The One Question Your Business Must Answer to Survive

….notes from my own entrepreneurial journey.  Walk with me!

It’s been a year in my business thus far.  It’s been a hard year and one that has taught me more than almost any other year in my life.  Some lessons I wish I hadn’t learned but every one of the lessons are valuable in some way.

My initial planning was great. I knew how to build a business plan.  I was an engineer and loved to dig into details.  I took several months to create it.  It had all of the right elements in it.  I had defined what the business was, how it would operate, what services would be offered, how it would be sold and marketed, what the operating costs would be and how much we would make in the first year.  I even included a competitor analysis, growth plan for expansion and customer profile analysis.  I had all the information I needed.

After I put the business plan down, I began to work on the business case.  Why? I knew that selling my service would be difficult.  First, my potential customers didn’t know they had a problem.  So, I needed to define that before I began to sell anything.  My first attempt at this was from the financial perspective.  To define the issue, I identified the amount of money my customer should be getting from their efforts.  I was hoping this would prompt my customer to look at how much they were getting and compare it to what they should be getting (my analysis).  This should have launched salvos in their brains but it only worked for a very few.  Some saw the huge delta and realized there could be something they could be learning.  For most….nothing happened.  I thought it might have been that they didn’t trust my assessment.  This made sense as I realize they didn’t know me.  So I changed the assessment to reference all of the official sources of data that I used.  It identified the authorities in their field.  The data and analysis were solid.  I used the data and mathematical methods from the experts in their field.  Easy sell, right?  Unfortunately, it did very little for the customer but it did solidify the case.

So maybe they needed to see the business case from a cost perspective.  The financial perspective essentially said that their processes were inefficient and that they could make more money if they did things differently or better yet, let me do it for them.  Perhaps they needed to understand what the cost was for their inefficient process.  I prepared a benefit cost analysis that illustrated their cost to perform the same functions that my company does.  Yes, you would expect that we were less expensive.  And, we are.  Our processes are automated, electronic and keep track of everything.  These are the benefits I shared with them, along with the fact that we are a fraction of the cost they are.

I took this new analysis and threw it in front of potential customers.  It was met with disbelief.  I soon realized they had never seen any analysis like this before and weren’t sure what they were looking at, although they realized that it didn’t paint an efficient picture of their process.  Eventually, discussions would go off track.  Once I started to see that customers were getting a little emotional about the topic, I realized that this discussion no longer hinged on the merits of the argument.  We had transitioned from the idea of what’s good for their company to what’s good for them.  It was clear that this was becoming a personal decision.  More importantly, my customer is apparently struggling with the “what’s in it for me” question.

I’ll have to admit that I should’ve seen this coming and that it should have been the first question I should have addressed.  No matter who you talk to, you must be able to convince them that your efforts are worthy of further discussion.  The challenge always comes with figuring out what interests they want to serve first: their own or the company’s.  Never assume any one is looking out for the greater good first.  Also, this is a never ending process.  As you move up the chain from contact to contact, you have to keep asking that same question.

Now, I’m embarking on a journey to figure how to assess what personal needs people are most interested in.  Do they want to look like a hero, avoid embarrassment, etc?  This will probably be the most difficult part of my journey as I’m sure to meet all kinds of people with various interests.  The challenge comes in developing a process to filter contacts into specific categories where I can have a process on how to deal with them.

Stay tuned!  This will be fun.

The Single Greatest Challenge With Today’s Career

No matter how well you prepare yourself for your career, there’s a rising force that is creating huge barriers for professionals today.  College degrees don’t matter.  It can’t prepare you for this.  Even a great network of professionals and coworkers and years of experience has limited impact in this landscape.  This force creates an environment like no other in the history of business.  For those in power, it provides the ultimate in flexibility in use of talent but for the talent, it affords some serious confusion in determining, much less traversing, any kind of career path.

Just a few decades ago, my father worked in a 100 year old company for over 34 years.  The company had a well defined structure, including a management hierarchy, job roles, payment structures, career paths and incentive plans.  I became a part of the company as I grew up.  Strangely, when I graduated college and starting working there, I couldn’t see the company I knew as a kid.  Changes had already begun and continued every year I worked there.  It was the beginning of what we call the “constant change” that we see today.

A softening structure.  When I began my first job, the organizational structure was rigid and well-defined.  Everyone had their place and knew what their responsibilities were every day.  I had a manager to help me when I ran into problems.  The organization chart was clear to each employee in many ways.  Now, let’s look at the difference within the last ten years.  I’ve helped many professionals who work in companies that have no organizational chart.  Companies engage in these practices because they say they want to remove barriers and allow their employees to approach anyone at anytime.  Having studied a few companies that have utilized this method, I can’t say that is highly successful, as many have failed.  While it seems like a good approach, employees quickly learn that there is still a hierarchy.  The management structure is well defined, just not put on an organization chart.  Decisions are still made by this structure and when things go wrong, it rolls downhill.  While some superficial facets change, many things don’t.  It’s not all bad though.  Employees do have the ability to interact with other business leaders, which can lead to new opportunities. Remember, there’s no structure so there is no real career path either.  You have to figure that out for yourself.

It’s hard to roll with my role.  Now, more than ever, high achievers are engaging with organizations that want to hire them but don’t want to provide a clear definition of their responsibilities.  Companies feel a strong need to remain flexible, which means they need to be able to use their talent any way they see necessary.  Role definitions tie their hands and contribute to an inability to change directions quickly.  Of course, it’s also possible that companies don’t know exactly what they need so they hire people who can function in ambiguity and aren’t afraid to charge headfirst into the unknown.  When I was a kid, I often worked as a farm hand.  This is a job that requires you to do whatever the landowner asks you to do.  They didn’t ask if you had certain skills or talents.  They needed something done and I was the person to do it.  Today, we see that even with the best business knowledge and expertise in the world, work boils down to that same simple principle.  Somebody has to do it.

There’s no work schedule.  This is certainly a more recent trend for companies that has been ushered in by technology that helps us work from anywhere at any time.   The typical work week was defined by the Fair Labor Standards Act of 1938, which was established to ban oppressive child labor, set the minimum wage standard and the maximum work week. Of course, with most employment, this doesn’t apply to you.  High achievers are often salaried exempt employees, which mean your work schedule isn’t really protected by law, as long as your pay is the same each pay period.  You can work 40 hours a week or 100 hours a week.  To make this more challenging for you, there is no real definition of work hours.  With a cell phone and laptop, you are reachable any time of the day and reachable almost anywhere in the world.  Growing up as a kid, my dad had a pretty good schedule.  He was an hourly employee and worked from 6AM to 3PM.  He could easily plan his life because the schedule was well defined.  Today’s work schedule is ill defined and makes your life a little more unpredictable.

Working ‘at-will.’  As if your career wasn’t already lacking of any real structure, states have created laws that allow employers to dismiss you for any reason and without warning.  Yep, that means they can walk into your office on Friday and terminate your employment without any justification.  Friday is a good day because it doesn’t disrupt the normal workday of your coworkers should you be terminated without reason.  So, the length of your employment at any company is always at risk.  Many years ago, this wasn’t much of a risk for the workforce but now many managers have figured out that balancing the bottom can include terminating a few employees to keep their division’s budget in the black.  I know we are all professionals here but when your job is on the line, you might be forced to do things you wouldn’t normally do, like terminating employees.

All of these factors have created a completely amorphous environment, void of any reasonable predictability, which further perpetuates the need for change.  We can’t see where we are going and that makes us uneasy.  Professionals remain in a job for 2 or 3 years but choose to leave because their future in the organization continues to remain undefined.  We are creatures of habit and embrace predictability, to some extent.  We’ve built our lives around our jobs and when that stability becomes unstable, so do our thoughts on satisfaction and happiness.  We once had a system that built careers on a visible, logical progression.  You went to college to earn a degree and then entered the workforce in your field.  After years of work in that field, you were promoted up the chain in a career that lasted a lifetime.  Bonuses and promotions were an annual part of your growth.  Today, we see more job uncertainty than we ever have but it appears to be occurring in times with sufficient economic stability. Nonetheless, young graduates will find themselves entering a workforce that struggles to define what it can offer in return for their efforts.   Whatever it is, it is likely to be short term.

Entrepreneurs: Optimists or Realists?

There’s no doubt that you’ve heard that most businesses fail.  When you look at the statistics, it’s very easy to believe that entrepreneurs are dreamers that either ignore the statistics or are just plain naïve.  If you knew 96% of companies fail within ten years, would you still do it?  We know entrepreneurs are smart and willing to take calculated risks, despite these overwhelming odds.  Do they even consider the realities of the entrepreneurial journey?

The first thing to realize about the odds of failure is that they are directly related to the amount of cash in the company.  Bill Camody stated in his article “Why 96 Percent of Businesses Fail Within 10 Years” that “cash is a fact.”  Once you don’t have any more cash, you can’t pay your bills.  This is a reality and certainly hits home very hard.  Now consider that the most significant source of funding for all business startups is the founder’s personal savings, which is roughly four times greater than any other source, according to the Kaufman Institute.  Venture capitalists and angel investors don’t engage heavily in startups.  If you’ve seen ABC’s TV show, Shark Tank, you know the sharks don’t like to invest in an unknown.  They want to see a cash flow before risking their money.  So, if you’re going to get money from others, either do it very early in the launch or you’ll have to grow the business before you can get a cash injection.

Most startups fail.  Most founders use their own money.  What can they be thinking? Do entrepreneurs overlook the realities of startups?  In a survey by Kauffman, many founders shared their thoughts on the factors that prevent others from creating their own startup.  These factors just might be the realities that one needs to consider (and constantly measure) when engaging in their own startup.

  • Risk – over 98% of respondents ranked an inability or lack of willingness to take risk as an important barrier to entrepreneurship.
  • Time and effort – 93% feel that entrepreneurs often underestimate the time and effort requirement to get their startup off the ground.
  • Capital – 91% identify the difficulty in obtaining capital as a major inhibitor, which may explain why most use their own money to start their new company.
  • Management skills – 89% cite management skills and the ability to start a company as critical to success.
  • Family pressure – 83% believe that family pressures to get a steady job and paycheck are real and challenging.

Other challenges mentioned in the survey include stress, maintaining a work-life balance, developing products and services for changing markets, government regulations, taxes, and the costs of employee benefits.

While it’s very hard to identify the right combination of the aforementioned factors that will lead to business success, there are some factors that will certainly lead to failure.  In a study by the University College London, it was found that businesses with entrepreneurs who held no real business experience did not increase profits.  The premise here is that nascent entrepreneurs don’t apply the appropriate weight to opportunities and threats.  In other words, their alertness to identifying threats and use of cognitive skills to recognize opportunities are not in balance.

Optimism has been shown to have a positive impact on entrepreneurial success, in terms of both actual firm growth and financial performance.    Realism, which also affects financial performance positively, is defined as the consistency between growth expectations and actual growth.  As with most entrepreneurs, and as verified by this study, optimism dominates over the impact of realism.

With regards to a balance of both optimism and realism, a dose of realism has the effect of modifying the overconfident cognitive bias of optimism.  For example, watching more cash flow out of your company than in for a long period of time has a propensity to dampen high expectations of future success, forcing one to reevaluate the current situation and cognitive strategy.  A lack of business experience can lead to a late recognition of this imbalance, resulting in failure.

In my experience, most entrepreneurs do a fairly good job of identifying threats and opportunities.  The things they incorrectly assess about them are the magnitude and timing, such as running out of money.   An important thing to remember is that most businesses are not creating something that hasn’t been done before.  There is a lot of literature, experience and information in the world.  Entrepreneurs should always seek it out and ensure they are correctly and constantly assessing their expectations, measuring performance factors (for a dose of reality) and maintaining just enough optimism to keep striving for their aspirations.  Additionally, before you begin to establish any expectations for your business, ensure you have fully applied your cognitive abilities to the factors mentioned above; that is, risk taking, funding, time and effort, management skills and family.

I’ve Got An MBA – Where Are the Management Jobs?

You’ve finally earned your ticket (the MBA) to the executive ranks. Graduation is over, you have a diploma and now you need to figure out how and, most importantly, where to put your skills to work.  The job market for managers is fairly hot right now.  If you haven’t found your opportunity yet, here are some places you might not have thought to look.

New business.  Many companies tout their successes to the world, mostly in the hopes of winning favor with potential customers but you can use these press releases to identify potential employers.  Small to medium companies often win big contracts from the private sector and government sector for which they are not totally prepared to manage.  While they may have established some preliminary management strategy to win the business, they may get changes to what they were awarded that is outside of their proposed plan.  Change always creates opportunity for establishing vision and direction.

Your action:  Monitor websites in your industry to identify companies that have announced big wins.  Learn as much as you can about their new business and determine where you can help out.  Then, contact someone in their Business Development department to see if you can get connected with the person responsible for that new business (e.g. department manager).  You go to Business Development people because they like to talk and negotiate.  Pitch your knowledge, skills and abilities in a way that clearly articulates how you can help them manage that new business.

Mergers & Acquisitions.  Companies are always trying to find ways to make money.  One of these ways is through the acquisition of other companies.  Big companies buy smaller companies to expand into new markets, increase their intellectual property or simply to show growth to investors.  Usually these transitions are challenging and difficult to manage as larger companies are not adept at adapting small companies into their fold.  Often, they will select new management for the smaller companies to help them make the transition, and this is where you can help.  A word of caution: Most of these acquisitions only last a few years before they are spun off or shut down.  If you’re not afraid of change, this is the type of business to follow.  M&A is always happening.  Read about 2015 M&A activity here.

Your action: M&A activity is not a highly publicized activity, at least not until the deal has been made.  The best way to learn about these activities is to tap into the industry grapevine and listen for rumors.  Talk with Business Development people to learn about rumors of mergers and acquisitions in your industry.  Go to trade shows and industry association meetings and conferences to gather information.  Companies love to talk about these rumors, which often have a strong element of truth.  Get your information and strategy ready for how you can make that acquisition more successful. Then, maintain contact with your connections to identify when it will occur.  Send your resume and cover letter that explains how you are the solution to the success of the new acquisition.

Venture capitalists (VC).  Another great source of management changeover is companies owned by venture capitalists.  Typically, VCs provide funding to companies and try to grow the companies as quickly as possible in an effort to sell them in a few years for a large profit.  This process of buying and selling companies creates a need for exceptional leaders who can manage each transition.  Often, VCs will identify organizational leaders they like and will seek to work with them many times during their career.  But there are also opportunities to introduce yourself and how you can help make them more successful.

Your action: Search the web for venture capitalists in your industry.  It’s as easy as doing a Google search on the name of your industry and the words “venture capitalists.”  Click the links to identify numerous VCs in your industry.  Then, research them to find out what companies they invest in.  Create your business case for why they should hire you and send it to the VCs and the companies they own. But make sure you know which of their companies may be in line for a transition before you engage with them.

Having an MBA is great.  You do learn about business.  Unfortunately, business isn’t run anything like it was when the MBA was first created.  Constant change is the flavor of the day.  Managing in transition isn’t the same as steady state management.  My guess is that there are far more companies in transition than there are in steady state.  If you can create a compelling case for why you’re the best for transition management, then you’ll likely find an opportunity to prove it.

Branding: It’s Mastering the Mind

Marketing is the battle for the customer’s mind – owning a share of mind. The process of strategic brand management is a two part exercise. The first part is getting into the mind by displacing something that already exists. The mind is like a dripping sponge and the only way to own a position is to replace a brand image that already occupies a share of mind.

Building a brand image is a long term proposition that requires an in depth knowledge of how the mind works. Words are the key to the mind and each word has either a positive, negative, or neutral value. So the process of building brand equity begins with the development of the right words to build a brand’s “unique value proposition”. That is what is: faster, better, or cheaper, than what already exists?

Obviously, Tesla has created a unique value proposition for their new model 3 that is reflected in the over 300,000 deposits of $1,000 each they have received so far from customers around the world for a car that will not be available for over a year, or more.

The second part of strategic brand management is maintaining and protecting that share of mind and growing the value of the brand with other customers. Brand equity is the value of a brand in the global marketplace. Some examples of the worth of a brand are: Apple ($154 Billion), Google ($83 Billion), Microsoft ($75 Billion), Coca-Cola ($59 Billion), Facebook ($53 Billion), etc.

Some classic examples of brands that have sustained and grown brand equity for many years are Nationwide Insurance (over 50 years) with their well known tune: “nationwide is on your side”. Peyton Manning, Nationwide’s current spokesman, only has to hum Nationwide’s infectious jingle for an instantaneous connection with customer’s minds. A competitor, Allstate, has another over 50 year old similar, but still effective slogan: “you are in good hands”.

Once you hear the familiar Intel “bing”, you don’t have to wait for the “bong” because it already has resonated. An over 100 year slogan that still resonates is Maxwell House Coffee’s: “good to the last drop”. And Wheaties: “breakfast of Champions”.

In conclusion, brand equity is made up of the intersection of the DNA of the brand with the DNA of the customer.

Business Startup: What skills do you need?

When you are unemployed and begin searching jobs listed in Job banks, like LinkedIn, Indeed, Monster and so on, you seek out job descriptions that match your skills and experience.  But when you start your own business, the job description might look like a book full of blank pages.  The skills, knowledge and abilities needed will be many.  They will be hard to define in the beginning.  In fact, the requirements will reveal themselves every day.  If you want to get a sense of what you’ll need, take time to talk to entrepreneurs who’ve failed and who have succeeded.  You’ll want to know every lesson you can.  Here are some lessons I’ve picked up along my own journey.

Before we look at skills, you need to understand a few other required characteristics of startup entrepreneurs.

  1. You need to be self-motivated. There’s no one around to push you to do things you need to do or tell you what you need to do.
  2. You need to very passionate about the business. Things will be difficult in the beginning but you need to keep pushing for success.
  3. You’ve got to be able to handle stress (and lots of it). It could take 2 years for your company to get off the ground. I’ve started companies with a family. When times are tough and no money is coming in, everyone will pressure you to fix it. (I’ve got a great post for this coming soon).
  4. You need to have a clear vision of your business, that is, a good business plan. My blog tells you how to do that (The Blitz Blog – The Source of Inspiration for High Achievers ).
  5. You need to know how to take a small success and create more success. This is the process for building your business.
  6. You need to be a quick learner. This includes learning from others because you won’t know everything you need to know.
  7. You must be customer friendly.   People will buy the service or product because of you.  If they like you, they’ll buy.
  8. You need to be the expert.  Whatever you sell, you need to be the expert on it.  You want people to seek you out.
  9. You need to be organized.  Startups need planning and focus.  You should have enough information to operate on autopilot (but drive it yourself).
  10. You need to be decisive.  Startups need money fast.  You can’t afford to overanalyze situations.  Make decisions and move on.

The typical skills needed for the startup entrepreneur are:

  1. Legal sense – you’ll have to create the business and operate within legal guidelines for your location and the industry.
  2. Accounting – how will you track your expenses and revenue? You will need a CPA but it helps to understand what they do because it could be you doing the accounting in the initial phase.
  3. Business development – You’ll have to decide what customers to market to and how they do business.
  4. Finance – How will you fund the initial phase of your business? You’ll have to establish the original budget and put the money in place.
  5. Marketing – You’ll need to create the social media and marketing materials for the business.
  6. Customer Relationship Management – You’ll need to be a salesman. People won’t buy products or services. They buy into YOU.
  7. Conflict resolution – Hopefully, you don’t make too many mistakes in the beginning but you need to fix them quickly.
  8. Collaboration – You might need to partner with other companies to sell your products or services. What kinds of arrangements can you have? You’ll have to figure that out too.
  9. Contracts – You’ll need to develop contracts, statements of work, proposals and other documents to support winning business for your company. Guess who gets to do that?
  10. Hiring – Once you bring people on board, there are a lot of government regulations that are required to hire people. You’ve got to know those too!
  11. Budgeting – You’ve got to be able to assess your costs to ensure you make a profit. Estimating labor and materials can be difficult, especially when your service is long term or customized.
  12. Writing – You’ll need to be able to create processes and policies that your company will use, such as privacy, nondiscrimination, quality, reporting, business plans, and so on. You’ll need documentation for your customer, the government and your company.
  13. Presentation skills – You need to be articulate as you’ll have to hold meetings and provide direction for your people. It must be clear and actionable. Otherwise, you waste time and money.
  14. Innovation – You have to keep your products growing and developing with the needs of your customer. Everyone usually talks about the APPLE model. It’s not a bad one to follow, if you can find out what they did in the beginning.
  15. Willing to learn – I can’t tell you how much I had to learn to get my business off the ground. Opportunities to learn are everywhere you turn.
  16. Adaptability – Very little will work the way you think it will. You’ve got to learn to adapt.
  17. Creativity – There will be many times where you will need something that doesn’t exist.  You’ll have to create it.
  18. Negotiation – Business is all about the deal and you must learn to master it to grow your business.
  19. Emotional Intelligence – You must be emotionally stable and able to handle the emotional swings of success and failure.  They are only bumps in the road to success and you have to hit some to get there.
  20. Focus – Businesses are built by defining a plan and implementing it.  Things change but you can’t let that happen so often that nothing gets done.

These are just a few of pieces to the puzzle of success.  Entrepreneurship is one of the greatest learning experiences you’ll ever have and it will also be one of the most challenging.  It isn’t for everyone.  When you’re in the middle of your startup, you’ll easily identify those who like the idea of entrepreneurship and those that don’t.  It’s a completely different mindset.  So, get out there and fill in the pages of your book with all the things it took for you to build your dream.

IAMPRO MBA Award Nomination

Well, it’s not often we are nominated for an award for our support of MBAs.  We’ve been blogging, publishing and working with MBAs on career development for a decade.  Considering I’m the only American among the International pool of nominees, I am truly honored to be representing the USA.

The IAMPRO MBA Awards celebrate MBA’s at the forefront of leadership excellence. To recognise the talents and contributions made by accredited schools and their students to the MBA arena and the wider community, the IAMPRO presents five annual awards to outstanding managers, entrepreneurs, non for profit managers, industry leaders.

The IAMPRO invites you to vote upon MBA students or alumnus/alumna for each category of the MBA awards. The winners will be individuals in each respected category.

Vote for me HERE.

I’m in Category 4. MBA ALUMNI ENGAGEMENT AWARD.

There is some real tough competition among these nominees and I’ll need all of the votes I can get.  Your vote is most appreciated.

A NEW DEFINITION OF TIME

One of the most noticeable differences between working for someone else and starting your own company is the personal definition of time.  As I look back on my many years building someone else’s dream, it’s very clear how much time was wasted during the work day.  In this post, I want to share my revelations from my own experience in the hopes that you will find some appreciation or recognition of this transformation in your own definition of time.

Time for an employee.  Working for someone, it always seemed as if my time was dictated for me.  It was hard to really grasp control of it.  There were two major factors that devoured my time each day.  The first, and the greatest thief of my time, was my leadership.  Meeting after meeting, we spent so much time and energy talking about the work that needed to get done.  My managers mostly held meetings to keep themselves updated, not to provide direction. For example, they would gather everyone in a meeting room every week, providing me the opportunity to listen to a lot of people talk about what they are going to do for the week.  Since our tasks didn’t overlap any, this new information didn’t have any value to me.  It was just for the manager to keep up with what was going on in the company.  You would always hear people mumbling “what a waste of time” as we left the conference room.  But this was part of the ritual time wasting activities that occur daily in established businesses.

The second force that targeted my available time for work was myself.  When I became well entrenched in my roles and responsibilities, I didn’t always feel pressured to get everything done as quickly as possible.  I realize time is money but when I was building someone else’s dream, and they were the biggest user of my time, I couldn’t really understand the value of time (at least not by their definition).  They spend my time like it was unlimited.  I would spend hours and hours every month listening to other managers talk about their projects.  Their projects weren’t my responsibility and the requirement to attend a full day of these updates provided no value to me.  With my leadership so eagerly burning time, I began to wonder if they really understood the impact this has on their employee’s definition of time. You see, with such time wasting activities, real value added activities would take longer than necessary.  The average time to perform services offered by the company kept growing.  The danger with this is that employees begin to accept that things will take longer, so there’s no rush to get things done.  Remember, time is money.  We always wasted both.

Time for a startup entrepreneur.  Starting up my company, time is defined by two factors: me and my customers.  When you’re in startup mode, you have considerably more actions to accomplish than time to complete them. The idea that time is money is what I live by.  It’s not anything like it is when working for someone else.  The longer I take to complete the actions to get my business off the ground, the longer it might take for cash to begin flowing in.  The impact of time has a more immediate and noticeable impact on me.  The faster I contact potential customers, the faster I can sell my service.  When they ask questions, I answer them right away.  All of my actions are now driven by my new definition of time, meaning that I must move as quickly as I can to bring in money.  The other definition of time that an entrepreneur must abide by is the customer, who is always right.  My potential customers don’t feel the same sense of urgency as I do and it drives me crazy.  I’m, at times, driven to push a little harder than I should.  Sometimes, my customers are nice enough to tell me to slow down a bit and yet others feel threatened or bullied by the constant barrage of communications and simply shut down.  To my customers, I’m new to the industry and have to learn their ways.  While I may bring something new that they haven’t seen before, I must be respectful and honor their ways of doing business.  When you’re just starting out, time can be the biggest hang up and a huge source of stress. But if you have a solid product/service and you know your customer likes it, it becomes an opportunity to develop patience.  Yeah, I know, nothing easy about that.

In bigger companies, time isn’t such a priority as actions are completed through the collective actions of many employees.  It’s easy to feel that when you’re working with someone else.  You’re in a meeting and the boss says, “let’s get this done in the next week or two.”  With big companies that’s tolerable, but startup mode seems to apply significant time pressure.  Startup entrepreneurs measure time in dollars.  Once the dollars are gone, so is time.  Actually, you can see this intense pressure in bigger companies when they begin to burn their backlog or fail to meet sales goals for a few quarters.  It often forces irrational behavior, such as signing contracts with financially distressed customers, further plunging the decline of performance due to lack of payment from the customer.

My suggestion in dealing with this time pressure is to understand your customer’s definition of time.  You do this in your planning phase; that is, when you put your business plan together.  Your chart showing cash flow should provide a reasonable timeframe that has been validated through interactions with potential customers.  If it takes them 8 months to approve a contract with you, then you must reflect that in your plans.  To think you can do that any sooner is risky.  You’ll have enough stress starting out so there’s no need to intentionally add more.

These are the ramblings of Todd during his walk into entrepreneurship.  Hopefully, you can relate to this.  If you want to share your experiences with us, contact me at todd.rhoad@blitzteamconsulting.com.

Startup Advice: Who/What/Where/When/How

I take advice from everyone.  It doesn’t mean I’ll use it.  I listen because I’m always interested to hear other people’s perspective on starting and running a business.  You never know what ideas people will give you (for free).  But when it really comes to advice that I plan to use, I’m very critical of the source I use.  And you should be too.

whoWHO DO I LISTEN TO?  It depends on what I want to know.  I always read what many experts have written on the particular subject before I go talk to people.  Being informed on the topic will help me filter out the “BS” people have a tendency to share sometimes.  Plus, it communicates to the expert that I’m serious about the situation and have done my homework, so I won’t be wasting their time.  Most experts want to be consulted, so they are happy to cull out a bushel of advice to help demonstrate their comfort with the subject.

Remember, you need advice you can use. It must be tried and true.  It must be applicable to your situation and spit out in terms that can be easily translated into action.  As for the people I pursue, they must have a few credentials that I can validate before I consider contacting them to ask for advice.  Here are some from my general list of traits.

  • Shares their experience (not too many years in the past).
  • Provides references to resources and people.
  • Offers actionable advice.
  • Respected in their field or industry.
  • Proven successful.
  • Share in a few fundamental beliefs: Faith, Family and Friends.

Don’t be afraid to ask anyone for advice, no matter how successful.  Recently, I had lunch with an alumni from my MBA school, Indiana Wesleyan University.  Evan is a financial advisor who just moved to Georgia and into my neck of the woods.  It never hurts to have such a fine, upstanding advisor in my corner.  Will I use his expertise?  You bet I will.  As you branch out to connect with the rich and powerful, realize it might take time.  The highly successful will just take a lot longer to connect with.  But keep trying.  My record is 18 months of continuous nagging. I think they felt sorry for me and gave me an hour of a billionaire’s time.  Wonder what that was worth?

whatWHAT DO I ASK ABOUT?  For me, this could be anything from the legal obligations of ADA, OSHA and E-verify to building the best marketing strategy.  I seek support as I need it.   Unlike the many executives I’ve served under over the years, I think it is very important to seek advice and get answers on anything that you don’t know about.  I’ve watched executives tank their company because they failed to reach out to experts to understand a part of the business that they didn’t.  Maybe it was pride or ego or just plain laziness, but a company’s existence depends heavily on its leadership’s knowledge base….and you never know enough!

For example, maybe you want to know how to distinguish your business from all of your competition, especially since you all seem to do the same thing.  I would say to you, “read the “Blue Ocean Strategy” by Chan Kim and Renee Mauborgne.”   In fact, I’ll send a copy of this book to the first two people who send me an email showing me that you promoted this post.  Running a great business is about finding the right answers and you must chase them vigorously. Your future depends on it.

whereWHERE DO I GET THE ADVICE I NEED?  I’ve found that the best advice comes from other business owners.  If you’re a startup, you probably don’t have a lot of connections to business owners.  Well, maybe you do.  My kids have been playing sports for years and now that I’m engaging in my own startup, I’ve just finally begun talking shop with the other kids’ parents.  I’m amazed how many are running their own business.  I never asked before because I didn’t have a real interest in their experiences, but I do now.  Business owners are great advisors because they can share real experience, not theoretical notions that you have to figure out how to apply.  Even better, they can connect you with other professionals they have worked with in the past, saving you considerable time in finding the support you need, such as legal, accounting, marketing, branding, strategy and funding.  You’re support is likely all around you and you don’t even know.  Take time to let people know what you are doing and what kind of help you need.  Many will be happy to help you succeed.

whenWHEN SHOULD I ASK FOR ADVICE?  This question is easy.  You ask for advice before you need it.  It takes time to really understand your issue in enough detail to ask a question.  You also want to ensure you do a little research to generate some potential answers to your question before you propose the question to an expert.  Then, you’re not really asking a question, you’re seeking validation of your ideas.  Professionals are more likely to respond positively to this scenario than an “out of nowhere” question from a stranger.  It also takes time for experts to respond to the question.  So you need to give yourself sufficient time for a response.  To improve your success in getting that valuable advice, choose times of the day where professionals are more likely to share information.  This includes early morning, the end of the day or after exercise when we are tired, as these are times when our defenses are down and we’re more likely not to think you might be a risk or threat.  Additionally, shared times of relaxation and enjoyment, such as during a golf game or a networking event, are great times to secretly tap into the minds of the experts.

howHOW DO I ASK FOR ADVICE?  There are several ways to approach this.  First, you can use mutual connections to make the initial pitch for you and setup the question for you.  Start with people you already know to identify potential experts who experienced what you’re preparing for.  Second, you can reach out to experts directly but you may want to hone a simple elevator pitch about your business that ends with the question that you so desperately need an answer. Third, you can invest in the experts you seek guidance from.  Most experts get tons of requests for information from people who want it for free.  We are all in the business to make money.  Show your expert that you have invested in them by purchasing their book, going to their seminar or promoted their work in some way.  Then, they’ll feel somewhat compelled to invest in you.  I would suggest that investing in the experts first is by far the best way to get the answers you seek.  It provokes feelings of reciprocity and will likely build a much stronger relationship that you can tap into for years to come.

SEVEN DEADLY SINS OF STARTUPS

When I was young, I always wondered why there was so much talk about leadership.  I tried to read as much of it as I could and then look for signs of it in organizations.  After many years of working inside other people’s organizations, the light was turned on in my brain as to why Leadership is such a hot topic.  When you look at companies that are in existence today, you don’t really think about how poorly they are run.  Mostly because it isn’t discussed and is hidden from the public to protect stock prices.  But you can see little signs that troubles exist.  For example, big companies play around with benefits all the time.  I once thought this was done to keep the costs low but it turns out that it is usually done to help boost the bottom line.  If you’ve got parents that retired from major corporations, they’ll tell you that their benefits are constantly declining.  Running a big business is difficult but they can adjust things to account for mistakes.  However, these little mistakes can grow and turn into major disasters that destroy the whole economy. When you’re in startup mode, failures come with a much higher cost since you don’t have much cash flow and you can’t afford to delay it any.

Combining all of the things I’ve seen from companies in the past, I’ve tried to outline the seven key failures that leadership engages in that results in either the destruction of the company or a massive decline in their earnings.  Here’s what I’ve seen.

MYOPIA.  This shortsightedness often results from a failure to plan your startup.  The most common example is running out of money because the startup took longer than you had expected.   When you’re engaging in business areas you have no experience with, it’s always best to find someone who can help you identify and plan for common risks.  A good planning template will go a long way to improve your vision.  See Robert Donnelly’s Plan-for-Planning Process.

SLOTH.  Laziness is a common characteristic for those entrepreneurs that try to startup their business while working a regular job.  Well, maybe they aren’t so lazy but they fail to put sufficient energy into the business to drive the startup.  It’s the same thing I hear from MBA graduates who can’t figure out why their career didn’t take off after they earned their MBA.  The MBA degree is a piece of paper (i.e. diploma), just like you’re FEIN is a piece of paper.  It guarantees nothing with regards to your success.

PRIDE.  No matter how smart you are or how great your business idea is, you will always need to be thinking about ways to transform your company to remain competitive and relevant.  I’ve seen way too many companies fail to adapt to changing customer demands. Every generation is different.  Only 71 of the original 1955 Fortune 500 companies are in existence today.  Here are some notable flops:  Blockbuster Video, Kodak, Borders Books, Sears, Pan-Am, US Postal Service, Hummer and Blackberry.  If the big guys can fail from this, so can you.  Jeff Stibel, cognitive scientist and serial entrepreneur, says that once the human mind sets out to do something, it will do it.  If you’ve ever worked for a company on the downslide, you probably noticed that leadership did very little to stop the disaster.  Maybe they thought they had all the answers.

MISANTHROPE.  When I started my first business, I wanted to do everything so I would understand all aspects of the business.  Hey, I went to college for 14 years.  I’m a smart boy.  Well, I learned the hard way that you have to bring people on board to help you achieve great things (which usually takes great effort).  Oh, my first business failed horribly.  What was I missing?  The customer’s perspective.  The customer holds the key to my success but I never took the time to listen deeply to what they needed.  In the book, The Cluetrain Manifesto, the authors share a key piece of wisdom; that is, markets are conversations.  If you want to be successful in your startup, you have to engage in conversation and trust what you hear.

GLUTTONY. This little terror wreaks havoc on you in multiple ways.  First, new entrepreneurs are often chock full of ideas.  All of them are brilliant and destined to be a huge success.  Trying to implement too many of them leads to a quick lesson; that is, they aren’t all brilliant and you’ve just wasted valuable time and resources.  When in startupville, keep your focus on the main idea behind the business.  Get it up and running before diving off into other ideas.  Second, once success begins to roll in, it’s tempting to build your own palace to work in every day.  Early success can lead to lavish spending and the creation of an unsustainable burn rate of income.

OPAGUENESS.  Those ideas that make us gluttons can also cause us to spin our wheels for years without developing our product or service.  My close friend, Mike, has been working on his startup for 7 years and has yet to develop a product for his international market.  While he has managed to capture some investments, he has isolated his own workforce because they can’t seem to understand what the company is trying to accomplish.  Once the money from investors came in, Mike seemed to lose focus of his original dream.  Corporate death is only a short time away, as the confusion is causing his workforce to seek employment elsewhere.  Your workforce needs clarity and focus.

AVARICE.  A new startup surely induces visions of extreme wealth, leisure and control over one’s life.  It’s fun to think about, I’ll admit.  However, allowing the desire for wealth to overcome you and drive you to engage in risk that is unhealthy for the business.  There are way too many examples of these types of failures, where are often brought upon by too much funding.  My favorite picture of this problem is Enron.  There level of greed was unprecedented and led to numerous convictions of fraud and conspiracy.  I know what you’re thinking….too much money is a bad thing?  I don’t think it is but allowing the desire for money to drive your actions in an unethical direction is not healthy.  As a entrepreneur, your business is who you are.  Don’t allow the business to change who you are.

If you’ve seen some other things that we all need to know, please share your story.  Starting a company is hard enough all by itself and we need every lesson we can get.

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