All posts by Todd

Todd Rhoad is the managing director of BT Consulting; an Atlanta-based consulting firm focused on helping high achievers create more success in their lives. He's the creator of MBAWriters, an international writing group, and the Henry series of books for MBAs. Todd has published ten books on career topics and numerous articles in career magazines around the world. Todd also creates college courses at the post graduate level and speaks to colleges on numerous career topics. He holds a MSEE and MBA and is a military veteran.

My Entrepreneurial Journey: My Startup’s Brand

When starting out a new company, it’s important that you establish the purpose of the business in the customer’s mind.  Surely the purpose is to make money and no one will argue with that.  But what does your customer think?  Do they understand what your business is trying to do for them?  Not only does your brand tell your customer what you do, it also helps communicate direction and focus for your efforts.

When I began creating my business plan for the company, I added a section for the brand.  This section wasn’t heavily detailed but it was critical for providing some initial direction and focus.  It begins with a simple identification of what we are trying to do.  When it comes to companies, here are a few reasons they exist:

  1. A better way to do it.  We know people (and companies) are creatures of habit.  Once a process is put in place, it stays that way until it fails.  This leaves opportunity to create something better, especially as technology is developed.  Most often, a better way usually reduces operating costs or provides some other unique benefits to the company.

My potential customers:  There is a process in place for the service I provide.  My customers either don’t do it or do it poorly.  My service will replace the customer’s need to use their inefficient process with additional benefits that reduce cost.

  1. Something completely novel. In this case, a company provides a product or service that didn’t exist.

My potential customers: Since a process already exists, I’m not really creating something new to the market but I am creating a new solution for the customer that has financial benefits.

  1. A solution to a problem. Your business should always be solving a problem or filling a need.

My potential customers:  They don’t know they have a problem, which could be challenging for me.  I’ll need to educate them first and then sell them on the benefits of the service.  This will need a strategy all by itself.

While there are other business purposes, these three represent the majority of my purpose.  Some companies will use “transparency” as a purpose.  However, I consider that to just be a part of business.  I know there are proprietary things in the business but the way I conduct my business should be very clear.

With my purpose identified, I can use this information to identify my target customer.  I know they may or may not already do the service I’m offering.  I also know, through research, that they are not very good at it.  I have also found that many of these customers have financial problems, which makes the benefits of my service all the more desirable.  The key factors that define my customer:

  • Do perform the service I offer but aren’t doing it efficiently
  • Do not perform the services I offer
  • May be unaware of the problem
  • May have financial issues
  • May desire to create change in their current processes

Now that I have some idea of my customer, I can begin a little research by contacting potential customers by asking probing questions that can clarify my above assumptions.  After gathering a little information, I can prepare marketing information that speaks directly to this customer.

While this isn’t a complete development of a brand, it does provide considerable direction for me while defining the purpose of my company to the customer.

Disclaimer:  These posts are general ramblings from me concerning my own startup experience.

RISK VERSUS COMMITMENT

Starting your own business is fun and challenging in ways you never imagined.  I get a lot of questions about these challenges.  Most budding entrepreneurs are trying to estimate the barriers they’ll run into.  This assessment helps them understand the amount of risk they might face, which is a good thing to do.  But, I think they have the concept backwards.  In my experience, it’s your level of commitment that defines the amount risk you’ll encounter.  If you don’t invest much, you don’t have much at risk.

My kids love the TV show “Shark Tank.”  For me, it’s entertaining.  The Sharks have a lot of money, so the risk they take is small, considering it is only a fraction of the value they possess.  But for most of the small business owners on their show, the risk is much greater.  Well, most of them.  I do remember a recent episode when the Sharks asked the business owner how much she had invested in the company so far and she said not much because she was still working her day job.  I think Mark Cuban jumped out of his chair in shock and gave her the “I’m out” response after chastising her for her lack of commitment to the company.  Apparently, the Sharks believe you have to be “ALL in” to really achieve the success you desire.  Why? It shows everyone your level of commitment to your business and dream.  Sure, we can work in a job we don’t like but would someone really build a business that didn’t encompass their passions?

Napoleon Hill once said “Great achievement is usually born of great sacrifice, and is never the result of selfishness.”    For most entrepreneurs I work with, great success is their quest; more specifically, financial independence.  They seek the freedom such success affords.  After all, we only have so much energy to put into building dreams.  If we spend a lot of energy building someone else’s dream, we have little energy to build our own.  This is why Mark Cuban didn’t appreciate the young entrepreneur’s efforts in building her company.  This approach is attempted by so many professionals; that is, working for someone else while starting a company on the side.  We already know investors aren’t crazy about that idea, but what else could this approach be missing?

Just as an investor doesn’t think you can put all of your energy in a side business, an employer doesn’t think you can do your best in your job if you have a business on the side.  Employers will worry that each day you’ll be focusing on your company and not theirs.  It will threaten your job security, which might make your side business your only business.  If you have a business on the side, don’t share that with your employer.  Managers don’t have entrepreneurial mindsets and won’t understand that you can separate the two activities.

According to Forbes, 90% of startups fail.  Even when you start out under the best conditions, you’re likely to fail.  Yes, there are outliers that prove you can build a business on the side and then jump into it full time once it takes off.  But considering that 10% are successful, I would suspect that a small fraction of these started as sideline businesses.  While I’m not a big fan of side businesses, there is one reason you might try it.  Forbes identified the main reason startups fail.  Essentially, half of startups create a product no one wants.  However, starting your business on the side might give you sufficient time to assess the market for your product, especially if you don’t have the money to contract someone to do a market study for you and you have to do it yourself.  Taking the time to study the market will greatly improve your odds of success or help you keep from becoming another startup failure statistic.

Another challenge for part-time startups is the ability to truly focus your energies on figuring out how to reach your market and build a business.  Without employees, you’re forced to wear all hats of a business.  That can be overwhelming, especially when you realize that you are not an expert at many of them.  It takes time to learn about legal requirements, accounting, marketing, sales, and planning.  Now, consider that your day job may require travel and times of intense efforts requiring long work days, and you can begin to see how your startup could remain in startup mode for many years.  Eventually, it becomes easy to push off making decisions about your company because of other responsibilities.  Without sufficient consideration of issues, you run the risk of failing to consider everything you should consider which can result in poor decision-making.  For example, if your company began to grow to the point that you needed to contemplate going all in but were afraid to make that step because you didn’t have enough funding to pay your salary for a year or so, then you might not decide to get funding to grow the business.  So, you remain in your safe job and keep the business at a level of work that you can manage while you’re working your main job.  This is the risk versus reward scenario.  Little risk with earn you little reward.

As a sideline business owner, your risks aren’t too bad.  You already know most knowledgeable business people, especially investors, may not take you seriously, much less invest in your business.  Your startup time is likely to be very long (e.g. multiple years).  If time to market is important, you’ll likely miss it.  Also, the longer it takes to start, the more risk you have in your day job.  It gets hard to hide your real passion from everyone at work and telling the wrong person could bring your employment to an abrupt end.

As an “all in” entrepreneur, the challenges are much greater.  When I started that business, I forfeited my job.  I sold my house.  Moved my family and rented a house.  As I began, I felt I could earn business and move out of the startup phase in less than a year.  This sounds easy, right?  Its okay for first few months but when it begins to take longer, around months 7 through 9, your family and friends begin to wonder if you’re going to make it.  I began to wonder too.  But you can’t lose faith. The slightest crack will set off those around you and spin your world into a huge panic. Relationships can be easily strained, mounding more pressure on top of you. With no customers, will I need to tap into my own personal funds if I pass the first year mark without success? If I do, then all future plans could be at risk; vacations, cars for the kids, college, retirement and all of those luxuries we all enjoy.  But….if it does work as planned, the reward is much more than I can get working for anyone else in any given year.  No more 1 to 3% annual increases each year or that tasty spiral cut ham for Christmas.  I’m working for myself, pushing a business I built. With significant income flowing in, I can start building my own Shark Tank and diversifying my investments.  It’s chasing financial independence and as an entrepreneur, I can get there much faster.  And when I’m tired, I let my kids run it.  Yes, the risk is much greater, but so is the reward.

I’ve tried starting businesses both ways; part-time and full-time.  Full-time certainly has considerably more risk than the “playing it safe” part-time approach.  I think the decisions you make and the effort you put into your business are considerably different between the methods…and the results typically reflect that.  It’s amazing the energy you’ll put into a business when your next meal or rent depends on it.  You will become bolder, especially in the face of any adversity.  There are many things to learn and procrastination has a price that as a full-time, “all in” entrepreneur, you can’t afford to pay.  Success becomes your only option.  You strive very hard to gain that first customer so that you can call yourself a legitimate business.  Then, you have to learn how to take that first success and create more success from it.  It’s a never ending learning process.  As a father of three, starting a business is much like raising a child.  It takes effort…constant effort.  It’s painful.  It’s risky.  It totally changes your life.  Sure, you can raise a child with little effort but we all know what those results look like.

So, what you think?  Are you ALL IN?

Selling Your Dream

If you’ve been reading our latest posts about the Plan-for-Planning process, you should now have a good business plan to kick off the next phase of your life.  Having done this a few times, I want all newcomers to entrepreneurship to be aware of the impact your new dream will have on your environment, especially those around you.  Read on to learn from my own experiences.

First, enjoy the excitement you have in your business vision.  You should be very passionate about it and eager to get started.  You’ll need every bit of that energy as starting a business isn’t for the weak minded.  It will be one of the largest investments you’ll make in your entrepreneurial journey and you need to take it seriously.  The reason I want you to feel the excitement is that every person you talk to about your business should feel your energy and passion.  I remember a discussion with my plumber when he stopped by to make a few repairs.  He asked what I was doing and I seemed to bubble over in my joy in just talking about the business. He said he could “feel the passion.”  I really hadn’t begun the business yet but the plan was in place and I was obviously ready to start.  That passion is critical at startup.  When it comes to selling your dream, people must believe that you believe in that dream 100%.  If they don’t feel it, they won’t buy it.

After you’re convinced you’ve got the best thing since sliced bread (or a really good business plan), you’re next step is to begin motivating your support team. These are the people around you that will support you physically, spiritually, mentally and any other way you need it.  You will want them to have the same amount of passion as you do, but this is unlikely.  Remember, this is your dream.  When I say YOU, I mean YOU.  No one will have the passion you do for this little idea.  Not even your wife or kids.  I started a business recently and it’s just beginning to take off.  It took a little longer than I expected but it is gaining some serious momentum (more on that later).  Do you think my wife and kids had complete faith in the idea? Not at all.  You see, the world isn’t full of dreamers, like us.  Some people just don’t like to take risks.  They are happy with a paycheck every two weeks.  Well, that’s my family.  I’m the starry eyed dreamer and risk doesn’t bother me at all but my wife saw it as a big risk, at least until contracts started coming in and the business grew.  Success was the proof that it was a good business idea.  Until success came, I had to bear the stress that I was on this journey alone (or so it felt).  Sure, everyone thought it was a good idea but they weren’t ready to jump on the bandwagon with me until it was a certainty.  This behavior by your loved ones isn’t unusual. In fact, it’s normal. My risk-taking is out of the ordinary.  Don’t get me wrong, my friends and family were supportive but they didn’t want to invest any energy into it until there was sufficient evidence of its success.

The hardest audience in selling my dream was my customers.  After all, if your family isn’t “ALL IN” then it’s going to be difficult to convince complete strangers to buy the service.  But, you already know that it will be difficult.  That’s why most people don’t start their own company.  Before I began reaching out to customers with my dream, I tried to create a brand around the service I was offering, which identified three key features that essentially made the question of buying the service all too easy to make.  I was figuratively laying a brick of gold on their desk and saying “this is yours at no cost.”  Strangely, no one touched it.  I was confused.  It’s free money and no one wanted it.  I soon figured out that two things were missing: understanding and trust.  These two factors were intertwined and stopped them from even considering grabbing the brick of gold.  They didn’t know me so they didn’t trust me, even when I cited the specific laws that clearly articulated the legality of their right to the money.  Trust was muddled by their lack of understanding of our service.  I had assumed that many customers understood what we were offering, but they didn’t.  Certainly, not in the detail I know it.  So, I began to work on these.  I got to know my customers better and created documents to explain the whole situation in detail (i.e. the problem and the solution).  Here’s where I ran into another barrier.  My customers didn’t realize it was a problem.  They didn’t even know this option existed.  Again, I put my nose to the grindstone and created more information to help my customers understand, specifically I captured information on how other customers were doing with this service so that they had a reference for the improvements it would make.

Eventually, they understood but the layers of mistrust were still as rigid as ever.  At this point, I thought I had them sold and they would grab that brick of gold off the desk.  But they didn’t.  Something else was holding them back. But what could it be?  The decision is a “no brainer.”  It wasn’t trust or knowledge of the service.  It had to be personal. But, I began to see this from many potential customers.  What personal reason could be stuck in the minds of so many people?  This was very strange to me. How could something so easy be personal?  These questions bounced around in my mind for months.

Then, I began to think about it from their perspective.  If I’m the customer, why wouldn’t I want my service?  There are two circumstances where I might be worried. First, what if I buy the service and it turns out to be a disaster? Second, what if I buy the service and it turns out to be a huge success?  The first question is easy to answer.  The customer wants some assurance that it will work. This is where my references and existing customers come in.  They can connect with potential customers to share their success stories.  The second question is a little harder.  My customer may worry that they will come under scrutiny for NOT hiring our service earlier if it turns out to be really successful.  My customer would never share these thoughts with me as it may make them feel vulnerable.  So, I began to help them see how to create their success story.  When I say “see their story”, I mean I put it in a visual process flow map that shows how we’ll sell the idea up the management chain while providing information that will answer all of their concerns, including why this wasn’t done earlier.  This process of brainstorming all of the possible barriers my customer can face, even the personal ones, has become a big part of my selling process. I include it in documents and presentations that I carefully share with my customers.  I make sure to paint a clear picture of how this decision will impact their reputation or how others see them.

That’s it for now.  Selling the dream once you’ve developed it will be challenging.  You have this great vision in your head that no one else can see and you have to find ways to help them visualize it.  And, of course, you’ll run into numerous barriers to materializing the dream.  Many of these barriers I would have never dreamt of but luckily a continual push has brought them to light.  Once you see the barriers, you have to resolve them.  Your customer’s issues are your issues.  The quicker you solve them, the faster you can get to the sell. Remember, business is always personal.

If you’ve got a story to share, send it to me at info@blitzteamconsulting.com.

The Plan-for-Planning Process – Step 7

Step 7 – Contingency Plan

The seventh, and last, chapter/section in the business plan is the contingency plan section (or the “what if?”). Since very few plans happen exactly as planned, and to demonstrate good planning acumen assuming a question like: “What will you do if you do not make the plan?” – from anyone who reviews the business plan, you need to contemplate the two obvious scenario’s:

  • What will we do if business is “better than” planned?

And

  • What will we do if business is “worse than” planned?

This then anticipates that the management team has developed Key Performance Indicators (KPI’s) that can be tracked every month. KPI’s being those 6 or 7 key indicators of business health for any business.

These KPI’s should have “trigger points” where it is obvious that the business is doing either “better than” or “worse than” the volumes in the best case scenario contained in the business plan. Reaching these trigger points should indicate that it is time to implement one of the predetermined contingency plans outlined in this section of the business plan.

Tracking these KPI’s in combination with the review of progress against the quarterly strategic milestones in the strategy section, the management team has a proactive methodology for maintaining control over the business.

Once developed in the way in which advocated in the plan-for-planning process, any management team can easily create a winning business plan.

The Plan-for-Planning Process – Step 6

In this step of the Plan-for-Planning process, you focus on the development of the organizational chart.

The sixth chapter in the business plan is the organization section (i.e. who is going to do it). It should contain the Organization chart for the company, as well as manpower tables by function.  A sample overview is:

Board of Directors

President – CEO

Chief Operating Officer – COO

Human  Resources

Finance & Accounting

Marketing & Sales

Research & Development

Manpower tables for each function should be included after the organization chart.

Explanations for any manpower growth over the business plan period should also accompany each table. If there is a specific manpower strategy, that should be referred to in this section.

Total salary expenses for the company for each year of the business plan, should be highlighted in this section, as well. Likewise, if there is a profit sharing/bonus consideration that should be discussed in this section, too.

Anyone reviewing the Organization section will have a clear picture of the total compensation expense of the company for each year of the business plan, along with explanations.

There you have it.  It doesn’t get any easier than this.

The Plan-for-Planning Process – Step 5

Step 5 – Asset Management

The fifth chapter/section in the business plan is the financial section. It should contain the projected Profit & Loss Statement, the Balance Sheet, Cash Flow projections, and key financial ratios for the business plan.

All of these financial statements should contain commentary where required to explain and clarify any specific numbers.

Additionally, any substantial capital expenditures over the business plan period should be noted and explained in the Asset Management section.

Summary level examples of these statements are:

                                                Projected Profit & Loss

                                                Operating Plan Period

                                                20XX     20XX    20XX

     Sales

     Cost of Sales

     Gross Profit

     Expenses

     Net Profit

                                                   Estimated Balance Sheets

                                                   As at:  20XX   20XX   20XX

        Assets

        Liabilities

        Equity/Net Worth

 

                                                    Estimated Cash Flows

       Opening Cash 1/01/20XX

       Incoming cash

       Outgoing cash

       Closing cash  12/31/20XX

 

                                                   Estimated Significant Financial Data/Ratios

                                                    20XX     20XX     20XX

      Working Capital

      Inventory Turns

      Receivables Collection Periods

      Debt to Equity

      Return on Assets

 

                                                    Projected Capital Expenditures

                                                    20XX     20XX     20XX

     Asset Replacements

     Expenditures on

          Strategy 1

          Strategy 2

          Strategy 3

Reviewing the Asset Management will give any reader a clear picture of the projected financial situation of the company over the business plan period.

GET OUT OF THE FAST LANE

In the last week of the year, my son and I took off down I-75 towards Tampa, Florida for a Lacrosse tournament.  Just a few hours into the trip, I noticed a common trend that lasted the whole 8 hour trip.  I looked over to my son and asked him to tell me what he saw.  He stated “everyone is in the far left lane.”  I reminded him that the far left lane is the fast lane and designated for the drivers going a little faster than everyone else.  But why would almost everyone flock to the fast lane?  As we moved over into the fast lane, we quickly noticed that traffic was actually slower.  The cars in the other lanes were traveling faster, with the exception of a few cars that forced drivers to work their way around them.  But they had two lanes to maneuver in so they didn’t have any problems getting around the slower cars.  The fast lane was a different story.  The only way to move forward was if someone moved out of the way.  Even though we were all going slower, we were in the fast lane and drivers remained there despite our speed.  Sound familiar?

fastlane

So many of us do this with our career.  It’s a sick version of the herd mentality.  We do everything people tell us to do but only seem to get the same results most everyone else gets.  That is, we are stuck in line waiting for the person ahead of us to retire, transfer, quite, get promoted or simply kill over before we get a chance to move up.  “Get out of the fast lane,” my son said.  “We’ll get there faster.”

Many people stay in the fast lane because it’s easy, doesn’t require any thought and you always know where you are (i.e. stuck behind the person ahead of you).  It’s like being on autopilot.  You’re moving but you aren’t sure if you’re getting there because you can only see taillights ahead of you.  Still, it doesn’t require much effort, so we drive on.

Scientists at the University of Leeds discovered that it takes a small minority (just 5%) to influence a crowd’s direction – and that the other 95% follow without even knowing it.  I know, moving over to the slower lanes would require you to make decisions constantly because there are slower cars that you will have to move around.  It gets to be a lot of work moving in and out of the lanes.

Staying in the fast lane may just be your problem with achieving the success you desire.  Research led by the University of Exeter has shown that individuals have evolved to be overly influenced by those around them, rather than rely on their own instinct. As the fast lane slows down, so do you.  As it speeds up, you speed up.  You do what they do.  As a result, groups become less responsive to changes in their natural environment.  Let’s say that the fast lane is full of MBA aspirants.  They haven’t noticed that the corporate world is full of them already and many of them have gained no flexibility in their career by earning the MBA.  It does little to improve their upward mobility.  If only a few people in the fast lane aren’t paying attention to the population of MBAs in their industry, they’ll stay in their lane to earn the degree and fall into the same situation as the others.  Everyone else will follow.  While the fast lane population may have dreams of getting into management, the MBA isn’t the only way to get there.  Get out of the fast lane.

So why do so many think the MBA is the only way to get there?  Social learning may be the reason.  It is likely that many aspirants are surrounded by a few people who believe it’s the answer.  Of course, once you go on campus, everyone will tell you it is the answer.  With so much bias towards the degree, aspirants will forego any analytical processing and go directly to the analytical response.  This does happen and was proven in a study published in the Journal of the Royal Society Interface, which found that a strong social bias may very well decrease the frequency of analytical reasoning by making it easy and commonplace to accept without thinking.  Well, I do remember something about us all thinking the world was flat, until that 5% of scientists convinced us it wasn’t.

What are other ways to get into management?  You can always start a company or join a startup.  Small companies offer the opportunity to learn more about management, since there is less of it.  Outside of these options, you might find yourself waiting in line for a long time.  Of course, you might occupy that time by building a nice list of credentials that you can put on your resume. Then, when somebody moves over, you can hit the gas and move into a new position.  Or….you can get out of the fast lane!  Some say “success is a choice.” Well…this is one of those choices.

If you’re considering taking the entrepreneurial route, let us know.  We’ve got plenty of folks who can help you with your idea.  Contact us at info@blitzteamconsulting.com.

The Plan-for-Planning Process – Step 4

Step 4 – How are we going to get there?

Typically called – “Strategies” – this section/chapter lays out the strategies that the company has developed to grow revenues and profits for implementation during this business planning period. You’ll want to answer all of the questions for each strategy to ensure full consideration.

The format for this section is (for every strategy):

  1. What the strategy is (a description of the strategy)?

2.  What the rationale is for the strategy (why we are implementing this strategy)?

3.  Who is responsible for implementation (a specific manager)?

4.  How long is the implementation going to take and what is going to be accomplished quarter-by-quarter (specific activities by quarter)?

5.  How much is going to be spent on each activity each quarter (a quarter-by-quarter listing of expenditures)?

6.  What is the expected return on the successful implementation of each strategy (the ROI for the strategy)?

When completed, this section should present a clear picture of what the management team plans to accomplish to continue to grow the revenues and profits for the company, and how much that will cost.

This section is particularly important because it lays out the quarterly strategic milestones that have to be reviewed on a quarterly basis, so that depending upon the success or failure of the expectations for each strategy for that quarter, decisions can be made as to how to continue to proceed strategy-by-strategy. And how to continue to allocate investments based upon these results.

This way management can better control the investments in the company’s future depending upon the levels of success or failure of each strategy on a quarterly basis.

OUR RESOLUTION

We’d like to thank you all for following us this past year.  We are truly grateful for your thoughts, comments, questions and suggestions.  Reflection, communication and interaction are the tools for changing the world.  Thanks for being a part of our world.

In an attempt to share more with you, we will be adding some things this year that will hopefully improve your experience with us.  This is our resolution for the new year.  We want to share more and learn more from you.  To do this, we are bringing more things in different formats so we can connect with you.  Here’s what we’re planning.

  1. We’ll be adding a new column called “Career COLD facts.”  This column will share some advice, experiences and lessons from the business world for all of our professional readers seeking that corner office spot.  This stuff ain’t what your parents or professors told you about.  It comes from the real world and is designed to wade through the BS to show you how things really work.   We all know the truth but are afraid to say it out loud.  Well….we’ll be saying it out loud!
  2. We’ll be adding some audio for those who’ve requested to hear us rather than read from us.
  3. We’ll also be adding some visual effects (e.g. videos, presentations) to help motivate us all in the new year.  Some of these we’ll make ourselves.  Some are made by others and we just like them (so we’ll share them).
  4. Lastly, we’ll be sharing our thoughts and opinions on some of the career and academic news that is published by mainstream media.  You may not believe this, but sometimes they get this stuff all wrong.  It’s time we challenge them a little.

We’re always open to suggestions.  Just go to our Contact page and send us your requests.

Again, thank you for this past year.  It has been a great learning experience for us (and hopefully for you too).

We wish you great SUCCESS in the new year and hope we can be a part of it!