One of This Days, You May Not Be An Entrepreneur.

If I had a Peso for every time someone has said to me, “One of these days, I’m going to start my own company,” I’d be rich. If this day ever comes for all these people, we will be overrun by startups. Yet I don’t lose any sleep over either of these possibilities.
Most people procrastinate from time to time, but I suspect that the challenge here is somewhat deeper than that. So I did my own informal survey of business books, to gather the key reasons why most people never start the journey. If you recognize yourself in any of these categories, you may be more of a “wanna be” than a real entrepreneur:

1. You are a dreamer, not a do-er. Most people in this category actually prefer to think of themselves as “idea people,” rather than implementers. In my view, the dreaming part and the idea are the easy parts, and the hard part is building a workable plan and making it successful. A strong vision is required, but that’s different from the dream.
2. Unable to learn the new skills. This starts happening to people immediately after school, who think that academia is where skills are acquired. Actually, schools are only for learning how to learn. Specific expertise is self-learned from experience, not books. The ability to learn doesn’t decline with age, unless confidence and interest declines.
3. Unhealthy fear of failure. A wise man I once knew said “He who is never afraid, he’s a fool.” Successful people overcome their rational fears, and move on to get the job done. Others are debilitated by their fear, and never start. Expecting some failure, and learning to deal with it, is one of the most effective ways to learn. Investors know that all too well.
4. Hidden fear of success. Believe it or not, many people fear success, and stop short if they see it approaching. There is, in fact, plenty of evidence that it takes a strong person to manage their life after success – note the many failures after success in winning the lottery, or after topping the charts in their chosen profession.
5. You are a perfectionist, not a pragmatist. A new product or service will never be perfect in a rapidly changing world, so why start? At the other extreme, I know inventors that have been working on the same idea for thirty years, and have nothing to show for it. A proven path to success in business is to get something out, and iteratively improve it.
6. Not focused, or easily distracted. Successful entrepreneurs have a strong vision, and don’t let anyone or anything lead them astray. In business, this means you have to keep your priorities straight, and separate the important from the urgent. Learn to commit, focus, organize your work, and delegate when appropriate.
7. Always finding excuses. The first principle of entrepreneurship is that “the buck stops here” – you have to accept ultimate responsibility for whatever happens, good or bad, Excuses are artificial barriers for not starting something, or ways of convincing yourself that someone or something else is responsible for your failures. Neither is productive.
8. You are not a self-starter. If you need someone else to tell you when to develop your business plan and organize your time, then “one of these days” will probably never come for you. With the entrepreneurial lifestyle, it’s up to you to set the standards, be the model, and actively do the follow-through.

According to Psychology Today, some twenty percent of people identify themselves as chronic procrastinators. Among wishful entrepreneurs, I think the percentage is nearer to ninety. If that is your current state, it need not be a life sentence by default. Some of you will change your outlook and your behavior, one of these days. When will you get around to it?

Marty Zwilling (more of Marty: http://blog.startupprofessionals.com)

 

Team Member Competency is Critical!

Most people think that the Peter Principle (employee rises to his level of incompetence) only applies to large organizations. Let me assure you that it is also alive and well within startups. I see startup founders and managers who are stalled transplants from large organizations, as well as highly-capable technologists trying to start and run a business for the first time.
Forty years ago, in a satiric book named “The Peter Principle”, Dr. Laurence J. Peter first defined this phenomenon. The principle asserts that in a hierarchy, members are promoted so long as they work competently. Sooner or later they are promoted to a position at which they are no longer competent, and there they remain, unless they start or join a startup to get the next level.
In all environments, the move to incompetence often occurs when competent technical people try to step into management or executive positions, for which they have no aptitude, interest, or training. How many technologists have tried to run startups and failed?
So what are the keys to avoiding this problem for yourself, and recognizing the signs and requirements in your own team, before the “level of incompetence” paralyzes your startup:

1. Focus on communication skills. The ability to communicate effectively and often to your team and to the outside world becomes more and more critical as you move up the role ladder. Practice and training are critical. If communication to others is not your forte, then stick to a highly focused non-management role.
2. Look for ability to direct, as well as act. Many people have trouble directing the task and not doing it themselves. Both are hard work, and both are valuable. Executives get paid for what they know, not for what they can do with their hands—for managing the job and not actually doing it.
3. Comfortable with a spectrum of responsibilities. As a manager, there will be many new responsibilities, most of which are a little fuzzy. A tech promoted to manager must change his mindset from one of focusing on a problem and solving it, to multi-tasking a broad range of responsibilities, and keeping them all moving.
4. Consistent demonstration of high-level competencies. You need ‘portable’ competencies—those that you can take with you to any level of the corporate ladder, and which you can tap into in a managerial capacity. For example: be solutions-oriented, able to balance both sides of an issue, and be a quick study.
5. Provide mentoring and formal management training. If you are seriously looking at shifting someone to a management role, make it top priority to get them formal training, not only on business management itself, but especially on people management and interaction skills. Talent and good intentions are not sufficient.
6. Evaluate passion and current position. A management position is not for everyone, and a specialist career may be much more exciting. Great technical gurus get paid very well, and have visible top positions like Chief Technical Officer (CTO) for prestige and respect. You can still be the founder, and bring in a CEO to run the business.

Another important point is to recognize and deal immediately with occurrences of the Peter Principle. If you are the CEO, and you tolerate ineffective people in important positions, they will suck the life out of your startup. The good people will fade away, and only the bad will remain. You will be tagged as the one with the Peter Principle.
It’s something that we all have to deal with, in our own career, and with other team members. In a small startup, everyone has to carry a maximum load for survival, and everyone sees the non-performers. If you are the last to see the problem, or the last to react, maybe it’s time to look in the mirror.


Marty Zwilling
more of Marty? blog.startupprofessionals.com

Move your marketing strategy from 'Hunting' to 'Gardening'

Have you noticed that more companies beg you to participate in their business today? It started with an email survey on your last stay at their hotel, but now includes requests for online product reviews, to social media input on the design of future products. They do it because engaged customers become loyal advocates and buyers. Welcome to the “Participation Age” of marketing.
Some say it’s happening today because it’s new, and technology makes it possible. Others say it stems from Intrinsic Motivation Theory, which asserts that people have always been motivated by a desire to join, share, take part, connect, and engage, and find that experience rewarding. In any case, your business needs it today to rise above the crowd and edge out competitors.
If you want all the specifics, you must follow the new wave of marketing experts, like Daina Middleton, and her recent book “Marketing in the Participation Age.” I’m most intrigued by one aspect that I believe relates to every business - the move from a hunter-based metaphor to a gardening metaphor – nurturing what we have planted, based on the following five rules:

1. Embrace test-and-learn values. That means constantly trying new marketing elements, understanding quickly what works, and immediately scaling, then moving on to the next alternative. Nurturing marketers reserve a minimum of 10 percent of their marketing budgets for testing and learning. It’s a dynamic customer environment out there.
2. Innovate; don’t perfect. The nurture approach leverages from the best of the moment, quickly adding value before someone else does it first. The concept of continual innovation is crucial, because the best may not last long. Pick something that is good enough and embrace the flaw as an opportunity to learn. Adapt quickly and move on.
3. Act quickly and motivate others, including participants, to act on your behalf. Motivate people, including your customers, to do something to improve your marketing today. Inspire your organization to act quickly and create an environment that rewards moving quickly. Estimate and act; because if you don’t, your competitors will.
4. Mix and blend; don’t invent. Partner with others to create unique solutions that might benefit your brand, product, or solution. Choose an agency partner who is pushing the envelope and remember to consider technology, media, and creative opportunities. Look for elegant blends of all three, not an elegant single media solution.
5. Embrace risks and champion failures. Prepare to learn from mistakes and accept that failures are inevitable in finding success. Partner with agencies that are willing to put skin in the game and get paid only if they deliver results. It often takes several failures to find opportunities that yield the best results.

In the current world of escalating change and information overload, marketing is not a luxury, and participative marketing can be the key to success, even for very technical solutions. We often see a mediocre product with effective marketing outperform a good product with little or poor marketing. Big marketing budgets alone and single blockbuster campaigns don’t assure results.
The message is simple. Ask your customers and partners for ideas, try them all, measure results, and scale up the ones that work. The participants, not the marketers, are in control, and they are demanding a relationship, not just a marketing message. If they don’t find value in the relationship, they move on. The choices and opportunities are theirs.
The situation is not unlike the attraction of current major social media sites, like Facebook, successful multiplayer game sites, like Activision, and today’s real world sports and politics. Gen-Y members were born participants, and they are a major force in every business domain. People thrive on continually learning, feeling empowered, and providing input to the world they live in.
So if you are a startup, or even a mature business, you need to nurture these intrinsic desires and develop more meaningful customer relationships that yield greater revenues. Marketing is no longer a one-way conversation. Does your marketing include listening as well as talking?
Marty Zwilling
more of Marty on http://blog.startupprofessionals.com

Starting a Business with Your Spouse

When she was 24 years old, writes Allie Siarto in her article, she started a business with my fiancé (now husband) and one of our best friends. Three years later, our business and marriage are stronger than ever, but not without a few bumps along the way.

If you’re considering starting a business with your spouse or significant other, or if you already have a business and you’re considering bringing your significant other into the mix, run through this checklist to avoid major headaches down the road:

1. Create an emergency fund.

   Money is the number one reason for divorce, and cash flow tends to be the number one challenge for new businesses. When we first started out, we waited months to get our business cash flow in order and get paid. But we didn’t stress, because we had saved a personal emergency fund ahead of time.

2. Get office space.

   You shouldn’t run out and get an office right away, but start budgeting for an office or co-working membership as soon as possible. We spent the first year of our business working from home, but we also joined a co-working group and got together with other entrepreneurs twice a week at a local coffee shop just to get out of the house and find camaraderie. Co-working spaces, as the co-working center of the Small Business Development Center of the Davao Chamber of Commerce offer flexible part-time solutions that will give you a more budget-friendly opportunity to get out, meet new people and maintain sanity.

3. Know your personality types.

   I tend to draw my energy from being around other people, while my husband draws energy from focused time by himself. I am more focused and energetic in the morning, while he works best late at night. I am very focused on the big picture, while he does better with the details. By understanding our individual strengths, we are better able to find areas where we complement each other. Consider taking a personality assessment to figure out your individual strengths and how you can best work together.

4. Define management roles.

   Along with knowing your personality type, you should have clearly defined roles within the company. Write job descriptions for yourselves and set clear expectations about who will take on which tasks for the business.

5. Engage in separate hobbies.

   When you are starting out, you will be spending a lot of long hours working together to get your business off the ground. It sounds strange, but it’s important to schedule activities apart. When we started our business, I got involved in the local photography community, while my husband got more involved with the organizations in the local startup scene. This added some balance to our lives and gave us something new to talk about outside of work.

6. Discuss risk tolerance.

   Because our business is our main source of income, my husband and I tend to be less risk-averse than we might be if we worked separately. We decided early on we wanted to take a “slow and steady” growth path with no debt, loans or investments, but we reevaluate our views on tolerance for risk, regularly.

7. Balance praise and constructive criticism.

   Make a point to thank each other for a job well done, and be kind about how you approach constructive criticism. In a close relationship, we often forget these basic rules of business.

8. Have a sense of humor.

   Don’t take yourself too seriously. Take time to find humor and happiness in the little things each day. For example, I’ve been known to break into song and dance during the work day.

Starting a business with your spouse can be one of the most challenging and rewarding things you will ever do. There will be tears and laughter. There will be celebrations and frustrations. But in the end, there’s nothing like sharing the payoffs of working together toward a common goal with your life partner.

Allie Siarto is the co-founder of Loudpixel, a social analytics company focused on social media monitoring, insights, measurement and infographics. She also runs a project called Entretrip, a co-traveling experience for location independent entrepreneurs, and a digital marketing innovation podcast called The Apt Marketer.

Article published on YFSMagazine.com

10 Qualities every future business needs to have

The reigning theory in business has long been that “alpha” leaders make the best entrepreneurs. These are aggressive, results-driven achievers who assert control, and insist on a hierarchical organizational model. Yet I am seeing more and more success from “beta” startup cultures, like Zappos and Amazon, where the emphasis is on collaboration, curation, and communication.

Some argue that this new horizontal culture is being driven by Gen-Y, whose focus has always been more communitarian. Other business culture experts, like Dr. Dana Ardi, in her new book “The Fall of the Alphas,” argues that the rise of the betas is really part of a broader culture change driven by the Internet, towards communities, instant communication, and collaboration.

Can you imagine the overwhelming growth of Facebook, Wikipedia, and Twitter in a culture dominated by alphas? These would never happen. I agree with Dr. Ardi’s writing, that most successful workplaces of the future need to adopt the following beta characteristics, and align themselves more with the beta leadership model:

1. Do away with archaic command-and-control models.Winning startups today are horizontal, not hierarchical. Everyone who works there feels they’re part of something, and moreover, that it’s the next big thing. They want to be on the cutting-edge of all the people, places and things that technology is going to propel next.
2. Leaders of tomorrow need to practice ego management.They should be aware of their own biases, and focus on the present as on the future. They need to manage the egos of team members, by rewarding collaborative behavior. There will always be the need for decisive leadership, particularly in times of crisis, so I’m not suggesting total democracy.
3. Winning contemporary startups stress innovation. Betas believe that team members need to be given an opportunity to make a difference – to give input into key decisions and to communicate their findings and learnings to one another. Encourage team-members to play to their own strengths so that the entire team and organization leads the competition.
4. Put a premium on collaboration and teamwork. Instead of knives-out competition, these companies thrive by building a successful community with shared values. Team members are empowered and encouraged to express themselves. The best teams are hired with collaboration in mind. The whole is thus more than the sum of the parts.
5. In the most winning companies, everyone shares the culture. Leadership is fluid and bend-able. Integrity and character matter a lot. Everyone knows about the culture. Everyone subscribes to the culture. Everyone recognizes both its passion and its nuance. The result looks more like a symphony orchestra and less like an advancing army.
6. Roles, identities and responsibilities mutate weekly, daily, and even hourly. One of the big mistakes entrepreneurs make is they don’t act quickly enough. Markets and needs change quickly. Now there is a focus on social, global and environmental responsibility. Hierarchies make it hard to adjust positions or redefine roles. The beta culture gets it done.
7. Temper self-esteem and confidence with empathy and compassion. Mindfulness, of self and others, by boards, executives and employees, may very well be the single most important trait of a successful company. If someone is not a good cultural fit, or is not getting it done, make the change quickly, but with sensitivity. Pain increases over time.
8. Every individual in the organization is a contributor.The closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Successful cultures encourage their employees to keep refreshing their toolkits, keep flexible, keep their stakes in the stream.
9. Diversity of thought, style, approach and background is key. Entrepreneurs build teams, not fill positions. Cherry-picking candidates from name-brand universities will do nothing to further an organization and may even work against it. Put aside perfectionism, don’t wait for the perfect person – he or she may not exist. Hire track record and potential.
10. Everyone need not be a superstar. It’s about company teams, not just the individual. In case you hadn’t noticed, superstars don’t pass the ball, they just shoot it. Not everyone wants to move up; it’s ok to move across. Become their sponsor – onboarding with training and tools is essential. Spend time listening. Give them what they need to succeed.

Savvy entrepreneurs and managers around the world are finding it more effective to lead through influence and collaboration, rather than relying on fear, authority, and competition. I believe beta is rapidly becoming the new paradigm for success in today’s challenging market. Where does your startup fit in with this new model?

Marty Zwilling (more about Marty on http://blog.startupprofessionals.com/)

*** First published on Entrepreneur.com on 10/29/2013 ***

10 Key Steps For Aspiring Billionaire Entrepreneurs

Everyone recognizes a great entrepreneur when they work with one, but most entrepreneurs don’t know what to look for in themselves that will drive that perception by others. In my experience, there is no magic gene involved, just simple good habits executed consistently and convincingly until everyone around you in a startup wants to follow your example.
This leading by example is easy to say, but not so easy to put into action. Most leadership gurus, including John Baldoni, have provided generic recipes, like his book from a while back, “Lead By Example: 50 Ways Great Leaders Inspire Results.” The points are great, but can be made even simpler and more actionable by adapting then to the world of the entrepreneur:

1. Demonstrate character. In the dictionary definition, character is said to be “the stable and distinctive qualities built into an individual’s life which determine his or her response regardless of circumstances.” Steve Jobs of Apple had character, and the people around him knew what he stood for in good times as well as bad.
2. Be accountable for your actions. In a startup, things don’t always work, and it’s easy to blame someone else, the poor economy, or just bad luck. Thomas Edison made no excuses for ten thousand light failures. Challenged by his contemporaries, Edison soberly responded: "I have not failed. I have just found ten thousand ways that won't work."
3. Check your ego at the door (and keep it there). For an entrepreneur, this is often evident in the willingness to be coached, by outside experts or by your own team. We all know too many people who won’t listen to any advice from anyone. That’s just hubris, and it doesn’t inspire anyone.
4. Promote resilience. There is no shame in getting knocked down; it’s getting back up that matters. In a startup, pivots and problems will happen. Learn to anticipate change, bounce back stronger, and teach others to do the same. Dean Kamen, while still struggling with the Segway Human Transporter, holds 440 other device patents.
5. Get in the habit of asking questions but do not expect easy answers. That includes taking a hard look in the mirror, and facing reality. Howard Schultz, who grew Starbucks to 13,000 stores by 2008, decided to step back in as CEO when the economy was killing his stores, and refocus everyone on the customer. Now he has over 20,000 stores.
6. Manage around obstacles. We’ve all seen the entrepreneur who is struggling to keep the business alive by tackling the daily obstacle. No one is looking around the corner to see the next one. Richard Branson, now worth about $4.2 billion, offers this advice: “Obstacles and challenges are healthy for everyone.” He is always looking ahead.
7. Drive innovation. Great businesses these days start with innovation. Entrepreneur examples include Larry Page and Sergey Brin at Google, who turned a new search technology into a tool that most of us couldn’t live without. Encourage everyone on the team to think and act creatively. Good ideas can come from anyone at any time.
8. Encourage dissent about issues but promote civility around people. Receptiveness to dissent allows for corrective feedback to monitor ineffectual startup practices, poor and unfavorable decision making, and insensitivity to team needs and desires. This is positive, but a loss of civility more than negates all these positives.
9. Create a winning culture. Entrepreneur leaders drive values, values drive behavior, behavior drives culture, and culture drives performance. High performance makes new leaders. This is the self-reinforcing circle of excellence every startup needs for success. Winning business cultures, like at Apple, are set from the top.
10. Teach others “the how.” Then get out of the way and let people do their jobs. Great entrepreneurs are mentors to everyone on their team. Effective entrepreneurs are not afraid to “get their hands dirty” working with the troops. Bill Gates of Microsoft, even late in his career, wasn’t afraid to jump in and write some code to illustrate a point.

Being an entrepreneur may start with that million dollar idea, but turning that idea into a great startup is all about results. The quickest way to great results is to build a great team, and let it multiply your productivity. Using the actions described here as a model, take a look in the mirror to see how well you are leading by example.

Marty Zwilling (more of Marty at http://blog.startupprofessionals.com/)

10 Cash-Flow surprises that could kill your Startup.

The sad truth is that cash flow surprises kill many startups, even though they should have been adequately funded to survive. Overall, 90% of small business failures are caused by poor cash flow, according to the D&B Small Business website. Cash is king when it comes to the financial management of a growing company, so this is not the place for shortcuts and sloppy practices.

Good cash flow management, in simple terms, means understanding every inflow and outflow of cash, and never delegating this function. In principle, you must delay every outlay of cash as long as possible, while incenting everyone who owes you money to pay it as rapidly as possible. Surprises are unanticipated lags between these two events, as well as unplanned cash outlays.

I will outline here ten key principles and disciplines that every entrepreneur must understand and practice to minimize surprises and failures in this area:

1. Failure to document cash flow projections is a disaster. No matter how small your company is today, there are more moving financial parts than you can manage dynamically in your head. Of course, you can’t predict everything, but writing down what you know will identify existing problems sooner, and allow other team members to help.
2. You can be on budget, and still run out of cash. In the real world, spending seems to happen fast, and money coming in happens slowly. Thus your monthly budget may balance, but if planned income comes later than planned expenses, you have a short-term cash flow surprise shortage. Neither banks nor investors will help you on this one.
3. Your startup may be profitable, but broke. Profits don’t necessarily translate into cash. You can make profits without making any money, since the first priority of most startups is to reinvest everything back into the business for growth. There are lots of accounting tricks to make you profitable, but it takes real cash to pay the bills.
4. Seasonal sales fluctuations eat cash. Fluctuating sales means more inventory is required to cover the ups and downs. Every dollar in inventory is a dollar less in cash available, maybe even two dollars less if your gross margin is 50%. If you try to vary the number of employees to match, that costs even more cash for hiring, firing, and layoffs.
5. Unanticipated expenses and emergencies drain cash. The chance of unanticipated expenses, in my experience, is close to 100%. It could be a natural disaster, like a flood or wind storm, or loss of key personnel, equipment failure, or a major customer complaint on the Internet. Every startup has an unplanned pivot, and these all drain cash.
6. New businesses don’t get “normal” terms. It’s easy to forget that your new office rent asks for first, last, and security; new utilities require an escrow account; and new vendors want immediate payment for the first couple of months, before they offer the normal net 30 terms. On the other side, your new customers expect a free trial period.
7. Sales volumes are still ramping up while marketing expenses are at max. In the early days of a new business, and every time you make changes, sales volumes slip just when you need them most to cover the extra marketing expenses and new infrastructure. Your old “cash cows” are dying, while the new ones are still being fed heavily.
8. Even good customers don’t always pay on time. The Kauffman Foundation reports that late payments are among the biggest challenges facing startups. According to the Receivables Exchange, small businesses now wait nearly 50 days on average to get paid. If you are dealing with distributors, that wait can easily be four or five months.
9. Higher than anticipated growth has put you in cash flow hell. The faster you grow, the more cash you need, to build product, facilities, staff, and service. These are “up front” costs that can’t wait the four or five months before the sales and revenue catch up. If you can’t deliver to match the growth, your house of cards comes tumbling down.
10. Bankers and investors hate negative surprises. If your execution doesn’t include the expected cash flow management, investments can get withheld, and executives lose their jobs. I recommend that you buffer your initial requests for funding by 25%, and then add a line of credit, to cover contingencies and minimize the chance for negative surprises.

Then there are the Founders that overreact. They pay just the smallest bills and let the rest slide. Or they stretch out all payments until vendors complain, reduce your discount, or eliminate your credit. If payroll is late, morale and confidence go down, the good people leave, and your startup spirals into the ground. For all these reasons, it’s worth your focus to prevent cash flow surprises.

 Article by Marty Zwilling -http://blog.startupprofessionals.com
*** First published on Young Entrepreneur on 07/12/2013 ***