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.

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?

MBA for Starting Your Business

It’s the latest craze and it almost sounds like a contradiction but many universities in the USA have quickly adopted an MBA program focused on entrepreneurship.  If the university isn’t adopting a certified program, they’ve instituted seminars, weekend training, networking events and more that address entrepreneurial needs.   It’s hard to imagine that academia would be able to show budding new entrepreneurs how to run a successful business.  The MBA degree was developed to help managers become better managers. Now, we are taking into a position that requires a broader set of knowledge, skills and abilities.  Many universities realize the challenge in providing such education so they often solicit the support from local entrepreneurs.  In fact, many colleges hire entrepreneurs to develop the new MBA program.  While the MBA isn’t really a requirement for anything, an MBA entrepreneurial program isn’t either but it might be helpful for your startup.  In this post, we’ll take a look at some of the key elements of this type of program so that you can determine if it’s right for you.

Assessing business ideas.  If you want to be an entrepreneur but don’t have any idea what business you want to create, then learning to assess ideas is very important.  The ability to recognize and evaluate opportunities is not an easy task.  Most entrepreneurs and entrepreneurship educators recognize that only a small percentage of venture ideas actually represent viable business opportunities.  Such skills are critical as startups are usually plagued by high uncertainty, low information and the need for rapid decision-making.  Students are often introduced to numerous platforms for evaluating business ideas such as the Timmons Model of the Entrepreneurial Process, the New Venture Decision Making Model and the Opportunity Search Model.  These models help you assess potential opportunities by guiding your focus in areas of environmental attributes, owner characteristics, strategy factors, resources, economics, and product/service model.

Basic organizational structures.  Most programs offer guidance in identifying the various types of structure that might be suitable for your business, such as an LLC, C-corp, S-corp and so on.  The factors that are important here are usually the number of owners, tax benefits, liabilities, and record keeping requirements.  If you don’t know anything about these, then the knowledge you get will be helpful.  However, in my experience, spending a few minutes with a business attorney or CPA is just as sufficient.

Develop a sound Business Plan.  If you’ve been reading our blog, this should be easy.  We just saved you a ton of money.  MBA entrepreneurial programs will give you great support in building a good business plan.  The business plan serves two purposes:  (1) clarifies your value statement and revenue model, and (2) communicates sufficient growth potential and stability for investors.  Of course, the quality of plan is only as good as the experience behind the creator, so you might want to investigate the experience of your professor.   Ideally, you can create your business plan early in the program and implement it throughout the life of your MBA program.

Marketing Plans.  MBA programs concentrate more on analytical and strategic marketing, such as creating marketing plans and strategies for sales purposes.  There is potential to develop some powerful skills here, such as competitor analysis, market research, budgeting, branding, communication, marketing tactics and metrics for monitoring.  Marketing plans are very valuable for a startup as they will help you focus your energy.  If you don’t develop the skills yourself, you’ll likely be hiring them at some point. 

Funding.  Many programs offer courses on working with venture capital firms, banks and angel investors.  These sources are exciting as they often come with sophisticated investment analysis tools and models, as well as thoroughly researched and professionally prepared business plans.  The top tier programs also give you access to these fund providers.  Unfortunately, most startups don’t usually get to tap into such sources.  The more common sources of funds for new and smaller businesses are family, friends, informal investors and the entrepreneur themselves.  Much of what you’ll learn won’t be used right away but will be helpful later on.

Mock experience.  Most programs will tell you this is a huge advantage, as students are afforded the practice of key business skills in a safe environment.  You can basically work with a team of students to walk through the development and implementation of a business venture.  The intent of this mock experience is to help ensure decisions are made using sound business practices.  The hope is that you’ll fall back on your habits, developed during practice, when difficult situations arise.  Of course, you may have the view that there are many factors that can affect your decision making abilities that can be emulated in a classroom setting.  It reminds me of the scene in the movie Harry Potter:  The Order of the Phoenix when Harry asks Professor Dolores Umbridge “And how is theory supposed to prepare us for what’s out there?”  In this scene, the ministry felt that a “theoretical knowledge will be sufficient to get you through your examinations.”  Unfortunately, starting your own company has real consequences that can be quite costly and theory ignores the fact that real businesses often deal with irrational people, both in your own team and the customer.

Identify new ventures.  To sustain growth of your organization, you must be able to identify new opportunities, including understanding, qualifying and quantifying the market.  Additionally, you must also understand your competitive advantage, build a financial plan, secure funding and build a team that can implement the plan.  These lessons may seem a little premature when you’re just starting up as you’ll be more focused on implementing your business plan, which usually doesn’t include changing course or expanding products and services right away.  If you don’t know what kind of company you want to start, this may help you understand how to assess any opportunities you find interesting.

Global strategies.  Most offerings are designed to help you develop leadership and strategic thinking tuned to the realities of today’s global economy, including topics related to operations, partnerships, product development, and legal contracts.  If you don’t plan on going abroad anytime soon, this may be a little premature and not a great deal of help for your more urgent startup needs.

Networking with other entrepreneurial minds.  Networking is a common theme for MBA programs.  Apparently it works for entrepreneurial programs as many students partner with other classmates to launch their business.  Networking is always helpful as it lets you bounce your ideas off existing entrepreneurs, professors and students who can help you evaluate your ideas.   Now, this can be done in many places, not just a college campus.

Startup acceleration.  This offering is usually dedicated to helping fundable startups with scalable business models connect with companies who might be interested in supporting the business idea through mentorship and venture capital.  If you’ve got an idea that requires considerable startup funding, this might be a useful approach.

While I’ve always thought that universities have become quite adept at jumping onto new trends, entrepreneurship seems to be more popular than the MBA itself.  The concern I would have in partaking in such programs is that you will be spending a lot of money to learn skills that may not be easily transferable to other companies should you decide not to start your own upon graduation.  Even worse, you could graduate from the program and your startup company fails a short time after.  That would be a huge setback.  Now, this is not to say that such programs don’t have value.  They do have value, especially if you have an idea of the business you want to start.  I’m not sure you’ll gain great benefit in these programs if you have no idea what business you want to create.  Just think about the challenge of any MBA graduate who finds themselves at the end of the program asking themselves “now what?”

In our next, we’ll give you a list of questions you should consider before enrolling in such programs.  We’ll also try to bring you real experiences from graduates to assess how well the programs work.

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 MBA: USE IT WITH CAUTION

Many professionals engage in this often expensive endeavor to gain business knowledge and skills that will hopefully improve their career mobility, either immediately or in the future.  Once the MBA is obtained, these freshly minted MBAs rush into the world to demonstrate their new found expertise.  The hope is that a clear demonstration of great knowledge will bring forth praise, reward and opportunity.  Here are a few considerations to keep in mind when utilizing your new skills and knowledge in your work place.

I now know what they know.  One common misconception new MBAs adopt is that the knowledge they gain in the MBA program is known by most managers and leaders in organizations.  With the MBA, they can now engage in the discussions with leadership or at least understand what they are talking about.  In most small and medium enterprises, you’ll find that many leaders are not highly educated.  They don’t develop strategies and plans for their organizations using methods taught in MBA programs.  These leaders use their experience and connections within their industries to figure out the direction of the company.  You should never assume what you know is what they know.  The importance of this fact will be shown later on in the article.

My new research abilities will be helpful.  It seems logical that being able to perform research to understand how the market trends, creating a thorough competitor analysis, or developing a roadmap for technology creation would be useful or desired by management.  It is important, especially if it is your job and leadership has requested this information.  If not, many managers and leaders may not understand the methods or the results.  The whole process of the research and developing these helpful results may likely be misinterpreted.

The MBA doesn’t make you a leader.  The MBA has become a science, not a journey into managing people.  No one believes it automatically makes you a leader.  Your individual personality has far more to do with you getting a leadership role than possessing an MBA.  In the book, The Ten Golden Rules Of Leadership, Soupios and Mourdoukoutas posit that leadership requires an unusual composite of skill, experience, and seasoned personal perspective, which include your personal values, priorities, and an ability to build and sustain a respectable quality of life.  I know you’ll want to lean very heavily on the scientific methods you’ve learned to improve business but the soft side will get you where you want to go much faster.

Your new knowledge doesn’t incorporate an understanding of management psychology.  The MBA teaches you about leadership, usually from an ideal perspective.  However, most companies operate far from ideal.  The way many managers and leaders function are known well to psychologists but not to the rest of us, as we believe they operate on a higher standard.  I wish it were always true but it isn’t.  They are just like the rest of us.  Learning these lessons in the workplace can be detrimental to your job, reputation and upward mobility.  Here are some key takeaways from some MBAs with such experiences in the workplace.

  • No acknowledgement. “My manager never even recognized the fact that I graduated with my MBA.  He viewed my MBA as personal development.  He didn’t think it was needed for my job, yet they still paid for my tuition.”
  • They just don’t understand. “After our company was acquired, I created a 20 factor cultural analysis to show our leadership how different the two companies were and how we needed to change to make it work.  I wanted the merger to be successful and I wanted to ensure I had a job for the future.  My boss said that I hated the company and shared my analysis with the General Manager, who I found out later used part of the analysis in his report to the leadership of our new parent company.  Two years later, we had lost so much money, we were sold off again.”
  • I’ll take that. “We needed to create some new technology to grow our business.   My boss asked me to figure out how much we should be charging for the IP we would create.  I did the research and came up with several methods.  He told his boss that he developed a method that was actually 10x the cost of what I had proposed.  We never sold anything.”
  • I’m the boss. “After I graduated with my MBA, a management position opened up. My COO tapped me on the shoulder and asked me to interview for the position.  I thought this was a good sign that I would get the job.  I didn’t even know a position was open.  I found out that there was one other applicant and he didn’t have an MBA.  Unfortunately, the other guy got the job.  The COO didn’t have an advanced degree either.  He was sending a clear message.”

There are too many stories like this to share in a single post.  The important thing to remember is that managers are people.  In most small to medium enterprises, these managers are not highly educated.  They have been put in power due to circumstances that probably weren’t dependent upon their use of a high degree of intellect but they do feel a strong urge to lead, even if they don’t know how.  They also don’t want to look bad in front of their boss, as they worry it might cost them their job.  Today, managers worry about that more than anything else.    While you’ll want to show off what you know, it does come with consequences.  If you’re in an organization that appreciates what you have to offer, the consequences will be good.  If they don’t need it or want it, you may find that the consequences hamper your upward mobility and you’ll encounter experiences like these that will clearly articulate what management thinks of your MBA.

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.

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