tag:blogger.com,1999:blog-44289385920293881282023-10-24T02:56:39.086-07:00Startup Professionals MusingsSelected ideas and assistance to entrepreneurs and startup founders in finding business ideas, funding, executive mentoring, and business networking to incorporate a business, file patents, add an advisory board, and address operational issues.MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.comBlogger1568125tag:blogger.com,1999:blog-4428938592029388128.post-68294509763293409982023-10-23T07:00:00.000-07:002023-10-23T07:00:00.163-07:006 Strategies To Position Your Business Against Rivals<p><a href="https://drive.google.com/uc?id=1vsjaGPNW_8C5sziYUaPCorkdxr0NUaIV"><img width="356" height="356" title="business-rivals" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="business-rivals" src="https://drive.google.com/uc?id=1-yZku_xj736t_a1guWaQy-QKLjrPNJ0t" border="0"></a>In their passion and excitement about a new product or service, entrepreneurs tend to continually narrow the scope of potential competitors, and often claim to have no direct competitors. This raises a big red flag with potential investors, who conclude that no competitors means no market, or you haven’t looked, and the new startup is likely not investable.<p>They are looking for startups that have a sustainable advantage over direct and indirect competitor offerings, as well as obvious value to customers living without your product today. First to market, for example, is not normally a sustainable advantage for startups. Startups simply don’t have the resources to keep ahead of large competitors who see initial traction and go after it.<p>A narrow scope doesn’t help your case either. Competition for your new hydrogen fuel auto engine is not limited to other hydrogen auto engine offerings, or even other autos. Remember the transportation transitions from horses to autos to trains to airplanes. All of these are competitors in terms of speed, price, or luxury.<p>A sustainable advantage also has to be quantifiable and large enough to overcome the natural resistance everyone has to change, or learning a new approach. My perspective as an angel investor is that once you get past early adopters, most people won’t switch to a new approach unless they perceive a cost or time savings or speed advantage of at least 20 percent. Non-specific terms, like better usability and low cost don’t incite customers to action these days.<p>So what are some of the key points that you should highlight in your investor slides to convince investors that you indeed do have a long-term competitive advantage over other alternatives in the marketplace? Here are some of the key ones:<ol><li><b>Patent protection in place as a barrier to entry.</b><b> </b>Investors understand that patents can be broken by unscrupulous competitors, but they prove your conviction that you have created something innovative, and are willing to do the work to defend it. Other intellectual property has similar value, including trade secrets, copyrights and trademarks. </li></ol><ol start="2"><li><b>Your solution is just the beginning, not the only solution.</b><b> </b>Your startup needs to be focused on a specific solution, but you need to show a long-term plan for a continuously innovative product line, or a series of follow-on solutions, that will keep you ahead of competitors. No investor wants to be tied to a “one-trick pony.” </li></ol><ol start="3"><li><b>Order-of-magnitude cost reduction or productivity increase.</b> Entrepreneurs often proclaim that they will work harder and more efficiently than competitors, thus reducing costs and improving productivity. This approach is not convincing. Investors are looking for technology, process, or business model breakthroughs, to move costs to a new level. </li></ol><ol start="4"><li><b>Startup team with experience and connections is this domain.</b> Teams that have worked together in a previous startup are always a plus. Expert knowledge in the relevant business domain is another plus. Warm connections to required distributors, suppliers, and large potential investors is a major plus. Investors check connections. </li></ol><ol start="5"><li><b>Thought leadership position in your market and customer set.</b> Prior recognition and visibility in the target market is invaluable from a competitive perspective. Successful entrepreneurs start early building their own brand through social media, industry forums, scheduled events, book publishing, and speaking engagements. </li></ol><ol start="6"><li><b>Clear product differentiation and a singular focus.</b> Solutions that primarily integrate the functions of several existing products will likely not provide a sustainable competitive advantage. The focus is diluted, it’s hard to keep up with individual product changes, and you will always be on the defensive. Investors want focus and breakthrough innovation. </li></ol><p>Almost as bad as positioning no competitors is trying to position a large list of competitors (ten or more). I recommend never naming more than three specific ones, and using each of these as representative of a group of competitors. For example, “Company A is representative of many who provide commodity solutions in this space.” Investors are wary of a crowded space.<p>Of course, a great competitive advantage won’t do you much good if your market opportunity is small or not growing, or you don’t have the resources to deliver. Investors like billion dollar opportunities with double digit growth rates.<p>Now that I think about it, your biggest competitive positioning challenge with investors may be your peer startups down the street, also looking for investor dollars. How do you stack up against the ones you know?<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-23052567091184389152023-10-22T07:00:00.000-07:002023-10-22T07:00:00.138-07:006 Ways To Make Sure You Are Working On Your Business<p><a href="https://drive.google.com/uc?id=11ujn_Samp1TGGQiTYDIdMpg4jDqQdCDr"><img width="376" height="251" title="An-employee-studying-graphs" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="An-employee-studying-graphs" src="https://drive.google.com/uc?id=19GzIbqlqPyJ8row93Lcr7W-cG4qHNpCo" border="0"></a>Well over 25 years ago, Michael E. Gerber wrote a best-selling business book called <a href="http://www.amazon.com/The-E-Myth-Revisited-Small-Businesses/dp/0887307280/ref=tmm_pap_title_0" target="_blank">The E-Myth: Why Most Businesses Don’t Work and What to Do About It</a>. The E-Myth (“Entrepreneurial Myth”) is the mistaken belief that most businesses are started by people with tangible business skills, when in fact most are started by “technicians” who know nothing about running a business. Hence most fail.<p>Some <a href="https://itsyourturnblog.com/why-michael-gerbers-e-myth-fails-in-the-internet-age-53619a587718" target="_blank">pundits</a> argue that the E-Myth principle is now outdated, due to the instant access to information via the Internet, pervasive networking via social media, and courses on entrepreneurship at all levels of education. Perhaps an innate business savvy is no longer a requirement for starting a successful business. <p>Let me assure you that based on my experience, I’m not convinced. I still see too many businesses started by technicians who haven’t acquired the basic skills or knowledge, or still assume that business acumen is a minor part of the new business equation. I also see no evidence that the percentage of new business successes has gone up in the last couple of decades.<p>I believe that most entrepreneurs today, at least in the technology domains I frequent, still work <b><i>in</i></b> the business (“Technician’s Perspective”), rather than <b><i>on</i></b> the business (“Entrepreneurs Perspective”). Here are some key ways these views differ:<ol><li>The Entrepreneurial Perspective asks the question: “How must the business work?” This perspective looks at the business as the product, competing for the customer’s attention against a whole shelf of competitors. The Technician’s Perspective asks: “What work has to be done?” In this view the product features, cost, and support are the key to success.</li></ol><ol start="2"><li>The Entrepreneurial Perspective sees the business as a system for producing outside results for the customer, resulting in profits. The Technician’s Perspective sees the business as a place in which people work to produce inside results for the Technician, producing employee income.</li></ol><ol start="3"><li>The Entrepreneurial Perspective starts with a picture of a well-defined future, and then comes back to the present with the intention of changing it to match the vision. The Technician’s Perspective starts with the present, and then looks forward to an uncertain future with the hope of keeping it much like the present.</li></ol><ol start="4"><li>The Entrepreneurial Perspective envisions the business in its entirety, from which is derived its parts. What’s important is the business as a whole: how it looks, how it acts, how it does what it is intended to do. The Technician’s Perspective envisions the business in parts, constructed from the bottom up, based on technical tasks.</li></ol><ol start="5"><li>The Entrepreneurial Perspective is an integrated vision of the world, where the customer need is an opportunity to make meaning. The Technician’s Perspective is a fragmented vision of the world, where customer satisfaction represents a series of problems to solve, with price, features, availability, and support.</li></ol><ol start="6"><li>To the Entrepreneur, the present-day world is modeled after a vision of a better way, one that will stand out with customers from all the rest in the past, and give the joy and satisfaction of success. To the Technician, the future is modeled after the present-day world, the model of past experience, and the model of getting paid for effort or results.</li></ol><p>The challenge of every Entrepreneur and Technician is to maintain the right balance of views to get things done, win in the marketplace, and keep everyone happy. As startups grow, they quickly realize that they need a third personality, called the Manager, to build systems and processes. The Manager craves order, and often ends up cleaning up after the other two.<p>Perhaps someday our education system and other resources will facilitate everyone starting a business to have that balanced view, but I don’t see it happening any time soon. In the interim, I recommend you use advisors, social media, and the Internet to find your alter-ego. Two heads are still better than one, to get the right business started, and get it started right, without worrying about the E-Myth.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-88807754017869458482023-10-21T07:00:00.000-07:002023-10-21T07:00:00.147-07:006 Keys To A Winning Business Model For Your Customers<p><a href="https://drive.google.com/uc?id=10jHjVCUuu-uA5iYsGUcgM5aDWWVL9fAr"><img width="384" height="256" title="winning-business-model" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="winning-business-model" src="https://drive.google.com/uc?id=1RLZ85Qf12oVmkTKwap554GjrkC_83v2d" border="0"></a>How do you convince investors that your business model will really work, before you have a revenue stream that exceeds your expenses? Even if you are bootstrapping your business, and you are the only investor, you should be asking yourself the same question. Too many founders have learned that passion and free beta products do not imply a sustainable business.<p>Proof of any business model starts with a finished product or solution, sold to a new customer for full price, with high satisfaction for the value received. Of course, that has be a repeatable event, with enough revenue to sustain the business. The conundrum is that once you have really proven the business model, you no longer need the investor money you asked for to start the business.<p>So what should an entrepreneur do to convince themselves, as well as potential investors, that they have a viable business model before it is totally proven? Here are some basic principles from my own experience that will improve your odds and keep you on the right track:<ol><li><b>Recognize that you are not the market. </b>No matter how passionate you are about your solution, it doesn’t mean that if you build it, they will come. Don’t skip the market research, input from influencers, analysis of competitors, and the simple act of really listening to potential customers via social media, before quantifying your opportunity. </li></ol><ol start="2"><li><b>Start selling it before you build it. </b>Marketing is everything these days. On the average, it takes as long to build marketing momentum as it does to build the solution. If you wait to begin marketing until your product is final, you will find it very expensive to pivot to meet real world input, or the whole opportunity may have moved on without you. </li></ol><ol start="3"><li><b>Plan for a real revenue model. </b>The <i>free</i> model, with a loose intent to monetize later, made popular during the tech bubble, doesn’t work anymore. No matter how good your cause, it takes real money to sustain a business. Decide early where and when money will come from, set some milestones and metrics, and work to a plan, or be caught short. </li></ol><ol start="4"><li><b>Word of mouth is not adequate for marketing and sales. </b>Even though the Internet is pervasive and free, you should not assume that a website is all you need for sales and marketing. To get the visibility and distribution you need will likely require one or two levels of partner relationships and a real model for marketing, events and promotions. </li></ol><ol start="5"><li><b>Customer support is more than handling exceptions. </b>Customers expect to be delighted in all phases of the product life cycle -- understanding features, pricing alternatives, returns and problem resolution. A detailed process, with empowered employees and adequate budget, are mandatory to any viable business model. </li></ol><ol start="6"><li><b>Everyone must be part of the sales process. </b>Don’t assume that only customer-facing employees need to understand sales, and that these people can be hired and trained at the last minute. Everyone on your team must maintain the mindset that customers are the key to your business model, rather than technology or accounting. </li></ol><p>I’m not suggesting that all these business model elements need to be perfect before you ask for funding or open doors for business. As an active angel investor, I do expect founders to be able to communicate a plan to implement all key business model elements, just as I expect them to understand and plan for all the elements of their technology and their solution.<p>In my experience, every great product is not a great business, and every great business model involves far more than a great product. Your challenge is to present a total business solution to the right customer set to build your credibility and momentum. Without these, your dreams and your business model may never get the fuel they need, and will burn out quickly.<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-57467862815246439472023-10-20T07:00:00.000-07:002023-10-20T07:00:00.132-07:0010 Keys To Success Despite Accelerated Market Change<p><a href="https://drive.google.com/uc?id=1jLrQZ914RNvfpB2ZimK98V8B_Czt9ujF"><img width="432" height="252" title="accelerated-market-change" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="accelerated-market-change" src="https://drive.google.com/uc?id=159_4be1qOvVnsofMZ0AT_rfpe3OzEcl5" border="0"></a>Most experts agree that the <a href="https://www.inc.com/minda-zetlin/how-the-smartest-leaders-cope-with-constant-change.html" target="_blank">pace of business change is increasing</a>, and all the business owners I know are struggling to keep up, much less surpass the wealth of <a href="https://www.inc.com/magazine/202305/ryan-holiday/why-all-business-is-global-business-today.html" target="_blank">global competitors</a> now entering the market. Based on my own experience as a business executive, I believe it’s time to be more proactive in preparing for change, rather than just reacting to the latest growth crisis. </p><p>That means working harder both <a href="https://www.inc.com/sarah-lynch/financial-bookkeeping-is-a-headache-for-business-owners-forthcoming-ai-tools-could-make-it-better.html" target="_blank">outside as well as inside your business</a> to anticipate and prepare for changes that are coming before you even know what they are. The traditional guidance of “keep your head down” and drive your dream to success is no longer adequate. You need an outside groundswell of support as well as inside to keep your head above water.<p>Here are a few of the key strategies I recommend for a client to survive and thrive today. The first ones address trends that I see in the market today, while the rest are meant to force you to be proactive in managing your own team and organization to anticipate the level of change I’m sure you will face ahead. <ol><li><b>Enlist industry leaders and influencers as proponents. </b>Networking to build and maintain positive relationships with the right people outside your company is something you can’t forget in the rush to get your new business going. Potential customers these days rely more and more on name recognition for credibility and new brand adoption.</li><li><p><b>Align your mission with a higher purpose in the economy.</b> These days, customers are drawn to support worthy causes, such as saving the environment or feeding the hungry. For example, consider <a href="https://www.inc.com/christine-lagorio/whole-foods-john-mackey-know-your-customers.html" target="_blank">Whole Foods</a>, whose focus on healthy foods and a sustainable environment is legendary, even though their prices are often a bit higher.</p></li><li><p><b>Bring in experienced advisors to keep you on track.</b> Most new businesses need three to five advisors or board members to regularly evaluate progress and resource needs, as well as your own leadership. These advisors need a stake in your success, like a monthly stipend, or an equity share of the business. This is not a place for friends and family.</p></li><li><p><b>Highlight the competitive edge you bring to the market.</b> Focus on a customer pain that your solution satisfies better than any competitor. Quantify the results, and avoid any fuzzy words, such as better usability, advanced technology, or more productivity. Client cost differentials of less than twenty percent are usually not enough to incent change.</p></li><li><p><b>Use test marketing to identify changes before scale-up</b>. Before you spend big money on inventory and scale over a wide area, make sure you have finalized your marketing, manufacturing, and distribution resources. Many new businesses have lost their credibility by not being able to deliver or having a major recall early in the growth cycle.</p></li><li><p><b>Put operational systems and metrics in place early.</b> In the chaos of scaling, it’s hard to identify and fix weaknesses before they become a crisis. Be transparent with your team on both problems and successes, as you need to keep them engaged and trusting you. Also take the time to get feedback on your own leadership and work on the culture.</p></li><li><p><b>Keep your product focus narrow and messages clear.</b> Resist the urge to expand your offering during early growth with additional products, services, and business models. These often confuse customers and take additional resources and people when you can least afford the costs. Establish a formal change request process and analyze options.</p></li><li><p> <b>Establish a written strategic plan, updated often.</b> If you want maximum contributions from your team, they need to know the plan, and have a role in creating it. Your job as a leader is to provide the resources to implement the plan, communicate it effectively to the team, and bring people in with right skills as partners and employees to make it happen.</p></li><li><p><b>Reward team members who are advocates of change. </b>Many team members have learned from prior experience that talk of change and change failures are all penalized, rather than rewarded for new learning and a path to success. The best rewards are often to be recognized in front of peers, and encouragement to support suggested changes.</p></li><li><p><b>Proactively provide training and team member rotation.</b> People need to be given challenging new assignments and constantly learning to stay motivated and engaged. Keep up with new technology for internal processes, actively hire people with new skills, and provide industry training for exposure to new techniques and competition.</p></li></ol><p>The objective of these strategies is to make business change a proactive opportunity or leadership, rather than a crisis with high recovery costs, and an excuse for failure. It’s a mindset that you must adopt and nurture, and build into the culture of your team. Life is too short to make it all pain and no joy. I recommend that you start now to look ahead rather than fight to catch up.<p>Marty Zwilling<p><b></b><p>*** First published on <a href="https://www.inc.com/martin-zwilling/10-strategies-to-keep-your-new-business-ahead-of-competitors.html" target="_blank">Inc.com</a> on 10/01/2023 ***</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-79799807327624022392023-10-18T07:00:00.000-07:002023-10-18T07:00:00.146-07:008 Steps To A Satisfying And Successful Business Exit<p><a href="https://drive.google.com/uc?id=1wZzC0LXHhpq-D_wVYqNl1Jvsbyq-8BF0"><img width="391" height="260" title="exit-strategy" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="exit-strategy" src="https://drive.google.com/uc?id=1yI9hsHY5mFPcUEAX-bDXlkp_8Fxk5R_s" border="0"></a>Once an entrepreneur, always an entrepreneur. Although many won’t admit it, true entrepreneurs can’t wait to exit their current startup, and build a new and better one with their next great idea. In addition, current investors want to see every startup go public or be acquired, as an exit event, so they can get their due return for that investment which has been tied up for the last few years.<p>For these reasons, I always look for an overt exit strategy in every startup I might consider for an angel investment. As a mentor to many entrepreneurs, I also encourage an entrepreneur exit focus early, and I really like the specific steps outlined in the classic book, “<a href="http://www.amazon.com/Exit-Signs-Expressway-Selling-Company/dp/1942497075" target="_blank">Exit Signs</a>,” by Pamela Dennis, who has helped companies through this critical transition for decades.<p>Her focus is a bit more on mature companies, but I believe the following eight steps, paraphrased from hers, are especially applicable to every startup and the entrepreneurs who create them:<ol><li><b>Think about the end game as you start.</b> Running a mature company is totally different from running a startup. Most startup founders don’t relish the thought of managing repeatable processes, greedy stockholders, and endless regulation reports. Yet they often fall into these roles by not proactively preparing themselves for any alternatives. </li></ol><p><b></b><ol start="2"><li><b>Set a target personal destination and timing. </b>The first step is clarifying your personal goals and the legacy you want to leave. Exiting this startup is not the end, and may be the beginning of something even better, like Bill Gates philanthropy, or your next plan to change the world. At minimum, you need to get an exit advisor to keep you on course.</li></ol><ol start="3"><li><b>Set your startup health gauges and use them.</b> New startup founders keep all the operating metrics they need in their head. If you intend to exit, or even if you don’t, it’s never too early to think what an acquirer or stockholder looks for to assess your business health. This all starts with building a culture and strategy that can survive without you.</li></ol><ol start="4"><li><b>Tune up your startup value and salability.</b> Even if you don’t have a formal board of directors, it pays to have trusted advisors who will give you regular unbiased feedback on your team strengths and weaknesses, financial and operating ratio norms, and an external view of current company valuation issues. Listen carefully and act accordingly.</li></ol><ol start="5"><li><b>Build relationships with potential acquirers. </b>The best sale or acquisition is a gradual one, where the acquirer gets to know you through formal and informal relationships. Don’t wait for a distress situation in the business or your personal life, and hope that the ideal acquirer magically appears. Keep a critical lens on payment options and tax implications.</li></ol><ol start="6"><li><b>Mature your business processes and customer base. </b>Secure your company’s sustainability through multiple revenue streams and customer sets, and solid core business processes. Build an exit-transition plan for yourself, and a plan to retain key talent on the team. Anticipate customer and valued-supplier reaction to any change.</li></ol><ol start="7"><li><b>Build a positive data bank and presentation.</b> Well ahead of any planned move, you need to assemble hard data to support your historical and projected performance and sustainability. Your valuation and salability depends on the credibility of this effort. Plan to spend 30-60 percent of your time away from running your business during this phase.</li></ol><ol start="8"><li><b>Lead your way out rather than wait for a push. </b>The win-win startup acquisitions and successful transitions to public companies are led by the entrepreneur, rather than happen passively. You need to proactively engage the right people, drive improvements where required, and pay attention to all the external and internal factors gating success.</li></ol><p>According to Dennis, an astonishing 87 percent of small and mid-size business owners don’t have an exit strategy or plan, leaving them to die at their desk, or get pushed out on terms they don’t like. If you are like most entrepreneurs, who look forward to a life of pride and profit after their current startup, it’s time to take some steps to make a startup exit more than a wistful dream.<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-39053126398325675892023-10-16T07:06:00.000-07:002023-10-16T07:06:34.744-07:004 Key Components Of Every New Business Financial Plan<p><a href="https://drive.google.com/uc?id=11ObBWnPq1Hd_pV1err2pn0IA3NRFvpxL"><img width="378" height="233" title="key-elements-of-financial-plan" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="key-elements-of-financial-plan" src="https://drive.google.com/uc?id=1mkR7-u7cxTG-CRK8Ztm46nQzhNrz-7pS" border="0"></a>Most aspiring entrepreneurs understand that you can’t build a business if you won’t commit to delivering a product or service, but many are hesitant or refuse to commit to any financial forecasts. Yet every business requires revenue and volumes, as certainly as it requires a product to sell. Thus, financial projections for up to five years are a necessary element in every business plan.<p>External investors will demand a financial forecast, but it’s equally valuable to you, even if bootstrapping. How else will you be able to convince yourself and your team that your business is viable? You need these projections to set internal goals and milestones, and to measure your progress toward reasonable success objectives.<p>For investors, and even for yourself, it’s also a bit of an intelligence test. Per the words of an old country song, “if you don’t know where you’re going, you will probably end up somewhere else.” If you don’t have a destination, don’t waste your money trying to get there, and don’t expect anyone to support you along the way.<p>Projecting financials is a natural extension of the homework every entrepreneur needs to do on customer opportunity size, product costs, pricing, competition and customer value. There is no black magic involved in predicting the future, if you use these four simple steps, with my basic rules of thumb to keep you on the right track:<ol><li><b>Determine your margin on sales. </b>Per-unit cost less cost of goods sold is your gross profit or margin. If you are losing money on every unit, it’s hard to make it up in volume. As a rule of thumb, most viable businesses need a gross margin above 50 percent, even on wholesale prices, to cover operational expenses and survive as a business.</li></ol><ol start="2"><li><b>Forecast sales-volume expectations. </b>Project based on your market size how many widgets you will sell in every channel. This should always be a “bottoms-up” commitment from your sales team, not your own optimistic guess. Don’t assume penetration numbers greater than 5 percent in early periods. Doubling revenue each year is a good target.</li></ol><ol start="3"><li><b>Quantify overhead costs. </b>It’s amazing how fasts costs escalate as you grow. You need 5 percent or more of revenue for marketing, maybe more for ongoing development, and people costs will double as you add benefits, insurance, training, IT and new processes. Check competitor numbers and industry average statistics to get you in the right range.</li></ol><ol start="4"><li><b>Calculate investment amounts and timing. </b>Initial sales success means more cash will be needed for inventory, receivables, facilities and people. Project your cash burn rate to keep at least 18 months between venture capital or angel investments. Controlling cash flow is critical as founders move from working “in” the business to working “on” the business.</li></ol><p>From a planning and strategy standpoint, I offer these additional recommendations to maintain your credibility with outside investors, and to balance your risk due to market uncertainty:<ul><li><b>Always buffer your investment requests. </b>Investment requirements should always be based on financial projections and cash-flow calculations, not on what you think you can negotiate. If your cash flow shows a shortfall of $750,000, add a 33 percent buffer, and ask for a million. Be willing to give up 20 to 33 percent of your equity to support this.</li></ul><ul><li><b>Update your financial projections every quarter. </b>Financial forecasts for startups are assumed to be estimates that will be updated as real data comes in. Plan to re-forecast revenues quarterly or even monthly, and replace forecasts with actuals as soon as a period ends. A business plan with old projections instead of actuals has no credibility.</li></ul><ul><li><b>Avoid conservative projections, as well as irrational ones. </b>Investors want entrepreneurs to be aggressive, but don’t make projections that make you look like the next Google. Entrepreneurs tend to be driven by their own targets, so pick an aggressive one, and you will likely do better that starting with a conservative one.</li></ul><p>I always recommend that entrepreneurs do their own financial projections, rather than rely on an outsider, because it’s the process that adds the value, more than the numbers. For additional value, I suggest the use of a spreadsheet such as Excel as a financial model, with a few variables, like price and volume. This allows a quick analysis of price change and revenue impacts.<p>You don’t need an MBA to do financial projections for a startup business plan. On the other hand, without financial projections, you don’t have a business plan. When you start a business, as in most other ventures, having no plan is a plan to fail. That’s no fun for you, your investors or your customers.<p>Marty Zwilling </p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-26543614607450920562023-10-15T07:00:00.000-07:002023-10-15T07:00:00.138-07:006 Guidelines For How And When To Use Non-Disclosures<p><a href="https://drive.google.com/uc?id=1TDVnBaHOHTvsC-9rXT41k6NSt9aKCsCz"><img width="384" height="256" title="A man in a shirt writing on printed sheets of paper. Original public domain image from Wikimedia Commons" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="A man in a shirt writing on printed sheets of paper. Original public domain image from Wikimedia Commons" src="https://drive.google.com/uc?id=115k9ybgXul2KCNmxb8i0yGzsr6FLUFe_" border="0"></a>Most entrepreneurs I meet are reluctant to disclose anything about their idea to investors before getting a signed confidential disclosure agreement (CDA). Professional investors and advisors, on the other hand, usually refuse to sign these agreements today due to the risk of litigation and administrative workload, and will walk away. How can you make this a win-win opportunity?<p>First of all, I will admit that there is some risk involved with talking to any potential investors, even with an agreement, just as there is risk in all the elements of your plan, product and market opportunity. Yet I can assure you that people who are paranoid, or want to avoid all risks, won’t be happy as entrepreneurs, so it’s all about balancing the risk-reward scale.<p>Thus, based on my experience as an entrepreneur as well as a startup investor, there are indeed situations where a non-disclosure is highly recommended, and others where the potential good far outweighs the risk. Here are the key considerations from my perspective:<p><b></b><ol><li><b>Dealing with known or trusted investors and advisors. </b>If you are approaching a recognized venture capital group, or even an accredited angel investor, a non-disclosure agreement is counter-productive. These professionals value their integrity, like your therapist or financial advisor, and will not share your business details nor steal your idea.</li></ol><p><b></b><ol start="2"><li><b>Unsolicited proposals or requests for information. </b>If you receive an email requesting details on your plan from someone you don’t know, you should respond with a CDA, as well as begin a more serious cross-check with reliable sources. The same is true for people who may approach you at networking events or industry conferences. Build trust first.</li></ol><p><b></b><ol start="3"><li><b>Discussions with potential strategic partners. </b>Most often, the best potential partners are already in a business complementary to yours. They could easily be your competitor, or copy your business, so a mutual non-disclosure is required here for protection in both directions. It pays to talk to competitors about <i>the</i> business, but not <i>your</i> business.</li></ol><p><b></b><ol start="4"><li><b>Disclosures relative to patents. </b>Entrepreneurs should never disclose the details of a planned or current patent application to any outsiders, even with a CDA in place. Potential investors don’t need this data, except perhaps as part of a final due diligence after agreement on terms. Product details in the public domain can never be patented.</li></ol><p><b></b><ol start="5"><li><b>Sharing trade secrets. </b>Some entrepreneurs avoid the patent process, since patent details become public once a patent is issued. Trade secrets, which may be recipes, formulas or processes, should only be disclosed on a need-to-know basis, even to employees, and then always accompanied by a CDA.</li></ol><p><b></b><ol start="6"><li><b>Select a reasonable agreement duration. </b>In today’s world of rapid innovation and new technologies, any individual or company should be hesitant to sign an agreement that limits their activities for 10 years or more. In most cases, a term of two to five years should be adequate. If required, all agreements can be renewed before they expire.</li></ol><p>The content of a non-disclosure agreement should be kept simple and straightforward, with a minimum of legalese. There are many samples available from known sources, including this one from <a href="https://www.startupprofessionals.com/linked/non-disclosure-agreement-mutual-generic-blank.pdf" target="_blank">my website</a>. I would be suspicious of any similar agreement more than two pages long.<p>Professional investors often challenge early non-disclosure requests for an idea or concept, since it’s an implementation that makes a business, rather than an idea. They have probably heard the idea a dozen times already, and are waiting to back the right team on the implementation. The last thing they need is an agreement to constrain their actions.<p>In fact, if you have a good idea, you need smart investors to spread the word to other good investors, so you really want them to talk about you. Remember that without a CDA, you can still explain how your idea works in marketing terms, without revealing how it is implemented or manufactured. <p>If that doesn’t get their attention, it probably won’t get any customer attention either, and that’s the best feedback you can get at that stage.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-66946149698097439272023-10-14T07:00:00.000-07:002023-10-14T07:00:00.157-07:00Don’t Underrate The Value Of A Startup Plan Document<p><a href="https://drive.google.com/uc?id=1jFSFAq5YneTYIYly-AKnkes8YeO9B9Sm"><img width="399" height="243" title="business-plan-document" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="business-plan-document" src="https://drive.google.com/uc?id=1LoG6ieCUrc6o1M4jNQJy8GWdPScQwEj5" border="0"></a>If you sold your last startup for $800 million, you probably already know how to build a business, and even conservative investors won’t worry about the quality of your next business plan. But, for the rest of us, don’t believe the Silicon Valley myth that all you have to do is sketch your million-dollar idea on the back of a napkin, and investors will line up to give you money.<p>Based on my experience as an investor and mentor to aspiring entrepreneurs in Silicon Valley and elsewhere, one of the quickest ways to kill your credibility and your startup is to offer a poorly written business plan, or none at all. There really is no excuse these days, with <a href="https://www.bplans.com/sample-business-plans/" target="_blank">samples</a> on the Internet, business-plan books in every bookstore, and dozens of <a href="https://www.business.org/business/startup/best-business-plan-software-tools/" target="_blank">apps</a> to automate the process.<p>A great business plan doesn’t have to be a book in length, with extensive financial statements. <p>Most good ones I see are in the range of 25 pages, which is more than enough to describe concisely all the business what, when, where, and how. The plan must simply answer every relevant business question that you could imagine from your team, partners, and investors.<p>In fact, the process of organizing and documenting these elements is the best way to make sure you understand the answers yourself. Would you be comfortable buying a house from a builder, or building one yourself, with no plan on timeframes, costs, and features? I hope not. Most investors tend to think of startups without a plan as expensive hobbies.<p>There is no magic formula for a formal business plan format or sequence, but I would recommend the following ten sections, in this sequence, with relevant content:<ul><li>Executive summary<li>Problem and solution<li>Company description<li>Market opportunity<li>Business model<li>Competition analysis<li>Marketing and sales strategy<li>Management team<li>Financial projections<li>Exit strategy</li></ul><p>A business plan that skips one or more of these topics is not complete, so don’t jeopardize your one chance to make a great first impression by offering a partial plan. It only takes a little extra work to make it a professional document, with a cover page, table of contents, headings, and page numbers. Don’t try to impress constituents with technical terms, jargon, and acronyms.<p>If you don’t have the time to write things down, or your writing skills leave something to be desired, don’t be afraid to get some help. No executive I know writes all his own contracts, but every smart one owns every one that is written for him, and understands every element. An entrepreneur who can’t manage a plan, probably won’t be able to manage the new business.<p>Of course, if you don’t yet understand all the elements, it’s time to learn. My advice here is to check your ego at the door, and find a mentor or a partner who has business experience and domain knowledge to help you plan a viable business. Your idea may be technically right, but without a business plan, it could be dead right, which is not the result anyone is looking for. <p>There are no guarantees, but various <a href="http://smallbiztrends.com/2010/06/business-plan-success-twice-as-likely.html" target="_blank">studies</a> have found that entrepreneurs who create a good plan generally double their chances of securing funding and building a successful business. In any context, and especially in the high-risk world of startups where more than 50 percent fail, you need every advantage that you can get.<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-46813432260613580642023-10-13T07:00:00.000-07:002023-10-13T07:00:00.133-07:008 Key Human-Centered Leadership Elements In Business<p><a href="https://drive.google.com/uc?id=1_Wo4-C4mqET9f-6ECnG1_5mXnypJbiFP"><img width="379" height="275" title="human-centered-leadership" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="human-centered-leadership" src="https://drive.google.com/uc?id=1FXAHBa5RL3ukudwasw9Xg5MYkZhoJzvY" border="0"></a>With today’s rapidly changing environment, I see many business leaders reverting to the “<a href="https://www.inc.com/robert-glazer/command-control-leadership-is-dead-heres-whats-taking-its-place.html" target="_blank">command and control</a>” leadership model, in an effort to be more responsive, rather than leading with their heads and heart. Yet I find in my mentoring practice that more and more team members prefer the <a href="https://www.inc.com/sudhakar-ramakrishna/build-human-centered-approach-digital-transformation.html" target="_blank">human-centered</a> approach and respond with more engagement and commitment.</p><p>I believe that a fully engaged team is the key to both productivity and agility in the face of change. In my search for guidance on modern business leadership studies, both scientific and actual case studies, I was impressed with a new book, “<a href="https://www.amazon.com.au/Head-Heart-Art-Modern-Leadership/dp/1761046063" target="_blank">Head and Heart: The Art of Modern Leadership</a>,” by Dr. Kirstin Ferguson. She brings a strong background in business with her academic credentials.<p>I agree with her eight key attributes of a head and heart leader, which I paraphrase here, in hopes of challenging your own thinking, In addition, I am providing some of my own practical insights to inspire and help you become the type of business leader I sense the world needs today:<ol><li><p><b>Lead with curiosity as a team role model.</b> Showing <a href="https://www.inc.com/debra-roberts/curiosity-is-one-of-most-valuable-traits-you-can-employ-as-a-leader.html" target="_blank">curiosity</a> means you have an open mind and are willing to hear diverse points of view that may conflict with yours. Seek to understand all perspectives and data, acknowledging and accepting that you do not know everything. This builds real team relationships, and enables better business decisions.<p>I’ve found that you can best start by asking for another perspective, whether of yourself or a team member. If you're asking someone else and wish to build that connection, be actively present during the interaction. Really seek to understand the other person.</p></li><li><p> <b>Accumulate wisdom by listening and questioning.</b> By watching and observing how you acquire knowledge and make decisions, those you lead can be inspired to do the same. Wisdom helps everyone tackle the challenges in business and in life, helping us to understand our limitations, strengths, and weaknesses and make better choices. <p>Wisdom is all about the why of any business situation. I recommend the “<a href="https://www.inc.com/gary-golden/entrepreneurs-should-always-ask-why-5-times.html" target="_blank">five whys</a>” approach, where you ask someone why five times, making sure on each step, your next why question directly addresses the previous response, until you get to the root cause.</p></li><li><p><b>Build perspective by confirming context.</b> Perspective allows you and your team to assign the correct meaning to the complexities and uncertainties you encounter every day in business. You must all learn to “read the room,” collect and interpret signals, even recognize who is missing, to have the maximum impact and influence to move forward.</p></li><li><p><b>Enhance capability by helping others grow.</b> You must be committed to developing a growth mindset in others around you to help them aspire to new challenges and achievements. You must give them a strong sense of self-efficacy by championing autonomy, encouraging them to think big, and coaching them on areas to improve.</p></li><li><p><b>Show humility by being honest about mistakes.</b> Start by getting people comfortable with what they don’t know, showing them you are open to new ideas, and don’t demand perfection in all deliverables. Make it clear that you always aim for progress, expect mistakes, and recognize that course-corrections or pivots are normal in business.</p></li><li><p><b>Develop self-awareness of your triggers. </b>Teach team members by example, monitoring, and feedback, to gain awareness of what motivates them, triggers them, and where their biases lie. This promotes more psychological safety, better relationships, and allows all to work effectively in uncomfortable situations with customers and peers. </p></li><li><p><b>Demonstrate the courage to take risks.</b> Taking risks can mean standing up to authority figures, confronting peers, or supporting projects with high potential but many unknowns. Courageous actions are often small and subtle, but equally important to high-profile examples. Make your culture psychologically safe for courageous team member actions.</p></li><li><p><b>Use empathy to lead with people at the center. </b>Emotional empathy involves identifying with the feelings of other team members, while cognitive empathy involves using critical thinking to understand another person's emotions and thoughts. You need both to create better outcomes and increase job satisfaction. Diversity and inclusion will get you started.</p></li></ol><p>The challenge in integrating all these elements of human-centered leadership, especially in hybrid work environments, is to embrace flexibility, both in mindset and practice. There is no one-size-fits-all approach. With remote workers, you need to learn how to effectively use the new software technologies, such as <a href="https://www.inc.com/peter-cohan/4-ways-to-build-trust-via-zoom-slack.html" target="_blank">Zoom and Slack</a>, to get the engagement and commitment you need.<p>Marty Zwilling<p>*** First published on <a href="https://www.inc.com/martin-zwilling/8-steps-to-implement-head-and-heart-business-leadership.html" target="_blank">Inc.com</a> on 09/27/2023 ***</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-68513951869625406272023-10-11T07:00:00.000-07:002023-10-11T07:00:00.151-07:006 Mindset Factors Turn Constraints Into Opportunities<p><a href="https://drive.google.com/uc?id=1jo4aD1eSeSBVHXvj08zXevJ0feME-EwU"><img width="323" height="361" title="achievement-across-obstacle" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="achievement-across-obstacle" src="https://drive.google.com/uc?id=1NdQy6Cd5y7A1BPCiKByzn_1EJ3nyJaqt" border="0"></a>Most new business owners I know feel the challenges of not enough time, money, and resources, and see these as problems rather than a <a href="https://www.inc.com/jon-burgstone/why-scarcity-may-be-your-best-competitive-advantage.html" target="_blank">competitive advantage</a>. In reality, based on my experience as a startup advisor and investor, these constraints lead the best entrepreneurs to the most innovative solutions and <a href="https://www.inc.com/comcast/local-marketing-strategies-that-startups-often-overlook.html" target="_blank">new markets otherwise overlooked</a> by their peers and competitors.</p><p>For example, the development of reusable rocket technology by SpaceX and Amazon, who could not match NASA supplier budgets, has opened huge new opportunities in space travel and exploration. Many are quick to call this innovation, but I believe it is often just the resourcefulness of a highly motivated owner and team, who never give up in the face of a survival challenge.<p>I’m often asked for the secret to this attribute in developing a team culture. I believe it all starts with you as a leadership role model, and the mindset and expectations you broadcast to your team. Here are a selection of the key elements that must be included in this mindset and delivery:<ol><li><p> <b>Incent rather than discourage a change mentality.</b> The biggest constraint is most businesses is a “business as usual” culture. In an effort to stabilize the system and make processes repeatable, team members are often penalized for even suggesting changes. A great incentive is highlighting learning and praising change requests in front of peers.<p>Another way of encouraging change is to give team members more <a href="https://www.inc.com/peter-economy/4-powerful-mindsets-that-will-help-you-transform-company-culture-for-better.html" target="_blank">autonomy</a> to make their own decisions, without micromanagement by you or other managers. In fact, that feeling of autonomy makes everyone more productive, more loyal, and feel valued.</p></li><li><p><b>Position challenges as future growth opportunities.</b> This requires reframing problems to motivate creative thinking and finding new approaches. People respond to positives, such as new growth, versus problems implying costs and loss of customers. Foster experiments that don’t require major investments, rather than “big bang” solutions.<p>For yourself, be very sensitive to <a href="https://www.inc.com/jayson-demers/how-to-change-your-mindset-to-see-problems-as-opportunities.html" target="_blank">first impressions</a>. These first impressions tend to highlight every challenge and constraint in a negative light, rather than something that can be in all cases a positive opportunity to learn, grow, improve, or adjust for the better.</p></li><li><p><b>Share constraint info and ask team to help.</b> You won’t be doing anyone any favors by keeping resource challenges and reductions to yourself. Most teams I know will buckle down and get the problem solved and work done if they know you are all in it together. In my experience, too much money or time is a source of downfall of many new businesses.<p>Also, being <a href="https://www.inc.com/help-scout/the-benefits-of-being-completely-transparent.html" target="_blank">transparent</a> in business and open with communication breeds trust. In every business, trust is the foundation of great teamwork, especially in dealing with constraints and challenges. This also applies to key customers as well as strategic partners.</p></li><li><p><b>Solicit partners with complementary strengths.</b> Don’t hesitate to look for new business partners who can mitigate your constraints, including distributors, new channels, or even competitors with complementary products. I recommend playing to your strengths, and not trying to fix all your weaknesses without an outside alternative.<p>Key to the right partnerships is maintaining a good relationship and <a href="https://www.inc.com/natalie-nixon/5-reasons-why-collaboration-is-essential-in-today-s-business-environment.html" target="_blank">collaborating</a>. Real collaboration forces you to articulate and distill what you are great at, where you really need help with resources, and how you can make this a win-win relationship.</p></li><li><p><b>Adopt alternative business models to address challenges.</b> Many companies these days start with a single online-only purchase model, but later move to providing subscription services and freemium alternatives. Others move to retail with distributors, or add licensing and franchise alternatives. Outsourcing of manufacturing is another option.</p></li><li><p><b>Expand your thinking to add additional solutions. </b>Most businesses stay focused on their core solution until they face growth stagnation and competition. I encourage you to be proactive, even with constraints, in exploring variations on your base technology that can expand the market. Extend your reach globally with adaptations to new cultures.</p></li></ol><p>With these strategies, it may actually be productive to take resources away from certain projects, to incent innovation and thinking outside the box. Certainly, if you sense that certain teams or members are stuck in the victim stage due to a scarcity of resources, it’s time to make some changes or look at where you are failing. In all cases, a “can-do” mindset is what you must have.<p>Today every business exists in a world-wide scope of ever-increasing needs and possibilities. How quickly and effectively you respond to these opportunities, despite your own constraints, will determine your survival and success in the increasingly competitive domain of business.<p>Marty Zwilling<p>*** First published on <a href="https://www.inc.com/martin-zwilling/6-keys-to-a-resourceful-team-culture.html" target="_blank">Inc.com</a> on 09/19/2023 ***</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-12045750384890376012023-10-09T07:00:00.000-07:002023-10-09T07:00:00.132-07:007 Steps To A New Business From An Innovative Solution<p><a href="https://drive.google.com/uc?id=1LYpaLtY0n73ki6LlxhqrVxcUSl6f_zNQ"><img width="427" height="285" title="steps-to-a-new-business" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="steps-to-a-new-business" src="https://drive.google.com/uc?id=12lo79fKZ5_gNDsgY8zqSZHR2lFu0Espn" border="0"></a>Most technical entrepreneurs focus hard on building an innovative product, but forget that an elegant solution doesn’t automatically translate into a successful business. Businesses require an equally elegant business model, with the right price, messaging and delivery channel to the right target customers to keep the dream alive and growing.<p>Defining the right business model requires the same diligence as designing the right product, but the approach and skills required are different. That’s why investors acknowledge that two co-founders are often better than one -- with one focusing on the technical solution, and the other focusing on defining and building the business model. These two jobs need to be done in parallel.<p>This dual-leadership approach would have avoided the frustration I felt in a startup a few years ago where beta customers loved our software solution as a free prototype, but we couldn’t sell one in the first few months for a price that seemed reasonable for all our work and innovation. The founder had simply not done the work to validate a price and customer segment.<p>In the investment community, this work is called proving the business model. It starts with validating a business opportunity (a large customer segment willing to pay money to solve a real problem), in much the same way as your proof of concept or prototype validates your technical solution. Here are seven steps I recommend for establishing the right business model:<p><b></b><ol><li><b>Size the value of your solution in the target segment. </b>Customers often complain that existing approaches are not intuitive or integrated, but old solutions may be familiar and locked in. Estimate your costs, including a 50 percent gross margin, as a lower bound on a price. Products too expensive for the market won’t succeed, and prices too low will leave you exposed. Match with competitor prices and market demographics.</li></ol><p><b></b><ol start="2"><li><b>Confirm that your product or service solves the problem. </b>Once you have a prototype or alpha version, expose it to real customers to see if you get the same excitement and delight that you feel. Look for feedback on how to make it a better fit. If it doesn’t relieve the pain, or doesn’t work, no business model will save you.</li></ol><p><b></b><ol start="3"><li><b>Test your channel and support strategy. </b>Now is the time to pitch the entire business model to a group of customers or a specially selected focus group. This is not just a product pitch, but must include all elements of your pricing, marketing, distribution and maintenance. Here again is your chance to make pivots for almost no cost.</li></ol><p><b></b><ol start="4"><li><b>Talk to industry experts and investors. </b>A small advisory board of outside people with experience in your domain can give you the unbiased feedback you need, as well as connections for setting up distribution and sales channels. It’s also valuable to talk to potential investors for their views, even if you are bootstrapping the effort.</li></ol><p><b></b><ol start="5"><li><b>Plan and execute a pilot or local rollout. </b>Good traction on a limited rollout is great validation of a business model. It allows you to test costs, quality and pricing in a few stores or a single city, with minimum jeopardy and maximum speed for recovery and corrections. Save your viral campaign and major inventory buildup for later.</li></ol><p><b></b><ol start="6"><li><b>Focus on collecting customer references. </b>Give extra attention to those first few customers, and ask for publishable testimonials and word-of-mouth support in return. If you can’t get their support, even with your personal efforts, take it as a red flag that the business will probably not scale at the rate you projected.</li></ol><p><b></b><ol start="7"><li><b>Target national trade shows and industry association groups. </b>You need positive visibility, credibility and feedback from these organizations as a final validation of your business model, as well as your product model, in the context of major competitors. This may also be a great source for leads as a key part of that final rollout and scale-up effort.</li></ol><p>Your business model can be a better sustainable competitive advantage than your product features, or it can be your biggest risk exposure. Too many of the business plans I see are heavy on competitive product features, but light on business model details and innovations.<p>If you or someone on your team hasn’t spent at least the same effort on the business model as on the product or service, you are only half prepared for the real world of business today. It’s hard to win by doing half the job, especially if that is the easier half.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-82738250610962428492023-10-08T07:00:00.000-07:002023-10-08T07:00:00.145-07:008 Expectations Of Investors Who Risk Their Own Money<p><a href="https://drive.google.com/uc?id=1_xh0gO2ZAJgEZ7i-O1s_JZhwi3Lv9WMW"><img width="433" height="298" title="MoneyMatters-angel-investors" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="MoneyMatters-angel-investors" src="https://drive.google.com/uc?id=1SyGirROPdQfjEPAIWEaDCtkC1MLTZqUR" border="0"></a>Most entrepreneurs have found by now one or more of the many popular <a href="http://www.crowdfunding.com/">crowdfunding sites</a>, and have the name and contact information for at least one of the big <a href="http://www.entrepreneur.com/vc100">venture capital firms</a>. But many have no insight or connections to the ethereal angel investment community, which In the U.S. contributes more than $25 billion to fund 70,000 startups every year.<p>In fact, there are a few key sites to help you find angels, including <a href="https://angel.co/">AngelList</a> and <a href="https://gust.com/">Gust</a>, but these don’t tell you very much about how angels work, and how to find the right ones for your startup. As an active angel investor, I can tell you what doesn’t work is broadcasting your idea description to flocks of angels, hoping that one will swoop down to anoint you with funding.<p>A better approach is to first understand who these people are, why and how they invest, and then focus on the ones who are the best match for your particular startup stage, location and industry. Here are eight key insights that will help you find a productive match:<p><b></b><ol><li><b>Angels want equity ownership, not causes. </b>By definition, angels are accredited investors, who invest their own money for a percentage of the business. Each has met legal securities minimums for net worth and professionalism, to reduce the risk to entrepreneurs. Their realm fits between crowdfunding and venture capital sources.</li></ol><p><b></b><ol start="2"><li><b>Most share expertise as well as money. </b>Angels are typically current or former entrepreneurs who want to bring more than money to your startup. They prefer local opportunities where they can meet and work face-to-face with your team. Thus, angel investments from across the country or internationally are rare.</li></ol><p><b></b><ol start="3"><li><b>Individual investments are limited to less than $100,000. </b>Groups of angels may syndicate multiple individual amounts, but if your total request exceeds $1 million, you need to focus on the venture capital alternatives. On the other end of the spectrum, crowdfunding or “friends and family” amounts might be as low as a few dollars.</li></ol><p><b></b><ol start="4"><li><b>Angels prefer strong teams to big ideas. </b>That means you need to lead with your credentials, rather than your disruptive technology. Warm introductions from common friends are even better, so networking with potential peers and future investors is highly recommended well before it’s time to ask for money.</li></ol><p><b></b><ol start="5"><li><b>Your pitch and business plan are important. </b>Perhaps you can get money from friends and crowdfunding with no plan, but angels look for the extra discipline and effort demonstrated in a written plan. Make sure these cover your business model and exit strategy, so the angels see how both of you will make a reasonable return.</li></ol><p><b></b><ol start="6"><li><b>Opportunity sizing and financial projections must be credible. </b>Every investor likes to see opportunities that are large, with double-digit growth. To be fundable, fifth year revenue projections need to be in the $20-$100 million range. Larger numbers are not credible, and smaller ones may make a great business, but won’t attract angels.</li></ol><p><b></b><ol start="7"><li><b>Avoid risky or questionable business domains. </b>Don’t expect angels to invest in work-at-home schemes, gambling sites or debt-collection type business proposals. Other notoriously risky or specialized businesses usually avoided by angels include brick-and-mortar retail, restaurants, telemarketing and consulting.</li></ol><p><b></b><ol start="8"><li><b>Early stage research and development won’t excite angels. </b>Every angel looks to scale the business after you have funded product design, perhaps with friends and family. Angels need to see a proven business model, with a working prototype and preferably a real customer or two. Look to grants and strategic partners for seed funding.</li></ol><p>Above all, remember that angels are really business people, just like you and me. They expect you to always show integrity and respect for their position, just as they respect yours, since they were likely once in your situation. They probably won’t respond well to large egos, failure to do your homework or pressure tactics.<p>Persistence and passion are seen as virtues by angels, so rejection should be only a temporary setback. The common response of “come back when you have more traction” means exactly that. <p>But before you return to the same angel, remember there are more than 250,000 others in the U.S. alone. That’s the real reason that more startups get funded this way than most entrepreneurs realize.<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-44173584156209888352023-10-07T07:00:00.000-07:002023-10-07T07:00:00.145-07:0010 Strategies For Finding More Work Hours In Your Day<p><p><b></b></p><p><a href="https://drive.google.com/uc?id=1_GcgAuty1Ku570aMXshAfBxI0j9gATzP"><img width="314" height="349" title="time-management" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="time-management" src="https://drive.google.com/uc?id=1UUNL8ZKJco394gLl3oZTkZrGb_jsiEx9" border="0"></a>Every entrepreneur I know can’t find enough hours in a day to do the good things they want, and yet they often find themselves saying <i>yes</i> to new requests. Perhaps because they are optimists by nature, or they just hate to disappoint others, they end up hurting their health, credibility, and effectiveness by not being able to deliver on everything they promise.<p>In addition to saying <i>yes</i> too often, some entrepreneurs under pressure say <i>no</i> poorly, by attacking the requestor or by avoiding any definitive response. Either of these approaches always make a difficult situation worse, often leading to guilt or a later accommodation.<p>A successful entrepreneur must be accountable for all commitments, and manage expectations to make this possible. So here are some tips I have learned over the years from strong leaders that can help you say <i>no</i> without damaging current business relationships or future opportunities:<ol><li><b>Establish boundaries and honor them for all to see.</b> Let your constituents know your priorities and limits. Don’t continually break your own rules about when you are available or what requests are acceptable. Your actions must match your words, so don’t say <i>yes</i> when you mean <i>no</i>, or hope to squeeze out later.</li></ol><p><b></b><ol start="2"><li><b>Ask for time to check your calendar.</b> It’s acceptable business practice to review your schedule, or converse with other principals, before committing to an answer. Don’t respond with a quick <i>yes</i> that you can’t deliver, or a quick <i>no</i> that will ruin a relationship. In all cases, it’s important to commit to a date or time for a final <i>yes</i> or <i>no</i>.</li></ol><ol start="3"><li><b>Give credence to your initial instinct.</b> Recognize that your brain and your body often register information that is more accurate than an optimistic emotional reaction, or a negative reaction after a long hard day. Take a deep breath, clear your mind of any external distractions, and analyze your gut reaction before providing any answer. </li></ol><ol start="4"><li><b>Voice both the pros and cons to a trusted cohort.</b> Speaking the considerations out loud will help you make sure you understand the full implications of either a <i>yes</i> or a <i>no</i> answer. Every <i>yes</i> answer increases your workload, and every <i>no</i> answer may cut off an opportunity you need down the road. Talking it out also buys you time.</li></ol><ol start="5"><li><b>Explore the possibility of a reciprocal favor.</b> This will help the requester understand the impact of the request, and potentially reconsider. In other cases, you may actually get back more than you give up. Every <i>yes</i> should be a win-win proposition, just like strategic partnerships can bring huge growth to both businesses, despite the work.</li></ol><ol start="6"><li><b>Explain your constraints before saying <i>no</i>.</b> Rejection without giving a context implies an unreasonable request or a problem with the requestor. People making a request may not understand your budget limitations, current workload, or competitive pressures. In this context, you can also make an encouraging statement about future requests.</li></ol><ol start="7"><li><b>Say <i>yes</i> to the person and <i>no</i> to the task.</b> Make sure the requestor understands first how positively you feel about them, despite the fact that the requested task cannot be accommodated in your current workload, strategy, or other boundary. Requestors are then less likely to be left with the impression that your rejection is a personal affront.</li></ol><ol start="8"><li><b>Sandwich your <i>no</i> between two positives.</b> Make your answer more palatable with a positive explanation. For example, if your partner asks you to cover a conference, but you have development deadlines at risk, explain these commitments (first yes), how they lock you in town (no), and finish by confirming your focus to an on-time product (second yes). </li></ol><ol start="9"><li><b>Defer the decision to a better environment.</b> Ask for the opportunity to discuss the request when you can give the requestor your full attention. When you are in the normal chaos of the startup day, both parties can be easily misinterpreted. Pay attention to body language and tone that often make the negative response more difficult to receive.</li></ol><ol start="10"><li><b>Make sure your words are non-defensive but clearly stated.</b> No one wins when a requestor reads your softly spoken <i>no</i> as a <i>yes</i> or a <i>maybe</i>. Long detailed explanations are usually read as defensive or confrontational. The answer should be strong and non-emotional. Just say <i>no</i> clearly, and smile as you say it.</li></ol><p>You don’t have to be viewed as a <i>yes</i> person to be viewed as a leader. In fact, if you look at the leaders around you, they are not afraid to say <i>no</i> to the conventional wisdom, and they gain respect for doing it. They have learned the art of saying <i>no</i> with the same conviction and passion they use in saying <i>yes</i>. That’s the best way to change the world and save yourself, so start today.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-43902030489691460462023-10-06T07:00:00.000-07:002023-10-06T07:00:00.149-07:004 Keys To A Successful Integrity Check With Investors<p><a href="https://drive.google.com/uc?id=1_BkBotLHdiY3ApykfZX_Iz23jAoCSZzf"><img width="402" height="251" title="startup-due-diligence-success" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="startup-due-diligence-success" src="https://drive.google.com/uc?id=1ncr6aoINQNULNh0--IY0nyY1W_ZjFTKC" border="0"></a>For the elite startups and entrepreneurs who manage to attract the investor they dream of, and survive the term sheet negotiation, there is still one more hurdle before the money is in the bank. This is the mysterious and dreaded due diligence process, which can kill the whole deal. In reality, it is nothing more than a final integrity check on all aspects of the business and the team.</p><p>Some entrepreneurs do very little to prepare for due diligence, assuming all the talking has already been done, and the business plan and results to-date tell the right story. Others schedule exhaustive training sessions for everyone on the team, including showcase customers, to make sure that everyone paints a consistent picture. My best advice is to stick to the middle ground.<p>The Founder needs to remember that meetings up to this point have been primarily off-site, with staged demos, and managed personally by the CEO or a small team. Due diligence always involves on-site visits, informal discussions with any or all members of the team, vendors, and good customers as well as bad.<p>If there are conflicts within the team, or differing views of the strategy, or evidence of missing processes and tools, the investment process will likely be terminated. Even if the entrepreneur feels that all is well, it’s well worth the effort to prepare with the following actions:<ol><li><b>Make sure the whole team is up-to-date on the plan. </b> That might start with the CEO giving the investor pitch to the whole organization, and distributing the current business plan document to everyone. Make sure all business processes are documented and integrated. If everyone has a different view of reality, you have no reality.</li></ol><ol start="2"><li><b>Take time to review and resolve any personnel distractions.</b> You need to brief the investor early if there are pending changes that have to be made, or conflicts that may become apparent during the due diligence process. Make sure everyone accurately posts their role with your startup on social media profiles, resumes, and references.</li></ol><ol start="3"><li><b>Communicate what is happening and why to everyone.</b> Don’t let the due diligence process be a surprise to the team. Make yourself available to answer any questions, show your enthusiasm, and explain both the positives and negatives of the external investment process.</li></ol><ol start="4"><li><b>Visit reference customers, partners, and vendors.</b> Use this opportunity to validate their satisfaction and support for your company and your solution. If you find open issues that can’t be immediately resolved, be sure to proactively communicate these to investors, with an action plan, rather than hope they won’t be found.</li></ol><p>Based on the size of the investment, and the runway available, the due diligence process can take several weeks, or even a couple of months to complete. In any case, before the process starts on your startup, you should be doing your own reverse due diligence on the investor, as outlined in this <a href="http://www.forbes.com/sites/martinzwilling/2014/09/09/size-up-your-investors-before-accepting-their-money/">article</a> I published a while back.<p>For reference, here is a quick summary of key elements which most investors include in their due diligence process:<ul><li><b>Key personnel review.</b> In all cases, an investor will ask to talk to all key players, and will likely follow-up by calling references and prior associates to verify background, commitment, and experience. Since investors tend to invest in people, more than the idea, the personnel review is normally the highest priority item.</li></ul><ul><li><b>Status of the solution.</b> Here investors are looking for feature problems or quality issues on the current product. A hard look will be taken at the technology maturity, the current development progress, and customer satisfaction with early product shipments. In addition, manufacturing and inventory levels will be reviewed.</li></ul><ul><li><b>Review of opportunity and segmentation.</b> A key criteria for a good investment is a large opportunity with double-digit growth. This should be a validation of prior assessments, based on any recent changes in trends, economic conditions and customer feedback data.</li></ul><ul><li><b>Traction in the marketplace.</b> A smart investor will take an independent final reading in the market on barriers to entry, active competition, demographics, and price sensitivity. Sales and distribution channel activity will be analyzed, as well as cost of customer acquisition, to make an independent assessment of your financial projections.</li></ul><p>The key theme for a successful due diligence is full disclosure and no surprises before or after the commitment. If more marriages were subjected to the same rigor, the divorce rate would likely not be in the current fifty percent range. In business as in other relationships, people on the team that have to be above reproach, committed, and working on the same page.<p>Startup equity investments imply a long-term business relationship, lasting an average of five years. During that period, it is very difficult for either party to get out of the deal, since there is no public market for the stock, and business divorces normally mean bankruptcy. It’s worth your time to do a little extra work here, and make the honeymoon phase a win-win one for both sides.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-3674614075920845332023-10-04T07:00:00.000-07:002023-10-04T07:00:00.147-07:006 Ideas To Recover From Business Resource Challenges<p><a href="https://drive.google.com/uc?id=15fn6ZHM9u73P3IWUP3sRM1koBdXeFwAN"><img width="380" height="317" title="resource-constraint-tips" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="resource-constraint-tips" src="https://drive.google.com/uc?id=16izxcicxKEBh6jBuaom3wPPFyAIqFpJh" border="0"></a>Most entrepreneur that fail are quick to offer a litany of constraints that caused their demise – not enough money, time, customers, or support from the right players. Ironically, as a startup investor and mentor, I have seen too many failures caused by just the opposite – too much money spent too soon, taking time to get product perfection, and assuming customers will wait. <p>In reality, resource constraints should be seen by startups a competitive advantage, by forcing them to develop new markets, and to think differently and act differently than existing players. The result, called resourcefulness, allows entrepreneurs to create opportunities in the face of scarcity. It allows them turn resource constraints into stunning new businesses.<p>In this context, constraints might more reasonably be seen as beautiful by entrepreneurs, just as they are described in the classic book, “<a href="http://www.amazon.com/Beautiful-Constraint-Transform-Limitations-Advantages/dp/1118899016" target="_blank">A Beautiful Constraint</a>,” by renowned marketing consultants Adam Morgan and Mark Barden. I like the way the authors outline how to see and turn constraints from punitive to liberators of new possibilities and opportunities, as follows:<ol><li><b>Look for ways to improve productivity.</b> Every startup needs to think hard daily about what problem or challenge is holding back progress, what really matters today, and what entirely new possibilities exist. How many times have you actually made up work to keep an idle person busy? Startups funded by rich uncles rarely think about productivity.</li></ol><ol start="2"><li><b>Rethink or reframe the challenge.</b> Constraints are the best motivators for finding new approaches to solving a problem, building a product, or crafting an effective marketing campaign. Perhaps success itself needs to be redefined or reframed. Every entrepreneur needs to avoid locked-in ways of thinking. Let your constraints drive innovation.</li></ol><ol start="3"><li><b>Find the benefit in subtraction.</b> Isn’t it amazing how often all the necessary work gets done, even when resources are removed or the budget is reduced in an ongoing project? The benefit of working harder and more efficiently is success despite constraints. Subtraction leads to simplicity, better usability, and easier education of your customers.</li></ol><ol start="4"><li><b>Find new ways to augment.</b> The fastest way to grow your business is to find partners who can amplify or sell what you already have, and you can sell what they have. That’s a win-win relationship, which almost always takes less time and money than building something new. Adding priced services is another way to augment a product business.</li></ol><ol start="5"><li><b>Create new kinds of solutions.</b> Using the solution technology that you already have, in new ways, takes fewer resources than inventing or sourcing new technologies. That’s why computer makers offer desktops, laptops, notepads, and now even smartphones. Without constraints at the forefront, computers tend to get complex and more expensive.</li></ol><ol start="6"><li><b>Build entirely new business models and systems.</b> Pricing constraints and the need to attract consumers drove the invention by startups of the freemium model, subscription model, razor-blade model, and others. Today we see whole new ecosystems and opportunities driven by environmental constraints, safety concerns, and social issues.</li></ol><p>Some entrepreneurs never get past the <i>victim stage</i> for constraints. They see every constraint as an inhibitor to their ability to realize their ambition, and an excuse for not persevering. Others proceed to the <i>neutralizing stage</i>, which means they tackle problems as they are encountered, and get some satisfaction by finding a way around each one. It’s still a hard road to success.<p>The smarter entrepreneurs jump quickly to the <i>transformer stage</i>, where constraints are proactively or responsively used to prompt wholly different and potentially breakthrough new approaches and solutions. They even impose constraints on themselves and their team to stimulate better thinking and new possibilities. Then they size the potential in the constraint.<p>We live in a world of over-abundance of choices, yet seemingly ever-increasing constraints, driven by a scarcity of time, expertise, and money. How entrepreneurs respond to these will become a larger and larger determinant of startup growth, competitive position, and success. What is your resource constraint mindset and action plan today?<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-36875648453617221062023-10-02T07:00:00.000-07:002023-10-02T07:00:00.139-07:006 Funding Resources For Ideas Needing More Validation<p><a href="https://drive.google.com/uc?id=11FkTJbR7YGWZjFladAwivQ8IV7PeA-aB"><img width="429" height="286" title="funding-for-research" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="funding-for-research" src="https://drive.google.com/uc?id=1J3dl4NWxqRZB_M55nIxnd4EkZUKnG0r8" border="0"></a>Angel investors and venture capitalists are looking for startups with real products and a proven business model, ready to scale. Yet I still get too many business plans that clearly are looking for money to do research and development (R&D) on a new and unproven technology. If you need funding for these early stage activities, I have some suggestions on better strategies to follow.<p>The first is to be more precise in your definition and understanding of where you are, and how the money will be spent. If this is your first foray into the entrepreneurial arena, with no track record in business or technology, your best and perhaps only supporters will be that class of investors known in the trade as <i>friends, family and fools</i> (FFF). They believe in you above all else.<p>Beyond these believers, you need to match your credentials and interests with the multitude of public, academic and government organizations that proclaim to foster research and early development, to satisfy the long-term needs of the people or organizations they support. In this context, there are at least six stages often included in the scope of R&D to narrow your focus:<ol><li><b>Search for new technologies. </b>This early stage is often called <i>basic research</i>, well before any specific commercially viable products might be envisioned. Here your options are limited primarily to large organizations with deep pockets, including <a href="http://www.grants.gov/" target="_blank">government grants</a>, universities and large enterprise sponsors searching for disruptive technologies. </li></ol><ol start="2"><li><b>Technology pilots. </b>This is the transition stage from basic research to <i>applied research</i>. Applied research is still primarily scientific study, seeking to solve practical problems, but doesn’t yet focus on a commercial product. Funding sources for this stage extend from grants to large private fund incubators, such as the IBM Watson initiative a while back. </li></ol><ol start="3"><li><b>Commercial product prototypes. </b>Funding for commercial product prototypes is still R&D in the eyes of venture capital investors, but in business areas with large opportunities, this activity will catch the eyes of specialized angel investors. It’s still considered high risk for investment, since manufacturing and quality issues are likely. </li></ol><ol start="4"><li><b>Product verification and clinical trials. </b>These days, almost every new product is not deemed scalable until it has been certified as meeting a multitude of quality and agency standards, including the Environmental Protection Agency (EPA), Food & Drug Administration (FDA) and Underwriters Lab (UL). Specialized VCs start to jump in at this stage. </li></ol><ol start="5"><li><b>Business commercialization. </b>Product development at this stage is the process of scaling up for manufacturing and marketing rollout. The technology is now embodied in a solution that can be replicated to reliably solve a real customer problem. Your fundability with investors now depends primarily on the execution capability of your team. </li></ol><ol start="6"><li><b>Expanding the product line. </b>Even for mature startups, there is always a need for further product development and research to compete and diversify the business, and investors understand this. But to prevent confusion with basic R&D, these costs should never be called out the major category in your <i>use of funds</i> statement to investors. </li></ol><p>While all forms of technology research and development will always be required, entrepreneurs need to understand that the funding for these efforts comes from many different sources, depending on the stage. Business equity investors are buying a portion of your business, so they are looking to fund a specific business with a specific offering, not a generic technology.<p>Don’t waste your time and energy talking to angels and VCs about technology funding when you could be focused more productively on grants, private funds and future business partners. Business investors and customers want to hear about solutions, and tend to back away from technology, until it is proven.<p>Fortunately, in many attractive business domains, including mobile software, Internet apps and ecommerce, the cost of product development is at an all-time low. Developers are using powerful technology tools to build mobile apps and websites for a few thousand, rather than millions of dollars. Thus the best entrepreneur strategy for funding is to build solutions, not technology.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-70736364548411734602023-10-01T07:00:00.000-07:002023-10-01T07:23:50.163-07:0010 Strategies To Find That Rare Complementary Partner<p><p><b></b></p><p><a href="https://drive.google.com/uc?id=1JQaPklkhrF7EFCAjP45jKic-edZXBxNP"><img width="427" height="242" title="handshake-man-hands" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="handshake-man-hands" src="https://drive.google.com/uc?id=1Mk05hQdV9-rKA7T8F_CnWOOUI7bajR2X" border="0"></a>A common challenge faced by every entrepreneur is that they don’t have the bandwidth, interest or skills to do everything that is required to build their startup. Of course, they can outsource part of the work or hire employees, but that approach means more time and money to manage the work, which they don’t have. The right answer is to find a co-founder with complementary skills.<p>Two heads are always better than one in a startup. Both need to share the passion, long-term opportunity and risk, rather than just getting paid to do a job, win or lose. Investors worry about a single entrepreneur getting overloaded, disabled or led astray, with no balancing and supporting partner. The challenge is how to find that elusive perfect-fit partner.<p>Don’t expect someone else to find the partner for you, since it’s really very much like finding a life partner. Your version of the right chemistry, similar values and passion for your solution probably won’t match mine. Yet from my own years of experience in the startup community, here are ten common steps that have worked for other entrepreneurs:<ol><li><b>Write a "job description" for that ideal partner. </b>Your best friend, spouse or a family member is the least likely candidate, so don’t start there. Take a hard look at your own business strengths and weaknesses, and write down what partner skills and experiences would best complement yours. Seek input from seasoned investors and peers. </li></ol><ol start="2"><li><b>Network to find co-founders just as you network to find investors. </b>In fact, many of the same venues, such as industry conferences, entrepreneur forums and local business organizations are useful for both. Online, it pays to join entrepreneur groups on LinkedIn and Facebook, and interact with people who meet your criteria on Twitter. </li></ol><ol start="3"><li><b>Join online "matchmaking" sites for business partners. </b>Co-founders are business partners for startups, so don’t be afraid to join and explore sites such as <a href="https://www.techstars.com/communities/startup-weekend">StartupWeekend,</a> <a href="https://angel.co/company/startupagents">StartupAgents</a> and <a href="https://www.cofounderslab.com/">CoFoundersLab</a>. Also start a discussion on the wealth of business blogs frequented by entrepreneurs, where you can make your interests known. </li></ol><ol start="4"><li><b>Attend local university entrepreneur activities. </b>University professors and student leaders always know a host of top entrepreneurs, alums or staff members who are just waiting to find the perfect match for their own interests, skills and entrepreneurial ideas to change the world. Support local activities and you support yourself. </li></ol><ol start="5"><li><b>Look for a partner from a different background. </b>In today’s global economy, your ideal partner may be half way around the world, from a different geography and business culture. Every startup infrastructure is flush with smart people from all cultures, many of whom may be ready and able to bring new energy and creativity to your startup. </li></ol><ol start="6"><li><b>Follow up with associates from prior job assignments. </b>If you were impressed with someone’s drive and capabilities in a prior work role, now is the time to connect again to check their interest and availability, or recommendations they may offer. Use caution to avoid employer conflicts of interest and non-compete clauses. </li></ol><ol start="7"><li><b>Relocate to a more likely geography. </b>Finding a high-tech co-founder in the middle of Kansas may be a long search. There’s a reason that Silicon Valley and Boston are hubs for high-tech startups. These areas may have not just your co-founder, but also the robust ecosystem your startup needs for investors, programmers and customers. </li></ol><ol start="8"><li><b>Explore candidate common interests outside of work. </b>Co-founder chemistry and interest matches are best explored outside the office. Find some common hobbies or sports to get acquainted before giving away half your company. Business partnerships are long-term relationships, so take your time getting acquainted before closing the deal. </li></ol><ol start="9"><li><b>Jointly define major milestones and key metrics for the startup. </b>This process is the ultimate test of a true shared vision and working style. Building a startup is hard and unpredictable work, and people get busy, so now is the time to jointly commit. If you can’t work as a team now and easily agree, it probably won’t happen at all in the future. </li></ol><ol start="10"><li><b>Negotiate and document roles early, including who is the boss. </b>No matter how equal you all are, there is only room for one at the top to make the final decision on hard issues. Especially when everything feels good today, don’t be hesitant to ask the hard questions of each other. There can be only one chief executive officer. </li></ol><p>For the success of your startup, finding the right co-founder is one of the most important things that a new entrepreneur needs to do. There are so many challenges in a startup that no founder should try to go it alone. When you find someone that works, I’m betting you will be together on your next startup, and the one after that. Great teams persevere, and success breeds success.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-68098513368896965762023-09-30T07:00:00.000-07:002023-09-30T07:00:00.136-07:008 Personal Objectives That Should Drive A New Startup<p><a href="https://drive.google.com/uc?id=1gF2bb8QICGk3oOcaDKdqVRJj67STenha"><img width="417" height="245" title="Free public domain CC0 photo." align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="Free public domain CC0 photo." src="https://drive.google.com/uc?id=1kCFIhF0m8xvK-AC5lS8DA4yaJEIfL3Pl" border="0"></a>As a business advisor, I meet many business professionals and aspiring entrepreneurs who are <a href="https://www.inc.com/lolly-daskal/want-to-be-your-own-boss-heres-what-you-need-to-know.html" target="_blank">anxious to be their own boss</a>, or have an innovative idea to start or acquire a new business. I have to tell each of you that starting and growing a new business is a <a href="https://www.inc.com/jeff-haden/8-habits-of-people-with-exceptional-determination-and-willpower.html" target="_blank">long hard road</a>, but can be very exciting and satisfying if you find the right match, and do your homework before you start.<p>Over time, I have assimilated a list of high priority considerations that I recommend to everyone starting down this path, to mitigate the pain and cost of false starts and failed efforts along the way. Unfortunately, in my experience as an angel investor, about <a href="https://www.inc.com/maya-hu-chan/90-percent-of-companies-fail-to-do-this.html" target="_blank">ninety percent of new business efforts fall short</a>, leading me to believe that many of you may be better off staying where you are.<p>In any case, here are the steps I recommend for all, even if you have already convinced yourself that the new role and opportunity is attractive, and the risks are minimal:<ol><li><p><b>Align with your personal goals and interests. </b>If your mission is to change the world or help the disadvantaged, another dating site or online gambling may not be for you, no matter how financially lucrative. Also, initiating a startup is quite different from taking over a thriving business, where the focus is on repeatable processes and quarterly profits.<p>For example<b>, </b>when Yvon Chouinard founded<b> </b><a href="https://www.patagonia.com/one-percent-for-the-planet.html" target="_blank">Patagonia</a>, a successful outdoor products company, his real goal was building safe products to help the environment. He also still gets excited to donate one percent of sales to environmental groups around the world.</p></li><li><p><b>Document and communicate a solid business plan.</b> The days are gone when you could just declare your plan with such passion that qualified team members and investors will line up to jump in with both feet. Plan to spend a couple of months on this effort, and then allocate at least 50 percent of your time presenting and selling it the first year.<p>The real value of a <a href="https://www.inc.com/articles/201105/business-plan-financials.html" target="_blank">written business plan</a> is that it forces you to think through all the elements of a new business in specific terms, to balance your focus on aspects you love, perhaps technology, and not overlook the ones you dislike, such as financials and hiring.</p></li><li><p><b>Select your destination to land after the start</b>. Some people love starting companies, while others enjoy scaling them. You should pick an idea that you can hand off quickly to investors, or one you can grow as a legacy for your family. Innovative technologies require iterative development, while other ideas are primarily marketing and financial.</p></li><li><p><b>Assess who you can get for value and mentoring. </b>You need advisors to help you tackle tough challenges and be advocates for your potential and progress. These may evolve from an advisory arrangement to a board of directors. These directors add value, but they also become your boss, and critics for everything you do to grow and survive.</p></li><li><p><b>Be ready to network for investors and team members.</b> You may start a business alone, but you need an employee team plus investors, vendors, and partners to scale the business. These relationships must be nurtured over time, balanced against your personal life, and grow to include major customers, competitors, and potential acquirers.</p></li><li><p><b>Acquire skills to implement good business processes.</b> Every sustainable business has repeatable processes and management systems in place to assure smooth growth and vitality. That means you need to be open to continuous learning and keeping up with change in your area. There is no business where you can just relax and enjoy the spoils.</p></li><li><p><b>You make decisions from data, or from the gut. </b>You may be comfortable driving your future based on vision and emotion, or have long been a stickler for details and metrics. Disruptive technologies require the vision and willingness to take a big leap, whereas incremental changes to existing competition must be managed with data and finesse. </p></li><li><p><b>Devise a strategy for your long-term role or exit. </b>Many business owners get pushed out of their business as it matures, while others plan for their own exit to start another company or retire to enjoy family life. Be proactive to set up the required organization, groom the right people, and enjoy the success of your labor, rather than be disappointed.</p></li></ol><p>Overall, I’m happy to report that new business owners and entrepreneurs who do their homework are <a href="https://www.inc.com/jessica-stillman/research-entrepreneurs-are-happier-and-healthier-than-employees.html" target="_blank">happier and healthier</a> than other business professionals. Even if you don’t decide to leave your current position, I encourage you to follow the same principles in your current role, including finding the work you love, striving for a higher purpose, and building a plan for a better future.<p>Marty Zwilling<p>*** First published on <a href="https://www.inc.com/martin-zwilling/8-priorities-to-consider-before-deciding-to-start-your-own-business.html" target="_blank">Inc.com</a> on 09/14/2023 ***</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-83479546784931433442023-09-29T07:00:00.000-07:002023-09-29T07:00:00.135-07:006 Lifestyle Aspirations For Starting Your New Venture<p><a href="https://drive.google.com/uc?id=1_10kQE0aSqj9qJp6hgK5T0z_UHVZBARh"><img width="395" height="296" title="summer-vacation-beach" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="summer-vacation-beach" src="https://drive.google.com/uc?id=1hIMKuZRsur44hhSvEUYy7UmkjGU6ObFo" border="0"></a>Being an entrepreneur seems to be one of the most popular lifestyle aspirations these days. According to most definitions, anyone who starts a business is an <a href="http://en.wikipedia.org/wiki/Entrepreneurship" target="_blank">entrepreneur</a>, but most people don’t realize there are many startup types out there, and picking the wrong one can be just as disastrous as being stuck in a cubicle at work, or doing things with no interest and no skills.<p>In my view, this mismatch of motivation to your business model is the primary reason that <a href="https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp" target="_blank">90 percent</a> of startups ultimately fail, and a shockingly high <a href="http://www.businessinsider.com/what-do-you-do-when-you-hate-your-job-2010-10" target="_blank">80 percent</a> of employees are dissatisfied at work. Thus it behooves every entrepreneur to pick the startup model that best matches their real motivation. Here are six considerations to get you started on the right startup:<ol><li><b>Invented a solution to a painful existing problem. </b>You have proven that you can create an innovative product, but creating a business is a whole new challenge. The old adage of “if we build it, they will come” doesn’t work anymore. Every business needs marketing, distribution, a positive revenue model and intellectual property to survive. You won’t be a successful and happy entrepreneur if you aren’t motivated to build a business. </li></ol><ol start="2"><li><b>Aspire to be in control of your own domain. </b>There are many business types that don’t assume any new invention or service, such as franchising, multi-level marketing (MLM) or freelancing. These do require business management and execution skills, as well as the discipline to manage yourself. Just don’t look for an investor to fund your efforts here, since investors will likely be tougher bosses than corporate managers. </li></ol><ol start="3"><li><b>Looking for a path to dramatically increase your income. </b>This is a tough one, since most of the overnight startup successes I know took six years or more. Franchises and consulting businesses have an earlier and higher success rate, but typically have a lower return. With new products and services, you can hit the jackpot, but many struggle or fail. </li></ol><ol start="4"><li><b>Trying to fulfill family or peer expectations. </b>Don’t try to be an entrepreneur just to prove something to a loved one, friend or sibling. There are no business types that work well here, except maybe an existing family business that is already successful. If you must proceed, at least pick something you love, or a social cause to benefit society. </li></ol><ol start="5"><li><b>Seeking a new career challenge to follow an existing success. </b>If you have a comfortable position from a previous success, and are not looking to retire, a great business is to share your expertise and experience through consulting. Another great learning opportunity and win-win deal is to co-founder a new high-tech startup team. </li></ol><ol start="6"><li><b>Fulfill your legacy and responsibility to society. </b>Environmental startups and non-profit businesses are just as challenging as the next disruptive technology startup, and just as likely to change the world. Leaving a personal legacy is a great motivator to switch to entrepreneurial work, if you have that passion and determination. </li></ol><p>No matter which of the entrepreneur business models you choose, don’t expect the work to be easier than a corporate job. In fact, most successful entrepreneurs would argue just the opposite. Success in any entrepreneur role requires a serious commitment, determination and learning from setbacks. Switching business models is not usually a shortcut to success and happiness.<p>I often recommend to aspiring entrepreneurs that they first take a job with another startup in the same realm as the one they envision to get some practical insight into the challenges, make contacts and learn more about their own motivations. Then take the big step of starting your own business, with fewer surprises, some good connections and likely more accumulated savings.<p>Overall, it is important to remember that happiness breeds success more often than success breeds happiness. Every aspiring entrepreneur should play to their strengths and interests, rather than listen to all the well-meaning advice you will hear from friends and experts. The exciting part about being an entrepreneur is that you can tailor the role to match your real motivations.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-1880738381913508292023-09-27T07:21:00.000-07:002023-09-27T09:52:32.516-07:008 Keys To Maximizing Your New Venture Stock Net Worth<p><a href="https://drive.google.com/uc?id=1PsnMtlDs-jfwvK_fDyrq2Qw_QPnhZGrP"><img width="388" height="265" title="Directomat_100_Shares" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="Directomat_100_Shares" src="https://drive.google.com/uc?id=1Sn_USXNHkiffRpA7aXMYmwQCevnT0sIq" border="0"></a>When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called <i>founder’s shares</i>. It’s disconcerting for most to realize that these shares are initially worth nothing, and the challenge is to get that value up as quickly as possible, without losing it just as quickly to investors, lazy partners, and taxation.<p>This is where things get technical, but the principles are really quite simple. Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork:<p><b></b><ol><li><b>Allocate founder’s stock commensurate with commitment. </b>Even though initial stock has no value or market, it is extremely valuable in dividing entity ownership between multiple co-founders, commensurate with their investment, contribution and role. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. At that time the original split makes all the difference.</li></ol><p><b></b><ol start="2"><li><b>Make sure the government waits for a stock sale to collect taxes. </b>In the U.S., every entrepreneur should incorporate early and file an <a href="http://financial-dictionary.thefreedictionary.com/Section+83%28b%29+Election" target="_blank">83(b) election</a><i></i> with the IRS within 30 days of founding the company. Failing to file, or waiting to incorporate until a first investor arrives, is a common mistake, and will lead to a nasty tax bill when you can least afford it.</li></ol><p><b></b><ol start="3"><li><b>Spread stock issuance over an earning period. </b>This is the purpose of a <i>vesting</i> schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year <i>cliff</i>). Key founder vesting should have no cliff.</li></ol><p><b></b><ol start="4"><li><b>Retain the right to reclaim stock from anyone leaving the startup. </b>To retain control, the original founder must reserve the right of first refusal to buy shares back at cost from a partner who decides to leave early or stop working. Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure.</li></ol><p><b></b><ol start="5"><li><b>Minimize your own loss of ownership as major investors contribute. </b>This is called <i>stock dilution</i> control. While new equity owners always have to get it from someone, actual re-allocation of existing shares should be based on a formula to maximize the value of your remaining founder shares.</li></ol><p><b></b><ol start="6"><li><b>Accelerate your own vesting if pushed out or the startup is acquired. </b>Don’t lose the value of stock not yet vested if your startup is bought out before the normal vesting schedule comes to a close. If new investors want to replace you as the founder early, make sure this action triggers an <i>accelerated vesting</i> clause as well.</li></ol><p><b></b><ol start="7"><li><b>Facilitate an upgrade of founder’s common to founder’s preferred. </b>Investors typically demand preferred stock to give them more control and first payouts, but these advantages can be at least partially offset (up to 20 percent) if you plan ahead. The acceptance of this option is now common, even though introduced only a few years ago.</li></ol><p><b></b><ol start="8"><li><b>Limit board seats and manage member selection criteria. </b>More board members is usually not better for the startup. Target no more than five members, with at least two being founders. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions. </li></ol><p>Every entrepreneur has heard the stories of a startup selling for millions of dollars or going public with the founder being squeezed out of all the gains. This situation only can be prevented by incorporating early, avoiding negative tax situations and managing your shares like gold. <p>Founder’s shares are just paper when you get them, and it’s up to you to turn them into a gold mine.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-48854327640476153132023-09-25T07:00:00.000-07:002023-09-25T07:00:00.134-07:008 Tactics To Highlight Your Startup For Early Funding<p><a href="https://drive.google.com/uc?id=1WHtqrOH4-oF2oVBVg02k0tOtGgk84ZYo"><img width="405" height="270" title="Free US dollar banknotes image, public domain money CC0 photo.
More:
View public domain image source <a href="https://pxhere.com/en/photo/540345">here</a>" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="Free US dollar banknotes image, public domain money CC0 photo.
More:
View public domain image source <a href="https://pxhere.com/en/photo/540345">here</a>" src="https://drive.google.com/uc?id=1R90Jhl8WOlsUI-oHM2SUlR2cBJinGjhh" border="0"></a>Many first-time entrepreneurs find themselves unable to bootstrap their startups, and also unable to find early funding at the venture capital level or even with angel investors. Their only recourse is that first tier of investors, fondly called Friends, Family and Fools. These are the only people likely to believe in newbies, with only minimal product evidence or business experience.<p>Yet surprisingly, according to statistics on the <a href="https://www.fundable.com/learn/resources/guides/investor-guide/types-of-investors" target="_blank">Fundable</a> crowdfunding site, friends and family are the major funding source for entrepreneurs, investing over $60 billion in new ventures per year, almost triple the amount coming from venture capital sources. The average amount per startup has been $23,000, usually in the form of a convertible loan, rather than an equity investment.<p>Of course, most startups ultimately need much more than this amount to scale the business, but some prior contribution from friends and family (as well as your own sweat equity) is normally expected as a qualification before professional investors will consider entering the game. Their logic is that if your family won’t invest in you, then why should they?<p>This is confirmation that the right people are always more important than the right product. Here are some key ways that you can be viewed as the right people, whether seeking an investment from friends and family, fools, or even later from professional investors:<p><b></b><ol><li><b>Ask for a specific amount to meet a specific milestone. </b>Shy introverts may be great technologists, but they won’t be entrepreneurs until they learn to nurture relationships with friends and family, practice their elevator pitch and respectfully ask for funding. Waiting for someone to give you a gift with no specific objective is likely to be a long wait.</li></ol><p><b></b><ol start="2"><li><b>Offer a formal agreement as well as a handshake. </b>The vehicle of choice is most often a convertible note, which is really a loan with a specified duration and interest, with an option to convert it to equity when professional investors come in later. Hire an attorney to make sure the terms are fair. This shows respect and professionalism.</li></ol><p><b></b><ol start="3"><li><b>Let people see your own investment and commitment. </b>Friends and family are quick to differentiate between a passionate hobby and a sincere effort to change the world. Show them that you have done your homework with industry experts and potential customers, and convince them you are not asking for charity or a donation.</li></ol><p><b></b><ol start="4"><li><b>Build a prototype first on your own time and money. </b>We all know people who are good at talking, but never seem to risk anything or find time to get started on the implementation. Every good entrepreneur needs to invest skin in the game, to show credibility and leadership to others. Investors want to be followers, not the leaders.</li></ol><p><b></b><ol start="5"><li><b>Don’t ask for more than your friends or family can afford to lose. </b>In other words, don’t be greedy, and remember that you have to live with these people even if your startup fails. Ask for the minimum amount you need to reach a significant milestone, with some buffer for the unknown, rather than the maximum amount you can possibly foresee.</li></ol><p><b></b><ol start="6"><li><b>Communicate the plan and the risks up front. </b>Remember that no investment is a gift, and everyone who buys in deserves to hear what you plan to do with their investment, and expects regular updates from you along the way. Be honest with naïve friends and trusting family members, since more than 70 percent of startups fail in the first five years.</li></ol><p><b></b><ol start="7"><li><b>Focus on well-connected friends with relevant business experience. </b>A wealthy uncle may seem like an easy mark, but a less wealthy friend who has connections and experience with startups in your domain can likely help you more than any amount of money. Remember that you are looking for success, not just money to spend.</li></ol><p><b></b><ol start="8"><li><b>Tie re-payments to revenue growth in the startup. </b>Rather than set a fixed repayment schedule, tie investment payoffs to a percentage of new product revenue, or a plan to convert the debt to equity. Use the minimum viable product concept to get revenue early, and allow market and product pivots at minimal cost.</li></ol><p>In any case, avoid the urge to think of friends and family as a last funding resort, when they should always be your first focus, and maybe the only one you will ever need. If you succeed, there is no joy like sharing the feeling and the money with people close to you.<p>But make sure you do it right, per the above recommendations, or you may be the biggest fool.<p>Marty Zwilling MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-27020895712392709072023-09-24T07:00:00.000-07:002023-09-24T07:00:00.136-07:007 Strategies To Win With The Power Of ‘We-Commerce’<p><a href="https://drive.google.com/uc?id=1xk1G18Bt4o9C5wR3Tn4uKk2pkFVNmNxd"><img width="410" height="231" title="e-commerce-win-we-versus-me" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="e-commerce-win-we-versus-me" src="https://drive.google.com/uc?id=1pXIgXLn2vKsyb5mYu_Fr8VrM1ix1-Hau" border="0"></a>In the last few years I have seen a popular business model emerging which embodies a greater focus on social and environmental responsibility, and a new requirement for trust and sharing, as well as customer and community collaboration. Companies like Airbnb, Uber, Zappos, and Whole Foods are setting the example, and leading the way in profitability and purpose.<p>In her classic book, “<a href="http://www.amazon.com/We-Commerce-Collaborate-Succeed-Sharing-Economy/dp/0399173625" target="_blank">We-Commerce: How to Create, Collaborate, and Succeed in the Sharing Economy</a>,” veteran marketing strategist Billee Howard calls this movement an economy centered on the power of “we” instead of “me.” She presents a roadmap to help us navigate this new business landscape, retaining the best of the old, while innovating the path to success.<p>In my work with many entrepreneurs and investors, I also see and support the strong movement to this business model, which can be characterized by the following attributes she outlines:<ol><li><b>Deliver value to the greater community, as well as customers and insiders.</b> Provide real value and give-back to the global community and employees, generating trust and loyalty, which in turn brings in more customers. The result is a win-win situation, with more profits for the business, satisfied customers, and happy employees at all levels.</li></ol><ol start="2"><li><b>Develop a personal-engagement extraordinary service mentality.</b> The days of mass production and commodity pricing as an asset are gone. The new customer generation wants to provide input, and wants to be treated as one-of-a-kind in their solution, delivery, and service. Being good in business now looks like an art, with creativity and innovation.</li></ol><ol start="3"><li><b>Customers and team members must be inspired, rather than pushed.</b> Companies that offer value beyond their product or service, for social and environmental good, are seen as leading the way forward to a shared future abundance. This results in a new loyalty inside the organization, as well as outside, building momentum and profit.</li></ol><ol start="4"><li><b>Grow bigger by thinking smaller in the beginning.</b> Start with a niche that you want to be known for, and knock it out of the ballpark by being the best. Narrowing your focus actually broadens your appeal and allows you to charge a premium because you are “the expert.” This give you the credibility to expand to other niches and grow the market.</li></ol><p><b></b><ol start="5"><li><b>Make innovation, creativity, and artistry your core competency.</b> This requires team members who’ve been taught to think like innovators, and a reward system that fosters creativity. It requires actively listening to customers, and a culture of change. Most of all, it requires leadership and communication from the top on purpose and shared goals.</li></ol><ol start="6"><li><b>Tell your purpose story for engagement and improved recollection.</b> Stories have been an essential driver of change and engagement throughout human history. Good stories make us think and make us feel. They stick in our minds and help us remember ideas and concepts in a way that numbers and text on a slide with a bar graph won’t.</li></ol><ol start="7"><li><b>Bridge the physical and digital worlds for your customers.</b> Make sure all relevant customer interaction data, regardless of channel or source, is immediately available at every step of the customer’s journey. Empower all team members and customers, both in-store and online, with the right information they need in order facilitate a buy decision.</li></ol><p>On top of the current pandemic, the business world has been forever altered by the growth of the world-wide Internet and global telecommunications. The customer and business universes are now globally and totally connected. This means that all customers see social needs and the environment as part of their own world, and expect these to be part of every business focus.<p>Thus, as the new sharing economy challengers continue to evolve their new business models, the traditional incumbents are being forced to change, or forced out of the marketplace. It’s time to take a reading on where you are in this spectrum. Is your company innovating a path to success, or riding an old wave into a cliff?<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-71749568562678431102023-09-23T07:00:00.000-07:002023-09-23T07:00:00.136-07:005 Keys To A Team That Balances Results With Learning<p><a href="https://drive.google.com/uc?id=1ieeUJnxrRaRm2ZdpJrVhe8LDyg1-J4Ym"><img width="414" height="297" title="balance-results-with-learning" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="balance-results-with-learning" src="https://drive.google.com/uc?id=1qdVhLH8Mh0LJS2FKnpStz8ACL-eZo7qW" border="0"></a>No matter how hard you work as a business leader or entrepreneur, you can’t sustain consistent results without an equally hardworking team, each with a <a href="https://www.inc.com/entrepreneurs-organization/top-5-ways-a-learning-culture-impacts-bottom-line.html">learning mindset</a>. In fact, in my experience as an executive and a mentor to entrepreneurs, sustainable results require a <a href="https://www.inc.com/geoffrey-james/the-big-lie-about-hard-work.html">balance between hard work and learning</a>, for you and your team members. Therein lies the challenge.<p>Most business leaders I know have found this balance for themselves, but many find it an order of magnitude harder to achieve and sustain this balance within individual teams and throughout the organization. I believe this difficulty stems from the historical use of results-only metrics in measuring performance and rankings, without including learning measures and achievements.<p>I see these issues addressed well in a new book, “<a href="https://www.amazon.com/Performance-Paradox-Turning-Mindset-Action/dp/059335690X">The Performance Paradox: Turning the Power of Mindset into Action</a>,” by Eduardo Briceño. Eduardo is a global pioneer in cultivating growth mindset cultures, and he provides case studies and specific guidance on how individuals, teams, and organizations can overcome this learning and hard work challenge.<p>Here is my interpretation of his top five foundation requirements to building great learning teams, with my own insights added:<ol><li><p><b>Establish team trust, relationships, and purpose.</b> The best way to establish trust is by being open, asking questions, listening to the answers, and giving candid feedback. Get to know your team members personally to deepen your relationships. Communicate a purpose that gives people a good feeling for helping others and doing good for the world. <p>For example, <a href="https://www.inc.com/blake-mycoskie/why-toms-founder-sends-employees-on-a-giving-trip.html">Blake Mycoskie</a>, founder of Toms shoes, garnered trust from his team by effectively communicating a higher purpose of helping the needy by donating a pair of shoes for every pair sold. He found that the returns were far greater than the cost.</p></li><li><p><b>Empower team members to initiate change. </b>Make sure your team members feel that you are always willing to listen to new ideas, and never penalize or reprimand them for thinking outside the lines. Encourage change and highlight the learning that always comes from failures. Celebrate small successes often with informal positive feedback.<p><a href="https://www.inc.com/jessica-stillman/7-jeff-bezos-quotes-that-will-make-you-rethink-success.html">Amazon and Jeff Bezos</a> credit much of their growth and success to supporting of unsolicited business “experiments” from anywhere in the organization. Bezos highlights the learning garnered from failures as well as successes from these experiments.</p></li><li><p><b>Communicate challenges and objectives transparently. </b>A team shielded from the realities of business cannot help you make decisions. To cultivate a learning culture, you need to expect some discomfort on both sides. Over time, you will get used to sharing and team members will respond in a constructive way, and even overcome conflicts.<p>Another advantage of <a href="https://www.inc.com/young-entrepreneur-council/5-reasons-transparency-best-policy.html">open communication and transparency</a> is your ability to attract and retain the right kind of talent to your organization. Most HR departments say that hiring and retaining the right team members for every role is one of their biggest challenges.</p></li><li><p><b>Create a culture of team psychological safety.</b> Fear of being judged as incompetent or insecure is a common and major hindrance to the effectiveness of teams. People need to feel able to talk about mistakes, as well as successes. Your challenge is to define norms of behavior and expectations for contributions, in both positive and negative situations.<p>As an example, <a href="https://www.inc.com/justin-bariso/google-spent-years-studying-effective-teams-this-single-quality-contributed-most-to-their-success.html">Google</a> spent years studying how to make their teams more effective, and concluded that their single focus on team member psychological safety was the prime contributor to their success. You can start by showing empathy for each individual.</p></li><li><p><b>Encourage people to solicit feedback frequently. </b>When all your people are waiting for feedback, it means they assume all feedback will be critical or negative. You want the team to seek feedback as positive and powerful learning opportunities. Make it frequent and broad, both inside and outside the internal team, to reinforce a sense of confidence.<p>As a leader, you are the role model for seeking feedback, by asking your teams regularly for feedback on your own performance. Make it a point to really listen to their input, not be defensive, watch body language, and follow up by making the changes suggested.</p></li></ol><p>You will quickly find that learning teams are more collaborative and productive in normal times, and especially in those challenges where change and innovation is required. Avoid letting them fall into the performance-only trap by shifting their focus from simply <i>doing</i> to <i>learning while doing</i>. Help them improve their skills and discover new career options while doing higher-quality work.<p>Marty Zwilling<p>*** First published on <a href="https://www.inc.com/martin-zwilling/5-prerequisites-for-a-continuous-learning-team-culture-in-your-business.html">Inc.com</a> on 09/08/2023 ***</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-50603137939505650632023-09-22T07:00:00.000-07:002023-09-22T07:00:00.137-07:008 Tactics To Make Service Your Competitive Advantage<p><a href="https://drive.google.com/uc?id=1aPZnbNfgJX6kvGsWoQFqzbHQnMkUW4EC"><img width="400" height="267" title="memorable-customer-service" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="memorable-customer-service" src="https://drive.google.com/uc?id=1YPp6qwHsXImTDFRYLuvZaUBYoOAe4reh" border="0"></a>Most leaders agree that poor customer service is a business killer today, in terms of lost customers, reduced profits, and low morale. Yet the average perception of customer experience has not improved. Young entrepreneurs and startups, in particular, often remain naively unfocused, despite their passion, of what it takes to provide the high-quality service expected.<p>It’s a tough job, and inexperienced entrepreneurs just don’t know where to start, and how to do it. Chip Bell and Ron Zemke, who are experts in this area, provide some of the best specific insights I’ve seen, in the classic book “<a href="http://www.amazon.com/Managing-Knock-Your-Socks-Service/dp/0814432042/ref=la_B000AQ17I8_1_6?ie=UTF8&qid=1369760191&sr=1-6" target="_blank">Managing Knock Your Socks Off Service</a>.” Their eight initiatives should be required reading for every entrepreneur:<ol><li><b>Find and retain quality people. </b>You have to start with hiring only people who are willing and able to make serious customer service happen. Make sure you know and communicate well exactly what you mean by high-quality service. Train them fully, give them authority, make them accountable, and tie their pay to customer satisfaction. <b></b></li></ol><p><b></b><ol start="2"><li><b>Know your customers intimately.</b> This means personally listening, understanding, and responding to your customers’ evolving needs and shifting expectations. Then make sure that everyone on the team does the same, and are motivated to improve the match with your startup. Seek out complaining and lost customers for the most important input.<b></b></li></ol><ol start="3"><li><b>Build a service vision that everyone sees as clearly as you.</b> This means articulating and living the customer service mindset for the team, in front of customers and in the board room. It must be understandable, written down, and verifiable, with regular measurements and metrics to make it real, benchmarked against the competition.</li></ol><ol start="4"><li><b>Make your service deliver process “happy.”</b> A well-designed service delivery process will make you easy to do business with. The process must be employee friendly, as well as customer friendly, and have feedback mechanisms to correct poor results. If service employees are not happy, the process isn’t working yet.</li></ol><ol start="5"><li><b>Train and coach continuously.</b> Companies with great service routinely spend 3% to 5% of salaries training team members – experienced as well as new. Leaders have found that keeping everyone on top of changes in technology, competition, and customer demands is critical to success. Service people need this as required team support.</li></ol><ol start="6"><li><b>Involve, empower, and inspire.</b> Involve team members in the fix to customer problems, as well as fixing the faulty process causing the problems. Empower them to look beyond simple rules for solutions, not out of habit, routine, or fear. Inspiration is the process of creating excitement, enthusiasm, and commitment, by your passion and actions.</li></ol><ol start="7"><li><b>Recognize, reward, incent, and celebrate.</b> By human nature, the team that works for and with you wants to do a good job. The best incentive is to give them something good back in return. This should start with constructive feedback on how well they are doing, and what they can do to improve. Don’t forget recognition for accomplishment and efforts.</li></ol><ol start="8"><li><b>Set the tone and lead the way. </b> Like it or not, you are the personal role model for all the people in your startup. How they see you deal with and talk about peers, partners, team members, and customers tells them what the real rules of conduct are for customer service. You can’t con or manipulate people into doing quality work.</li></ol><p>Customer service is not just handling exceptions, something that you can think about later, once the business is up and running. It’s a core process that must be up and effective when you deliver your first product or service. If you still doubt the consequences, consider the following facts from research by <a href="https://www.mtdsalestraining.com/mtdblog/what-are-customer-service-skills.html" target="_blank">MTD Training Group</a>:<p>· More than 50% -- Scrapped a planned purchase because of bad service<p>· 60% – Consider switching businesses after 2-3 instances of poor service<p>· 69% – Spent more money on purchases from satisfied businesses<p>· 90% – Tell others about their service experiences.<p>In the past, competitive advantage was all about economies of scale, advertising power, and service versus price. With instant low price search, ordering via smart phones, and unfiltered online reviews via Yelp and Foursquare, the advantage today has shifted to companies who can make every experience positive. Prepare for it, and don’t jeopardize your future on the first day.<p>Marty ZwillingMartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0tag:blogger.com,1999:blog-4428938592029388128.post-19872617490055005002023-09-20T07:00:00.000-07:002023-09-20T14:11:41.997-07:008 Perspectives On Innovation That You Should Discount<p><a href="https://drive.google.com/uc?id=1nIOnrvqHPtVYnBt4-Jo93vJhTitY33Pa"><img width="426" height="284" title="innovation-constraints-to-ignore" align="right" style="border: 0px currentcolor; border-image: none; float: right; display: inline; background-image: none;" alt="innovation-constraints-to-ignore" src="https://drive.google.com/uc?id=12xnksjd5GeSaJCKwnTWchEzZ8mSPZw7N" border="0"></a>Starting an entrepreneurial business, or maintaining the competitiveness of a mature business, requires innovation. Yet everyone I know seems to have a different perspective on what constitutes real innovation, and why is seems to happen so rarely. Another challenge is to debunk some of the common myths that seem to prevent many from even assuming they can innovate.<p>As a starting point, I like the <a href="https://en.wikipedia.org/wiki/Innovation" target="_blank">Wikipedia</a> simple definition of innovation as “the application of better solutions to meet new requirements or market needs.” I also enjoyed the classic book, “<a href="http://www.amazon.com/63-Innovation-Nuggets-aspiring-innovators/dp/0996753109" target="_blank">63 Innovation Nuggets for Aspiring Innovators</a>,” by George E. L. Barbee, based on his 45-year career and work as an innovation guru with several Fortune 100 companies and the Darden School of Business.<p>Some of the most common innovation myths that Barbee mentions or I have encountered in my work with entrepreneurs around the world include the following:<ol><li><b>True innovation can only come from R&D and geniuses. </b>In reality, the best business process innovations usually come from regular employees on the front line of your business, just trying to do a better job and better serve customers. Many product innovations come from quality improvement focuses, like the Japanese <a href="https://en.wikipedia.org/wiki/Kaizen" target="_blank">Kaizen</a> initiative.<b></b></li></ol><p><b></b><ol start="2"><li><b>Innovation must be driven top down by visionary leaders</b>. Some innovations are clearly implementations of visionary ideas, but anyone at the operational level can think outside the box, individually or as a team, to suggest and implement innovations. Many innovations, including <a href="http://www.todayifoundout.com/index.php/2011/11/post-it-notes-were-invented-by-accident/" target="_blank">Post-It notes</a> and superglue, were even invented by accident. </li></ol><ol start="3"><li><b>Real innovation only happens in entrepreneurial organizations.</b> Startups may be quicker to adopt innovations, but there are clearly some large problems than can only be solved by companies with large resources. Other innovations, such as the ones from Kaizen initiatives, can only come from established organizations and processes.</li></ol><ol start="4"><li><b>Innovation is random, and can’t be orchestrated. </b>Current research indicates that innovation is a discipline, it can be maximized, measured, and managed through formal processes. Peter F. Drucker outlined the key elements of this discipline, including methodically analyzing seven areas of opportunity, in a <a href="https://hbr.org/2002/08/the-discipline-of-innovation" target="_blank">classic article</a> on the subject.</li></ol><ol start="5"><li><b>Individuals who are innovators are born, not bred. </b>Research published by Harvard many years ago in a book, “<a href="https://hbr.org/product/the-innovator-s-dna-mastering-the-five-skills-of-d/an/14946-HBK-ENG" target="_blank">The Innovator’s DNA</a>,” concludes that innovation is about 30 percent individual genes and 70 percent learnable and driven by motivation. The focus must be on five discovery skills of associating, questioning, observing, networking, and experimenting.</li></ol><ol start="6"><li><b>Solution innovations need to be perfected before going to market. </b>These days, with markets and technology changing so rapidly, it’s impossible to verify an innovation before taking it to market. Thus I recommend the minimum viable product (MVP) approach with iteration, to test innovations until the product or service really meets today’s customers. <b></b></li></ol><p><b></b><ol start="7"><li><b>“Thinkers cramp” and “organization cramp” limit innovation. </b>Innovation and creativity are two different things. Creativity is more about ideas, while innovation is all about implementation. The “writer’s cramp” type of block on ideas need not apply to the implementation of measurable and specific improvements and innovations in business.</li></ol><ol start="8"><li><b>It’s impossible to innovate in a staid complacent culture. </b>Innovations come from people, not culture. When people change, due to new leadership, new motivation, or business changes, innovations occur, which can lead to culture change, rather than the other way around. Complacent cultures cause business failures for reasons well beyond lack of innovation.</li></ol><p>You probably know more of these myths, but the message here is that initial innovation is critical to every startup, and continuous innovation is critical to the survival of every business. The market and your competitors never stand still, so every moment your business stands still, it is losing ground. <p>Don’t let a few outdated and unproven innovation myths stop your business from achieving the impact and lasting legacy of your long-term vision.<p>Marty Zwilling</p>MartinZwillinghttp://www.blogger.com/profile/02310305711437204301noreply@blogger.com0