Wednesday, February 8, 2023

5 Key Growth Initiatives In This Inflationary Economy

inflation-main-tease-socialMost business professionals I know have been conditioned to think of inflation as highly negative, driving up their costs, and reducing customer buying. I see it as an opportunity to find new ways to attract customers, make long-needed changes to improve productivity, and lower your own costs of doing business. We all need a shock from time to time, to get us thinking ahead again.

For example, in my discussions with business owners, some have already used inflation positives to update their inventory values, take advantage of reduced mortgage rates, or simply making the price increases that they have long needed. Others have seized on the opportunity to restructure their business for the future, eliminate marginal processes, and find new growth partners.

For the rest of us, here is my prioritized list of key strategies that I believe every business leader can benefit from as a starting point in making the current inflation economy less of a negative impact on their business, or maybe even a pleasantly surprising positive:

  1. Solicit follow-on revenue from existing customers. Now is the time to reach out to satisfied existing customers for repeat business, as it is less expensive to generate more revenue from your past customers than it is to land new ones. I recommend using digital channels, including email and social media, personalized, if possible, with promotions.

    Keeping customers coming back is not a one-time thing, but an on-going effort to not let them forget you. You must show your appreciation with a “thank you” for the business every time, offering a reward for referrals, and doing things together in the community.

  2. Respond to new market shifts and opportunities. The recent inflation has made every customer rethink their spending habits and needs. While they are looking, you can benefit with new services or an expanded product line. Maybe it’s time for you to expand online, through Amazon or similar platform, or open a new store in a new growth community.

    Also, you must focus on business model innovations that cut costs for your customers, such as self-service, un-bundling your pricing, and selling directly to the customer. Innovation is not all about break-through technologies and big financial investments.

  3. Outsource functions outside your core competency. I see a new resurgence of outsourcing alternatives from outside the country as well as inside, driven by freelancers caught in the squeeze. Look for functions that may be performing poorly in your business due to lack of skills or necessary tools. Selective outsourcing can save you real money.

    With free world-wide Internet access, outsourcing no longer requires the extensive travel, translation, and communication costs once associated with remote work. Through the use of Zoom and similar video tools, they could be your employees working from home.

  4. Run experiments on new sources of revenue. In times of inflation, customers will react positively to a new repair or support service, may be more amenable to a rental capability for major items, or ready to sign up for a subscription service. I recommend sampling one or more of these opportunities, without a major investment on your part.

    For example, Amazon and Jeff Bezos credit much of their continued growth, even in tough times, to scheduling change “experiments.” Bezos believes that if you double the number of experiments you do per year, you’re going to double your growth ability.

  5. Replace marginal performers with new top talent. Now is the time for those changes you have been putting off to balance resources. Recent downsizing at nearby companies means more highly skilled employees on the market now, so you may be able to trade up and gain in productivity, thus reducing overall costs, while preparing for new growth.

    Attracting the right talent and using the right incentives has been shown to dramatically increase productivity. Don’t forget that new generations of workers are motivated by a different set of incentives, including culture, flexible schedules, and constant feedback.

I understand that inflation is putting pressure on all of us, businesses and customers, but as with all challenges, there are potential benefits as well as pain. I’m just suggesting that looking for positives is more productive than focusing on the negatives. After all, running a business is all about maximizing your satisfaction, as well as your financial returns. Make it a win on all fronts.

Marty Zwilling

*** First published on Inc.com on 1/25/2023 ***

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Monday, February 6, 2023

7 Mindsets for Succeeding as an Aspiring Entrepreneur

aspiring-entrepreneur-successEvery business professional I know, or have met in my consulting role, has given serious thought to the alternative of switching to the entrepreneur lifestyle, pursuing a long-standing dream, and controlling their own destiny. They ask me for a perspective on the pros and cons of that dream, the potential for increased satisfaction, and the probability of their long-term growth and success.

I’m convinced that the answer to that question is a personal one, and you need to look more inward than outward for the answer. All I regularly do is offer some personal anecdotes and lessons from my own experiences, and recommend that you do your own research on the experiences of others who have been on the many sides of the business equation.

In that context, I was pleased with the guidance and real data presented in a new book, “Fall in Love with the Problem, Not the Solution,” by Uri Levine. He has built more than a dozen businesses and seen everything ranging from failure to immense success. He offers a handbook of lessons for what to expect in business, from initial ideas to funding, growth, and possible exits.

In my view, here are several key takeaways that you can compare to your own perspective, to see if you have the mindset, determination, and patience to migrate to this business lifestyle:

  1. Building a startup is a journey of failures to success. The most important rule to increase the likelihood of success is to try more ideas, and the way to try more is by failing fast. This approach will give you more time and run rate to find what works best for you. Sometimes you need to focus on the next idea rather than saving the current one.

  2. There is no such thing as a surefire or bad idea. Every idea has merit and risk. I have seen great ideas fail, due to timing or poor execution, and poor ideas laid out perfectly, and morphed into absolute brilliance. The winners are the ideas that cause enough customers today to pull out their wallet and lay down their money to pay for solutions.

  3. You have to cater to many different user categories. There are at least three relevant groups of users to start: innovators, early adopters, and early majority. But don’t forget the even larger group which follows, called the late majority. The biggest challenge is that a user from one category can’t even realize that there are other users not like them.

  4. To survive, you need to find a product-market fit. Product-market fit (PMF) is all about value creation. You need to create great value for many people to succeed, else you will die. For consumers, this is how many users try the solution, and are still using it three months later. For business solutions, it’s about expanding usage and renewing contracts.

  5. Find an idea that matches your set of values. The key to work satisfaction in the long-term is living your core values. For example, if saving the environment is your passion, look for a business and customers that thrive on the same values. This will put the right team in your life, keep you motivated, and prevent decisions that will get you into trouble.

  6. Firing sooner is more important than hiring quickly. If everyone knows that someone at the company is not right, and management does nothing, top-performing staff will leave. For every person you hire, after the first and third month, you must ask yourself, do I still agree with this hire? Remember that people join companies, but they leave people.

  7. Decide early on your exit, right time and conditions. Exiting your company will be the most extreme transition of your life. Think about it positively, what the day after is going to look like for you and your team. Resist the urge to commit to stay forever, be prepared to let go of your baby, and consider the associated alternatives, such as starting a new idea.

The processes and requirements for building new ventures are far different from those of most existing professionals, so think seriously about these takeaways before you step into a new set of responsibilities and expectations. Yet, in my experience, the people who pursue the new venture alternative are generally more satisfied than all the rest. Life is too short to not have fun. Go for it!

Marty Zwilling

*** First published on Inc.com on 1/23/2023 ***

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Sunday, February 5, 2023

Does Your Entrepreneur View Match Your Startup Stage?

Yolande ChanAccording to most definitions, an entrepreneur is one who envisions a new and different business, meaning one that is not a copy of an existing business model. Many entrepreneurs have a passion and an idea, or even invent a new product, but are never able to execute to the point of creating a startup. Even fewer are able to grow the startup into a viable business.

As a mentor and advisor to entrepreneurs and startups, and an angel investor, my passion is to find and nurture those entrepreneurs with innovative business ideas and acumen, to make them into successful business owners. I fully realize that for some of the best entrepreneurs, success is surviving the journey, and they can’t wait to hand off the new business and start another one.

Thus, in my view, entrepreneurship is an evolution of an idea through a series of developmental stages, culminating in a self-sustaining business. A business is an entity which exchanges goods and services with people outside the business (customers) for money, social good, or something of equal value. Here is a summary of the key stages along the way:

  1. Idea and seed stage. In this first stage, a specific idea or passion is solidified into an executable plan. Typically this is done by one or more entrepreneurs with personal or family resources, with no business entity yet formed, so they would not yet be considered business owners. Market research and a business plan should be the focus at this stage.
  1. Startup and development stage. The development stage normally begins with designing and prototyping a product or service, and creating the company legal entity. While legally the entrepreneur has created a business entity, there is nothing of value yet to own since the company has no solution to offer, no customers, and no revenue.
  1. Funding and rollout stage. At this point investors should be interested in buying a chunk of the business. It is arguably sustainable with a proven value proposition and business model for customers, and operations processes that work. The entrepreneur now becomes a business owner, and must start thinking like one to get to the next stage.
  1. Growth and scaling stage. This is the stage where most entrepreneurs exit, get pushed out, or learn to operate as full-time business owners. Business owners know that growth as a business versus a startup requires replicable and documented processes, a focus on marketing and sales, personnel management skills, and detailed planning.

Another way of determining when an entrepreneur becomes a business owner is to look for the mindset change required to build and maintain a successful business. Every entrepreneur needs to compare his strengths and aspirations to this business mindset:

  • Satisfaction from business success versus the big idea. Business owners get their satisfaction from happy customers and happy stakeholders. Entrepreneurs are more focused on thinking big, stepping into the unknown, and changing the world. They embrace risk, while a business owner seeks to reduce and manage risk.
  • Seeking a stable environment now versus a better future one. Good business owners like a predictable market where they can make calculated decisions to improve and grow. Entrepreneurs love to envision breakthroughs and disruptive technologies, with tough problems to overcome, which will allow them to create lasting change.
  • Relish repeatable activities and processes versus new challenges. Most small business owners enjoy the completion of daily and weekly tasks, and cyclical processes, like inventory and receivables. True entrepreneurs are always thinking many months out, anticipating the next opportunity and the next recognition for innovation.
  • Long-term attachment to the business versus the idea. If you see the business as the core of your worth, you will make a great business owner. Entrepreneurs see their value in the change they accomplish, and their impact on the future. True business owners dream of keeping the business in the family, and making it a long-term success.

Yes, there are notable entrepreneurs who make the transition from the big idea to a big business owner, including Bill Gates and Mark Zuckerberg. But there are thousands more whose interests revolve around being a better entrepreneur. Others start and end their careers as business owners, by buying an existing business, inheriting a family business, or buying a franchise.

So I believe the bottom line is that most entrepreneurs never really become business owners. They may step into that space for a few years to maximize the impact of their idea and personal return, but their heart is in their next venture, and that’s the way it should be. Neither money nor business success will buy you happiness if you aren’t doing what you love. You decide.

Marty Zwilling

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Saturday, February 4, 2023

5 Challenges When Predicting Future Customer Behavior

future-customer-behaviorWe are now solidly in the era of big data, where computers are capturing and processing the details of everything we do with all our interconnected devices in real time. Businesses see this as the Holy Grail for finally being able to predict who, where, and when customers will buy their existing solutions, and what their future solutions must look like to be attractive.

According to published estimates, ninety percent of the data in the world today was captured in the last two years, at roughly 2.5 quintillion bytes a day. That’s a lot of data, but the jury is still out on whether technology can make any sense of the data or derive new meaning from it in our changing world. So far, we haven’t been very good at predicting the future in life or in business.

For me, the first step in understanding the potential is to better understand what human data really looks like as it comes in from all these sources. I found some help in this regard from a classic book, “Humanizing Big Data,” by leading consumer researcher Colin Strong. I will paraphrase here the keys ways he outlines that our lives are becoming increasingly datafied:

  1. Datafication of emotions and sentiment. The explosion of self-reporting on social media has led us to provide very intimate details of ourselves. Many market research companies now use this data by ‘scraping’ the web to obtain detailed examples of the sentiment relating to particular issues, brands, products, and services.
  1. Datafication of relationships and interactions. We are now not only able to see and track the ways in which people relate, but with whom they relate, how they do it, and when. Social media has the potential to transform our understanding of relationships by datafying professional and personal connections on a global scale.
  1. Datafication of speech. Speech analytics is becoming more common, particularly as conversations are increasingly recorded and stored as part of interactions with call centers, as well as with each other. As speech recognition improves, the range of voice-based data and meaning that can be captured in an intelligible format grows.
  1. Datafication of offline and back-office activities. Within many data-intensive domains such as finance, healthcare, and e-commerce, there is a huge amount of data stored on individual behaviors and outcomes. Add to that the emergence of image analysis and facial recognition systems processing in-store footage, traffic systems, and surveillance.
  1. Datafication of culture. There is a whole new discipline of ‘cultural analytics,’ which uses digital image processing and visualization for the analysis of image and video collections to explore cultural trends. For example, Google’s Ngram service has already datafied over 5.2 million books from 1800 to 2000 to let anyone analyze cultural trends.

Of course, there is a big jump needed from data to real insights, intelligent decisions, and future predictions. This book author also explores some of the major challenges associated with humans making sense of big data, and using it effectively, including the following:

  • The human psychology of cognitive inertia. Humans seem to be wired to resist change, with a set of cognitive ‘rules of thumb’ which focus us on short-term loss-averse behaviors. Human are inclined to rely on familiar assumptions and exhibit a reluctance to revise those assumptions, even when new evidence challenges their accuracy.
  • Cognitive ability to make sense of data. Even though computers can process and store large volumes of data, assessing the implications still falls primarily in the realm of humans. Sense-making is the process of deriving meaning from experience and situational awareness, which seems to be a struggle for both people and computers.
  • Information overload and data quality. In reality, more data does not necessarily lead to better decisions. More information usually means more time is required to make a decision, perhaps leading to inertia, or volumes of one type of data bias the decision in the wrong direction, since more data is not always better data.

As we continue to become more data connected online and offline, there is no question that our digital exhaust will tell more and more about us, allowing better short-term projections of our buying habits and interests. Yet, the challenge of really predicting future needs and behavior is much tougher. Thus, I predict that humans will be driving big data in business, rather than the other way around, for a long time to come.

Marty Zwilling

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Friday, February 3, 2023

10 Lessons To Be Learned By Winning Teams Everywhere

PR_MPWahl2Did you ever wonder why some entrepreneurs always seem to have all the luck and success, while others never seem to catch a break? As an angel investor, I quickly learned that luck has very little to do with it, and I now look for some personal characteristics and leadership styles that separate the potential winners from the losers.

These differences are the reason that investors say that they invest in people, rather than ideas. As I was reminded again by the classic book from Dennis Perkins, “Leading at the Edge,” this isn’t a new concept. He illustrates this by comparing the acts of numerous teams which faced the edge of life and death as early Antarctic explorers in the 1800s.

He was able to identify ten lessons from the common threads to survival in the winning explorer teams, which I believe apply equally well to the survival and success of business startup teams today:

  1. Never lose sight of long-term goals, but focus real energy on short-term objectives. Don’t be afraid to pivot, and commit to new objectives with as much passion and energy as the original. Andy Grove of Intel fame started making memory chips, but switched to microprocessors with a vengeance when Japan totally undercut his pricing.
  1. Set a personal example with visible, memorable symbols and behavior. Under the stresses of a startup, visible leadership cues can make the difference between success and failure. When McDonald’s was still a small company, Ray Kroc, the CEO, had a penchant for asking a store manager to help him clean up trash in their parking lot.
  1. Instill optimism and self-confidence, but stay grounded in reality. That means you must first find optimism in yourself. Then it extends to the hiring process. Herb Kelleher, while CEO of fledgling Southwest Airlines, said he only wanted people with positive attitudes. He also famously said," We don't do strategic planning. It's a waste of time."
  1. Take care of yourself: Maintain your stamina and let go of guilt. Evidence shows that effective entrepreneurs have high levels of energy, and handle stress well. But no one is superhuman. I once worked for a CEO of a startup company who insisted on working 20 hours a day, until a health crisis almost killed her, and did kill her company.
  1. Reinforce the team message constantly: “We are one – we live or die together.” Teamwork is the hallmark of high-performing startups. Establishing a shared identity is the first step to creating unity. The Google team stayed tight as they developed the technology, first working out of Larry Page’s dorm room at Stanford, then a garage.
  1. Minimize status differences and insist on courtesy and mutual respect. CEOs who talk, and really listen, to everyone in the organization gain the highest reputation. Not surprisingly, based on the success of their companies, both Mark Zuckerberg and Elon Musk scored in the top ten most respected CEOs per a recent Glassdoor Survey.
  1. Master conflict – engage dissidents, and avoid needless power struggles. Some entrepreneurs go to great lengths to avoid interpersonal friction, or engage the wrong way. Those of you who viewed the movie The Social Network, saw an example of new entrepreneurs dealing with conflict poorly, almost leading to the demise of Facebook.
  1. Find something to celebrate and something to laugh about. Especially under the constant pressures of a startup, the ability to lighten up, celebrate, and laugh can make all the difference. Herb Kelleher, mentioned earlier, is one leader who also understood the power of humor in business, with his own antics, and focus on “fun ware.”
  1. Be willing to take the Big Risk. Risk aversion does not always result in disaster, but neither does it create change. Risk takers make things happen. Think of the risk taken by CEO Todd Davis of LifeLock when he posted his Social Security number online, to assure customers the he could protect them from identity theft. It worked.
  1. Never give up – there’s always another move. Rather than expecting things to go right, entrepreneurs have to assume things will go wrong, and solutions are elusive. Colonel Sanders started at a late age to build his chicken recipe into KFC (Kentucky Fried Chicken). It took two years of persistence to get the money. The rest is history.

Investors (and team members and partners) find that it’s more effective to assess an entrepreneur’s fit to these personal characteristics than it is to assess the real potential of an idea, or the probability of good luck. We listen to you and judge how many of these are practiced by you. When it’s time for due diligence, we will talk to your team. Their perception is the only reality. What do you think they will say?

Marty Zwilling

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Wednesday, February 1, 2023

5 Ways To Optimize Team Satisfaction In The Workplace

business-team_optimizedWith business teams now getting back together in the workplace after primarily working remotely during the pandemic, it’s an ideal time to implement change and make sure your team is feeling a renewed sense of satisfaction, high engagement, and maximum productivity. These people are your most important assets, and you can’t succeed in business if they are not happy and healthy.

In my experience advising businesses, large and small, I have often been surprised by the level of complacency and general malaise I find in the ranks, with a resultant direct loss of productivity and competitiveness. The specifics have been highlighted well in a new book I just read, “Work Here Now: Think Like a Human and Build a Powerhouse Workplace,” by Melissa Swift at Mercer.

In addition to defining the problem, she makes concrete suggestions on how to change work for the better, taking advantage new technologies, and new thinking brought about by this new era. I will summarize here her key strategy suggestions, with my own insights, for working within teams, while keeping the people effective, and creating more value for the business than ever before:

  1. Create a safe, nonjudgmental space to talk with you. Team members need to feel comfortable in the office conversing about less significant work concerns, and how they are feeling day to day, without fear of reprisals or judgement. Both you and they will learn how to work together more effectively, and understand what changes are needed.

    A key to success is for you take the initiative and make the conversation about the other person. People love to talk about their work, and they will find something worth talking about that adds value. The result is trust built in you and a positive feeling on both sides.

  2. Put away permanently your “suck it up” voice. We’ve all been there. If you want team member work to change for the better, make that voice shut up. Listen more and talk less, to learn what changes you can make without blame or emotion. The best relationships allow for informal conversations about concerns that can be acted on later.

    In addition to the right words, be sure you present the right body language. The way you communicate nonverbally is often more important than the words you use, so I recommend you keep your nonverbal cues professional and friendly in all discussions.

  3. Be curious about work items you don’t understand. Leaders who can identify what of their team’s work eludes their understanding, and how to ask about it without either feeling threatened or conveying a threat to the team, can help their team work better and avoid inefficiencies posed by you not completely understanding what the people do.

    I assure you there is no shame to being humble about understanding the complexities of team job assignments, and team members are typically pleased to convey their special skills, work techniques, and challenges today. Let that be part of their job satisfaction.

  4. Develop metrics to monitor work intensity. Work intensity could be anything from number of meetings in a day, to number of production line emergencies, to number of angry customers during a shift. High work intensity causes stress and fatigue, which you can mitigate, for example, by making sure meetings end a few minutes before the hour.

    These metrics are also the best way to gauge when your team needs more help, and identifying strong and weak contributors. I find that one of the biggest contributors to team health and satisfaction is a feeling by all that you understand workload allocation.

  5. Never encourage or reward performative work. Some team members feel they have to perform or show off by talking excessively in meetings, always staying late at work, or over-reporting to you on their every move. You can counter positively by encouraging everyone to go home on time, managing meetings carefully, and coaching positively.

    I am convinced the performative work problem really became more visible during the recent pandemic. For example, team members working from home felt they had to be constantly connected, working or not, in order to prove that they were busy, busy, busy.

With these strategies, and others that you can add from your own experience, I believe it is now an ideal time to think bigger than more time off, free lunches, and better game rooms. Let’s rethink how we work, and make the more radical changes we need to get our teams back on track in this new fast-moving global economy, to be more engaged as well as more competitive.

Marty Zwilling

*** First published on Inc.com on 1/18/2023 ***

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Monday, January 30, 2023

6 Startup Lessons Learned By Passionate Entrepreneurs

I guess it makes sense for a robot to read an e-book[401]Over my many years of mentoring aspiring entrepreneurs and business professionals, I often hear a desire to start a new business, with a big hesitation while waiting for that perfect idea and perfect alignment of the stars. From my own experience and from the best entrepreneurs I know, I always offer some basic business realities, and assure you that conditions will never be perfect.

Thus, I was happy to see my perspective solidified and detailed with real examples in a timely book, “Mission Possible: How to Build a Business for our Times,” by Alexandre Mars. He started an up and down career as an entrepreneur at an early age, and has since gathered experience and success in Europe and the USA on all sides of the business equation, including philanthropy.

Here is a sampling of his takeaways I support, with my insights added, that I recommend for every business professional thinking about career alternatives and opportunities:

  1. There is no such thing as a “eureka moment.” In my experience, and the feedback from investors, most “new” ideas have been tried many times, and where they came from is not relevant. So don’t wait for that “idea of the century” that no one has ever thought of before. Just look for your advantage and passion, and put together a great plan to win.

    Another alternative to waiting for that magic idea is to go find it, through “brainstorming.” You may find that a collaboration of your most creative friends, with your guidance and enthusiasm, can identify more innovative ideas than you can wake up with in a lifetime.

  2. Success requires a great amount of hard work. I believe in the “10,000 hour rule,” which postulates that the best entrepreneurs put in more hours of relevant work on an idea and starting a business than the rest of us, counting all efforts and restarts. Your time is precious, so don’t waste a minute of it on useless activities or dreaming.

    For example, most people believe that Bill Gates started with a simple purchase of a base operating system leading to MS-DOS and Microsoft, but Mars points out that Bill spent thousands of hours in some computer rooms working on software day and night.

  3. Know yourself and find help to fill in the gaps. None of us has the skills and interests for all aspects of developing an idea, as well as growing a new business. I recommend a personal SWOT analysis first – find your strengths, weaknesses, opportunities and threats. Then pursue the people and education you need to build a winning business.

    In my own experience with technical startup founders, I still find it hard to name one who was also good, or even interested in financials or business operations. However, by finding a partner with complementary skills, the potential was always greater than “1+1.”

  4. You need a team and relationships to run a business. Not a single one of us has the bandwidth to build a solution and a business alone. You need a dedicated team, gleaned from your network of informal connections between family members, friends, and individual relationships with other professionals. Start today building a bigger network.

    A mistake often made by new business owners due to the unfamiliar new workload is to ignore and lose existing relationships with outside advisors as well as team members. I advise that you block out time at least weekly for nurturing new and existing relationships.

  5. Finding the right investors can make or break you. Most aspiring entrepreneurs don’t have the resources alone to “bootstrap” or fund their new business alone. Finding investors requires that you start early in finding the right people, building a relationship with them before you need money, and nurturing their trust and advisory efforts to help.

    When you do find potential investors, be sure to take the time to do reverse due diligence on them, as they are doing due diligence on you and your team. I find too many entrepreneurs are surprised later by onerous investor expectations and hidden terms.

  6. Chasing and capitalizing on luck brings resilience. No matter what anyone says, I believe that luck is a factor in every new business. Even bad luck, such as unanticipated economy changes or major new competitors, will build resilience and enhance learning for future challenges. I’m also a believer that a positive attitude can make your own luck.

Don’t let any of these realities destroy your dream of moving forward on an idea that can change the world, put you in control of your own destiny, or take away the satisfaction of doing what you love. My intent here is only to let you be forewarned, as well as help you be forearmed. You too can be part of the evidence that business owners are more satisfied than other professionals.

Marty Zwilling

*** First published on Inc.com on 1/16/2023 ***

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