself, in a new book, “Burn the Boats,” by serial entrepreneur Matt Higgins. Matt is a recurring guest shark on TV’s Shark Tank for entrepreneurs, as well as a lecturer at the Harvard Business School.

His book is all about his teaming with the right people, as well as you unleashing your full potential by tossing backup plans overboard. He also recommends going all in on key business initiatives and new ventures, making failure not an option.

Finding the right people starts with understanding five key patterns that Matt and I both look for in every business professional. These patterns are potential derailers to success in all leadership and professional relationships:

1. Rely too much on intellectual horsepower only. Some people have an abundance of raw intellect but are short on emotional intelligence. This may limit any ability to work with others, or interest in working on themselves, to adapt and accept change. To be a good leader, you have to be able to take feedback and effectively deliver feedback to others.

   In my own experience as an executive and consultant in business, I have long been convinced that emotional intelligence wins in leadership and long-term success over logical intelligence (IQ) every time. Look for emotional intelligence in every relationship.

2. Being too deferential to potential disagreement. Of course, you always want people around you who listen, but also have the confidence to stand up for what they believe in, even if it causes a bit of conflict. You don’t need people who are so afraid of any disagreement that they never take a position on issues, or offer any innovative ideas.

   Some people hide under consensus decision-making as an avoidance of disagreement, arguing for more team participation and engagement. But, when you need innovation, or for complex issues, you often may need some disagreement to make the right decision.

3. Unable to recognize or handle workplace politics. You also need people who have the interpersonal awareness to know how to deal with each individual in an organization and can predict how they will respond to different situations. That requires understanding what motivates you as well as them, and being able to capitalize on every motivation.

   I’m sure that you will agree that every office has politics, whether acknowledged or not. People who build constructive relationships with co-workers, outside constituents, and management will always be less impacted by politics and more successful in helping you.

4. Not willing to share credit for successes at work. For some team members and associates, success is all about “I” rather than “we.” These associates or aspiring leaders will never gain the trust and following necessary to get the most from everyone for your success or the business. Listen carefully to their language during initial conversations.

   The toughest people to spot who are focused primarily on themselves are covert narcissists. Look for a quiet smugness or sense of superiority, including condescending stares, lack of eye contact, dismissive gestures, and overall inattentiveness. Be careful.

5. Unwilling to show or admit any weaknesses. Some people try to hide their flaws by evading questions or pushing their own agenda instead of listening and responding to yours. Look for people who are honest and authentic with others, and not afraid to admit mistakes. We all have weaknesses and need people with complementary skills.

   Sometimes apparent weaknesses in others or yourself are blindspots that are not intentionally hidden. In this case, you will make the most progress by identifying the triggers and making a sincere effort to communicate or offer a fix to the challenge.

These tips are derived from the work of Dr. Laura Finfer and her Leadership Excellence Consulting, and validated by leadership experts around the world, as well as myself. Now is the time to review all your business relationships, as well as your own attributes, for changes and learning to facilitate your own growth and success, as well as that of your business.

Marty Zwilling

*** First published on Inc.com on 2/22/2023 ***

8 Entrepreneurship Principles For Anticipating Change

Aspiring entrepreneurs who rely only on traditional learning vehicles (teachers, classrooms, and risk-free practice) are doomed to failure in anticipating change today. Either they are never really ready to commit, study an opportunity until it has passed, or fail with tools and techniques from a bygone business era. The Internet and the current information wave have changed everything.

Being a successful entrepreneur these days requires a current insight to a myriad of changes, including many that haven’t yet been integrated into the traditional academic learning vehicles of textbooks and professors. The Internet is the problem, by facilitating constant change, and it’s the solution, by providing an absolutely current view of customers, trends, and best practices.

The challenge is to find the time and initiative to keep up with the information wave, and be able to curate the data into knowledge that must be learned, unlearned, or relearned. It requires an attitude of self-education, versus an assumption that someone else will provide the education. For entrepreneurs, change is the norm, so you have to relish it before you can make it happen.

This required ability is aided by some supportive personal attributes, such as confidence, initiative, problem solving, and determination, but the basic learning principles must include the following:

1. Satisfaction will come from learning something new every day. This goes hand-in-hand with every entrepreneur’s desire to do things better, and make a real impact on the world. This is a key part of enjoying the journey, as well as the destination. It doesn’t imply any sense of superiority or weakness, but often provides motivation beyond money.

2. Success requires challenging assumptions and status quo. With this principle, real entrepreneurs start with a conviction that new learning will reveal flaws in existing models, leading to new opportunities. The Internet is the source of data for alternative views, and social media allows direct customer interactions to test these views.

3. Learning means understanding, far beyond memorization. Great entrepreneurs strive to understand the depth of a customer need, rather than just the ability to recite a longer list of features. Technologies are not solutions, but understanding a technology, in the context of a customer need, will result in more competitive and long-lasting solutions.

4. The act of communicating and writing enhances learning. The process of documenting what you think you know in a business plan, for the team and for investors, solidifies your own understanding of your new business. With that learning, you are able to more effectively share and market your solution to customers and business partners.

5. Building a new business is not rocket science. Growing a business is understanding the needs and thoughts of regular people and simple financial transactions, not some complex technology that you might assume you can never learn. With the Internet, you can see all you need explained in a dozen ways in text, videos, pictures, and podcasts.

6. Learning is nothing more than looking outside your box. Extending your knowledge is like dealing with competitors – if you aren’t extending your comfort zone, you are losing ground. With the Internet, you can quickly test your new business concepts, with crowd funding and social media, and get quick feedback from around the world at low cost.

7. Relationships are a test of your learning readiness. Building a new business today is all about building relationships with your customers and your team. As an entrepreneur with a new startup, you are the brand, and customers today expect a relationship. In addition, you always need relationships with advisors, investors, influencers, and peers.

8. Proactively ask for help and anticipate the need to pivot. With the Internet, you can ask for help from normally inaccessible experts, with minimum personal exposure and cost. It’s easy to see how often others have made changes, so your own learning and associated pivots should never be an embarrassment. Avoid the arrogance trap.

No one is too old to learn new things as an entrepreneur, whether you are just out of school at twenty, or just finished your first career at sixty. If you follow the principles outlined here, and take advantage of the pervasiveness of the Internet, you too can be a part of the solution rather than a part of the problem. A failed startup is the harshest learning lesson of all, and we need to change that approach.

Marty Zwilling

7 Specifics Show How Startups Are All About Execution

In my experience with entrepreneurs, there seems to a wealth of self-proclaimed “idea people” who aspire to start businesses, but only a few who are willing and able to dig in and get the job done. All the great ideas in the world won’t make a business, if the ideas never get implemented. Only rare great entrepreneurs, like Bill Gates and Elon Musk, have proven to be both.

I worked with Bill Gates in the early days of Microsoft and the IBM PC, while I was with IBM. Bill was relentless in his focus on getting the software PC DOS project delivered, while continually challenging us with new business models. Elon Musk is known for his focus on implementation, often working 80-100 hours a week, while still able to offer an endless supply of innovative ideas.

If you or your team sees you as an idea person, your first task as an entrepreneur should be to find a co-founder who can deliver. Finding a co-founder is rarely a bad thing, since two heads are always better than one in meeting all the startup challenges. Let me be a bit more specific on how follow-up trumps ideas for success in the key challenges of a startup, or any small business:

1. Networking with investors, partners, and customers. Meeting people and talking about your ideas won’t get you very far. First you have to listen carefully to what the other party is looking for, and then you have to follow-up to meet their connections, do personal dinner invitations for relationship building, and demonstrate traction.

2. Tailor investor proposals and term-sheets. Professional investors expect far more than an idea pitch – they are looking for a documented opportunity analysis and realistic financial projections. They watch for formal follow-up to questions, demonstration of real product, and revenue results. Passionate reiteration of the idea won’t close funding.

3. Detailed product specifications and prototypes. With great idea people, an initial product is rarely fully defined, as features are added and subtracted to meet the audience of the day. Milestones are not met because there is no implementation discipline. Products from idea entrepreneurs often try to be everything to everyone.

4. Productivity and time management challenges. Idea entrepreneurs are largely driven by the “crisis of the moment” or the next event on their schedule. They are too busy to follow-up on a major partner opportunity, customer inquiry, or a critical internal process that simply isn’t working. Communication to the team suffers, and productivity is low.

5. Managing marketing metrics and the sales pipeline. Effective marketing requires converting ideas to real content, creating programs to educate channels, and managing metrics to see what works and what needs to change. Follow-up is required for every sales lead, a pipeline built, and a sales process documented, with training for new reps.

6. Customer acquisition, retention, and support. Ideas don’t generate customer loyalty – they want to see specifics for their case. Most experts agree that acquisition of a new customer costs six times retaining existing customers. Lack of follow-up after a sale can cost you more customers than poor service or poor quality.

7. Maintaining professional relationships. No business associate will be impressed with ideas for long, if they experience unpredictable follow-up delays in email, phone calls, or delivery commitments. Disciplined execution is as critical to communication and relationships as it is to the bottom line of your business.

For business professionals, I would suggest that if you don’t do follow-up well, you should never aspire to be a manager or an executive. That’s what they have to do most of the time, so you won’t enjoy the job, and probably won’t be seen as doing it well. Most executives will tell you that their idea time is while sleeping, or while working out in the gym.

Of course, every small business needs to be built around a great idea, and every entrepreneur needs to find innovative new ideas regularly to stay ahead of the crowd. But the bulk of the real work and time to make a startup or small business successful is in the execution and follow-up.

In my view, idea people will be more at home and more appreciated in the design, marketing, or planning department of a larger and more mature organization, with an implementation team behind them. Successful entrepreneurs need to enjoy the journey, perhaps more than the destination.

Marty Zwilling