Thursday, September 27, 2012
The % of ownership can be determined by a financial contribution, or a donation of effort in the form of hours at zero cost to the company, carefully accounted at an agreed upon rate and yielding a resulting ownership share, or some other means of valuing an investment in the firm.
Yet a third factor to consider in specifying the ownership % is the long term role of each partner in the operation of the firm.
An operating agreement is a separate document, not controlled or required by the state or the federal government but very important to your company. It should be a simple, straightforward document you and your prospective partner(s) can draft yourselves, addressing such matters as % of ownership, how revenue will be distributed and other general matters, as well as who can commit the company in the form of credit cards, who signs checks on the company account and other administrative matters. Buying out a partner should also be covered as well as adding new members if the need arises down the road.
I have seen many enterprises fail or go through terrifically hard times due to lack of an operating agreement. The parties should sign it after a review by a lawyer. It should then be notarized and made an official part of the company file.
You can download a free, generic operating agreement with instructions from the second vertical Box Net cube in the left margin of the below site. You can feel free to borrow from the sample or supplement it as you see fit to make it your own. It is fairly comprehensive in order to cover most business situations and there may be elements of the example you feel are not necessary.
The role of the individual in the on-going operation of the company is a major factor to consider in the ownership equation as well as initial financial or labor contributions. The operating agreement process is the way to achieve equity and commitment among the parties.
Courtesy Of Kenneth Larson, SCORE Mentor
Tuesday, September 25, 2012
Part of the problem is that according to the U.S. Small Business Administration, 72 percent of workers at small companies (companies with less than 100 employees) have no employer-sponsored retirement plan available to them. By starting a retirement savings plan, you will help your employees save for the future, help you attract and retain qualified employees and even gain significant tax advantages for your business and your employees. All while helping you secure your own retirement.
- Today small businesses can offer a retirement plan for about what we pay per month for cable television – even if you have just a handful of employees.
- Business owners can also take advantage of a tax credit for the costs of setting up a retirement plan. The credit equals 50 percent of the cost to set up and administer the plan up to a maximum of $500 per year for each of the first three years of the plan.
- Employee contributions are deductible from the employer’s income and employee contributions (other than Roth contributions) are not taxed until distributed to the employee. Money in the plan grows tax-free.
- A plan can be put in place in less than a week and will only require about an hour a month of on-line maintenance time. And you don’t have to set up an employee match unless you choose to do so.
Monday, September 24, 2012
Mumpreneur must be a British thing, as when I Googled it most of the sites were .uk. Never heard the term here in the states and I find it a bit derogatory. I've owned a recruiting business for over twenty-five years and prior to that was a free-lance graphic designer before taking a job as a recruiter. I was a single mom and worked from home, and I would have been horrified to be singled out as a mumpreneur. I was as viable a solopreneur or freelancer as any man with or without children, a Professional Woman with clients, deadlines, meetings, billings and taxes owed.
If one runs a legitimate business, whatever that business is, and it is successful, turns a profit, and pays taxes to the government, then you are a Professional Woman. If you run a Cottage Industry, you are still a business woman, but it's a smaller endeavor, selling more one of a kinds, or handmade items to a smaller audience. But that is a legitimate business too.
I take umbrage with that term. Are the many women on Etsy.com mumpreneurs? I doubt they would see themselves that way. And that is a highly successful international site with handmade goods from all over the world from small firms, individuals or companies that often work out their homes. They see themselves as businesses.
A Professional Woman is known by her code of ethics, business practices, decorum and the ability to deliver on time and within budget what she promises. Just like any Professional Man. They are one and the same.
Where did this term originate and who is using it? Distasteful to me. As a woman I would be embarrassed to say it out loud. Demeaning.
Courtesy of Cheryl Roshak
I think it depends on who you ask- My site is called "Mompreneur Mogul".
It's not derogatory. It's not degrading.
Anyone who is a mother knows that the term is a total gift. Period.
Some women flip out about it - I think that's silly. ( of course that is my opinion I know other women get upset if you call them mommy, or in this case mompreneur- I don't.
And as far a gender discrimination I don't see how it applies in any way.
To me a Mompreneur is obviously a mother and she is a professional woman.
Even if she never had a business just being a mom would make her professional. Anyone who is not a mom should try it for 24 hours. Most would come out crying. Moms are professional believe me.
As a matter of fact I think it's funny at times that people who have racked up degrees and are in high positions in companies ( some not all) look down on a mother. Funny if it wasn't for theirs they wouldn't even be in that company.
It's one of the most challenging most rewarding jobs on the planet. Nothing compares really.
I've performed on stage in front of 40,000 people. I shook the hands of Steve Wynn. Chuck Schwab, Michael McDonald, Larry The Cable Guy and others. I've toured the world and been in the company of the elite and the most poor- I've written a book, been on tv, run my blog and business and I love my business however being a mom beats it all.
Simply put a Mompreneur is a woman with a business who also has children and she is profesional.
Oh and there is no shame in my name ;) None whatsoever-
Courtesy of Lisa Cash Hanson
I think mumpreneurs are defined as mothers with children who run a business, usually from home and this business is often web-based, allowing flexibility for childcare arrangements. In my experience of it, mumpreneurs also often create products and services for pregnancy, babies, children and childcare once they see the need for it after going through these stages themselves.
A professional woman may have her own business, but she is less likely to be based at home with children within this business, having opened her own offices, salons or consulting rooms If she does not have her own business, she is likely to have a senior role in a government or publicly-listed company.
The overlap is that they both work incredibly hard! And happen to be women.
Thursday, September 20, 2012
NO MARKETING PLAN
NO MARKETING CAMPAIGNS
NOT TESTING MARKETING EFFORTS
NOT MEASURING MARKETING EFFORTS
Too many business owners look at marketing as an EXPENSE when it's actually one of the best INVESTMENTS you can make for your business!
You can't open the doors of your business and expect customers to find you. I have seen businesses spend tens of thousands of dollars on a new retail location and/or to build a new shinny website and then EXPECT customers to find them. You can have the best website in the world but if no one knows about it or can't find it how will increase sales?
ATTENTION ALL BUSINESS OWNERS!
Marketing is ONLY a Expense if you are doing it incorrectly! Maintain active marketing campaigns and make sure you can MEASURE all of your marketing efforts. Don't just throw money at your marketing and think its going to work itself out. Test your marketing and advertising and measure everything. Large corporations can afford to throw money at marketing they can't measure but most small businesses can't afford this.
Successful businesses only risk a small amount in testing an idea with a high potential return .... e.g. adwords to get traffic to a squeeze page or survey .... then only do they create the product if the test indicates it is profitable else they fail quickly. They only take major risks like renting a shop or hiring staff when they have a proven idea that is cashflowing well. Successful businesses plough 10% of turnover into building the business and another 10% into personal & professional development of manager & staff.
Most startups fail in year 1 by developing a product before discovering there is a market for it .... and taking large risks like opening a store for low returns (physical goods have a margin of 10-20%) or risking their home for a loan.
Year 2 taxation is the biggest killer of startups because employees are used to spending all their income once they have it. But when switching to a business taxes are not due till the end of the year. Forgetting to pay themselves first (instead of last) compounds the issue.
Year 3 loss of focus causes problems because too many business owners use a business plan as just a tool to get money from friends, family & fools instead of as a working guide.
Year 4 + the biggest traps include failure to do what only you can do & delegate the rest resulting in burnout.
Business owners are outsiders in society because they have not accepted the social conditioning of working hard for others for 40+ years in the hope of getting a pension of less than half of what was not enough to support your life while working. So they need a support network from successful business people.
A business plan is needed based on the owner's requirement for funding his desired lifestyle *10 ... to give the minimum target profit level of the business.
The successful people/businesses have different accounts and budgets for asset building 10%, education 10%, contribution 10%, play10%, long term saving (eg for new car) 5%, savings/debt reduction 5%, necessities 50%. In other words, budget all your expenses, needs, and desires and stick to it.
Above is not a "Does It All" recipe for business success but should at least give you a few tasty dishes to sic your teeth into.
Monday, September 17, 2012
Out of the top 10 teams in the course, they were from a variety of regions.
Women did just slightly better than the men (differences are not statistically significantly different).
The team score was not significantly higher for those with larger teams. At the beginning I recommended teams of 3-4 people. Once teams got too large there appears to be some decline in performance, but otherwise, team size did not significantly influence the average score. A team that is too large can have difficulties with fast decision making and coordination/communication.
Finally, here's a cool photo of a set of customized, handcrafted soaps from one of the teams that is producing eco-beauty products and soaps:
Often they fail because the owners don't know anything about running a business.
They may be experts in the TYPE of business they have, e.g., a great chef may open a restaurant, a great athlete may open a sporting goods store, a great fashion designer may open a clothing store.
But they know nothing about running a BUSINESS.
I find that business owners don't make it because they:
--somehow think that passion will get them through everything,
--listen to people who have no right to give them advice,
--are too emotionally attached to their business,
--try to do everything themselves
-- they haven't yet moved from being self-employed to running a business -- because they don't know what they don't know.
Marketing wise, most don't understand that "less IS more, when it comes to creating an ideal client profile." They market to "everyone who breaths and make no one special. And we as clients want to feel special.
The bottom line is that the principal reason for failure is ...
Lack of a sound business plan. It is just as much for the business planner as for the investor.
What's the best measure to protect yourself?
Completing the business planning process will convince the most important individual that a viable business vision exists for the enterprise. That individual is the owner.
When the owner has completed a business plan, he or she will be able to pitch it with confidence to people who can help. It will be the road map to a business future that you can slide across the table to a banker, partner or investor. The owner can address it with verve because he or she owns it by having done it.
These links provide free tools and examples on business planning as well as free counselors to assist, worldwide.
How To Write A Business Plan
Sample Business Plans
Friday, September 14, 2012
A cowboy named Bud was overseeing his herd in a remote mountainous pasture in Montana when suddenly a brand-new BMW advanced toward him out of a cloud of dust.
The driver, a young man in a Brioni® suit, Gucci® shoes, RayBan® sunglasses and YSL® tie, leaned out the window and asked the cowboy, "If I tell you exactly how many cows and calves you have in your herd, will you give me a calf?"
Bud looks at the man, who obviously is a yuppie, then looks at his peacefully grazing herd and calmly answers, "Sure, why not?"
The yuppie parks his car, whips out his Dell® notebook computer, connects it to his Cingular RAZR V3® cell phone, and surfs to a NASA page onthe Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo.
The young man then opens the digital photo in Adobe Photoshop® and exports it to an image processing facility in Hamburg, Germany ...
Within seconds, he receives an email on his Palm Pilot® that the image has been processed and the data stored. He then accesses an MS-SQL® database through an ODBC connected Excel® spreadsheet with email on his Blackberry® and, after a few minutes, receives a response.
Finally, he prints out a full-color, 150-page report on his hi-tech, miniaturized HP LaserJet® printer, turns to the cowboy and says, "You have exactly 1,586 cows and calves."
"That's right. Well, I guess you can take one of my calves," says Bud.
He watches the young man select one of the animals and looks on with amusement as the young man stuffs it into the trunk of his car.
Then Bud says to the young man, "Hey, if I can tell you exactly what your business is, will you give me back my calf?"
The young man thinks about it for a second and then says, "Okay, why not?"
"You're a Congressman for the U.S. Government", says Bud.
"Wow! That's correct," says the yuppie, "but how did you guess that?"
"No guessing required." answered the cowboy. "You showed up here even though nobody called you; you want to get paid for an answer I already knew, to a question I never asked. You used millions of dollars worth of equipment trying to show me how much smarter than me you are; and you don't know a thing about how working people make a living - or about cows, for that matter. This is a herd of sheep."
"Now give me back my dog."
Thursday, September 13, 2012
I was introduced to Nilofer Merchant by a colleague at Stanford's Engineering School when I was looking for a new guest speaker and mentor for my class on Technology Entrepreneurship.
Nilofer kept my entrepreneurship class of Stanford students enthralled for a full 90+ minute class. In short, she was terrific! I asked her to come in and talk to them about marketing as the first guest speaker in E145 (Intro to Technology Entrepreneurship) for a crowd of engineers skeptical about the value of marketing in startups. By the end of her talk, she not only had given the students concrete things they could do in their own startups, she also had a line of students out the door staying after class to talk with her for longer!
The book opens with a NYT-style obituary to the old ideas about Traditional Strategy still taught in some business schools.
The tools are not the issue. Establishing processes that are efficient and then selecting to the tools is the challenge I encounter time and again with small business.
As a counselor I have noticed the symptoms of the technology monkey, particularly among the younger (Generation X and Y) entrepreneurs.
There seems to be a belief that automation, the Internet and social networking can make the business succeed when in fact the real design of the enterprise itself is lacking (niche, market base, business plan, competitive analysis and financial forecasting)
I hear from many clients who ask, "What Now?" having launched an enterprise that is going nowhere because they are driving the tools and not the car.
I take them back to the garage, design the auto to see if it can run and then apply the wrenches retroactively if that is possible. It is usually a traumatic experience and could have been avoided with strategic and business planning before launch.
Above courtesy of Kenneth Larson, SCORE Mentor
Monday, September 10, 2012
Just my opinion, but in my mind this is how I see it:
Entrepreneur = visionary
Business Owner = does what needs to be done
I feel a business owner could be successful at something they don't necessarily love, whereas an Entrepreneur is always creating and pushing the boundaries
He or she possesses:
1. An Idea
2. A market niche
3. The desire to control individual destiny
4. The willingness to learn how to run an enterprise
5. Ability to work hard.
6. The desire to build unique entities that are individually their own
B. BUSINESS OWNER:
The person or persons registered on the Articles of Incorporation with the state as the rightful holders of employer and tax I.D. numbers for an enterprise when it is registered to become a business.
A may = B but not always.
There are silent partnerships, financing arrangements, operating agreements and other circumstances whereby the entrpreneurial drive behind an enterpirse is not vested in the owner.
Holding companies and similar corporate identities make owners removed from the entrpreneurial level and public companies sell stock making the stock holders owners in businesses.
Warren Buffet and Berkshire Hathaway's entrenrurial niche, in fact is finding entrpreneurs and good long term investments that pay off.
Most business owners start there businesses because they are very good at what they do! They run the business and are more technical in nature with a large leaning to opertional duties in the business as well as all getting involved in all aspects of the business from Admin, Accounts, HR, Strategice Development, Personal Dev, IT, Marketing and Sales etc
An entrepreneur is somebody who is "opportunity obsessed". He has the ability to take the opportunity, look for recources to exploit the opportunity and most imortantly if a team is needed an entrepreneur has the ability to identify people who compliment his weaknesses with the aim to build a profitable enterprise that can be sold or harvested for a capital gain. An etrepreneur will then seek out further ventures with similar aim.
Personally I think entrepreneurs and business owners represent two very different populations but there is some overlap (represented by an intersection if they were represented in a ven diagram).
The big differences I've seen can be summed as:
Business owners are focused on execution.
Entrepreneurship are focused on vision.
Additionally, entrepreneurship is a way of looking at the world that is more about creation, innovation, and (re)imagination and less about P&L and the operating aspects of running a business.
There are plenty of examples of entrepreneurs who have started successful businesses but rarely do they stick around once their vision has been realized.
Big companies are beginning to see the value which entrepreneurs can bring to a business and there is a big push in corporate America to foster Intraprenuership within big corporations. I think this trend will make great strides to blur the lines between the 2 further and make businesses more entrepreneurial.
I guess my final comment would be that even though the two may be different in all the ways mentioned, both of them need to imbue similar aspects into their journey to really succeed - Passion, Motivation, Know their North Star, Know Why they're on that Path, be able to Grow Professionally as well as Personally and so on. So they may be differently orientated, but still need the same impetus's in their own individualistic way.
Friday, September 7, 2012
What better way to start a new season than by starting a new venture? The soon to launch 3-day SSFB-only Buy-One, Get-One FREE Special will help folks do just that!
Starting Friday, September 7th at 12PM ET visitors who "Like" SiteSell Facebook get a FREE SBI! with their purchase of SBI! at it's regular annual price ($299).
This means when you get one custom small business website from SBI .... you'll get another one FREE. Think of the possibilities for boosting your online efforts with two websites to work with ... for the price of one.
To take advantage of this amazing offer simply go to this Facebook site ...
After you get there "like" SSFB ... and then click through to the Special order page from Facebook.
Want to see what SBI can do for your online business efforts? Watch this ...
This snappy video introduces the notion of RESULTS and PROOF - two critically important elements lacking in every other Web-building platform. They don't advertise proof and results because they doesn't exist.
Only SBI! has THAT kind of backup!
Consider this also. To be successful in business...truly successful...you need to innovate. Innovation is important to not just keep up with the Jones's, but to get ahead and stay ahead of them. With an SBI website you have innovation built in ... AND innovation is continually added at no cost to you! That continued innovation (at no extra cost for over 10 years), sets SBI apart.
To see what I mean check out these tools...all of which are built into every SBI set.
Remember ... to take advantage of everything mentioned above AND MORE .... go here and "like" SBI, then click through to the special order page.
Thursday, September 6, 2012
Think process first and then technology. Consider the projected future needs of your projects, what the customer demands in the way of invoice backup for services, rates and the like if you work on time and material jobs.
Write a specification that details these needs and send it to tool vendors. Ask for competitive quotes and on-line demonstrations or trials if they are available. Select your tool carefully and let your specification drive the tool, not the other way around.
1. An electronic computer software package is not a system. One cannot acquire a system by acquiring computer capability.
2. One acquires a system by conducting systems analysis, achieving a design and processes by working with the people who will run the system. This is hard work and time consuming. Processes are improved and made more efficient by modifying user behavior not by automating it.
3. Once system and analysis and system design are complete one chooses tools to assist in running the system. The adequacy of a computer tool is driven by the requirements of the most efficient system design.
4. The biggest mistake implementation teams make is to believe they are buying a system when they buy a software tool or let the software drive the systems analysis process. That is like asking a mechanic to drive a wrench from New York to St. Louis. It has resulted in millions of dollars wasted and plummeting efficiency in many organizations, large and small.
5. It is necessary to design a system and processes unique to the company to meet user requirements before going shopping for computer tools. If you do not you will be pigeon-holing your company into a COTS mentality and become a slave to the company that owns the source code. If you want anything changed it costs a big buck.
Depending on the size of your business, you could use either QuickBooks (Pro, Premier, Enterprise) or Sage 50 (formerly Peachtree, Complete, Premium, Quantum). Both have most of the small business market for accounting and they offer industry specific applications (Manufacturer, Contractor, profesional services firms, etc). They both allow for invoicing clients by email straight from the accounting software.
Wednesday, September 5, 2012
We look forward to seeing you in the next classes. Meanwhile, please spread the word to your colleagues and friends and on social networks.
PS. Until we migrate your information to the new site, you can access the data from Spring's class on spr2012.venture-lab.org.
Monday, September 3, 2012
This video offers even more background on exactly why Obama hates business and America so much ... and just what kind of dangerous person actually occupies the White House (at least until November 2012). Whatch and listen closely ... it's VERY disturbing.
Outsourcing to India, or anywhere, can be really great and at times really frustrating too.
Following are the things that you need to look out for:
1. History of the company / individual
2. Rate the company is offering (based on your budget)
3. Experience of the outsourced vendor to accomplish the specific desired work, etc.
It is always best to follow an organized process. Following is a simple sample process you could start with .....
1. Initial discussion
2. Project requirement analysis
3. Submission of Time and Cost estimates
4. Negotiations and iterations (estimations and team members)
5. Finalization and contract
6. Introduction of Team
During the development process get involved with regular communication (phone, email, written), team meetings (internat as well as joint via video conference), and a beta testing phase. Don't just jump right into it. Contact, communicate, test, verify, and make sure your expectations are clear and met. I'd also suggest to include agreed upon penalities in any agreement in the unfortunate case of unmet deliverables or performance expectations.
Thursday, August 30, 2012
What you need to decide is what kind of corporation you want to set up. For a simple business, a Limited Liability Company is probably the best for a single owner. If you have partners, you may want to investigate a Limited Liability Partnership or an S-Corp. You probably want to shy away from a C-Corp strictly for taxation purposes unless you're planning something big like an IPO.
Here's a link to a comparison chart of the various incorporation entities ...
You should also read the book "Are You Ready To Incorporate?... Saving Time & Money Through Sound Business Tactics" to help you decide what to do about incorporating.
Book Description ....
The myth: Everyone knows that only big companies and rich people with lawyers incorporate!
The facts: The reality is that there are a variety of ways to incorporate which match whatever business or venture you are engaged in and incorporation is available to everyone who wants financial security and tax savings.
In this remarkable and comprehensive book, the Editors of Socrates provide everything you need to know about incorporation in a single volume dedicated to clarity, easy access to information, helpful hints, practical interview with experts and design principles to make information gathering simple and enjoyable. No other contemporary book contains so much – including the invaluable free CD provided with each book in which glossaries of terms, forms, checklists, special reports, interviews, discussion and more are provided.
Monday, August 27, 2012
1. To attract Investment and potential investors.
2. To add talent to build / translate your business plan to action. For this you need to share your vision with energetic team members who can join you in attaining the objectives.
3. For self. You need to translate your thoughts to paper so that you are able to do a milestone check on the journey at various stages.
To get started you'll need to work through the following steps ...
1. Talk with somebody who has written several successful business proposals. Ask what worked and what didn't.
2. Outline a two-part proposal. The first part will describe the business opportunity and your plans to take advantage of it. The second will present financial data - tax returns, a balance sheet and a summary of your operating plan.
3. Write the proposal. Limit the first part to 10 pages. Make it concise and clear. When describing the market opportunity, cite sources.
4. Explain what makes you and your company different from competitors. Perhaps you have special skills and experiences. You might have a new technology. Talk about your achievements in the industry.
5. Describe the segment of the market you will pursue. Discuss what you will do to take market share away from competitors.
6. Identify prospective customers. Explain why you are targeting them.
7. Summarize your marketing plan. Offer details, but be brief.
8. Discuss any regulatory issues your company might have to deal with.
9. Identify the management team. Who are the top three people in the company? Give brief biographical sketches.
10. Describe your expectations regarding revenue and cash flow for the first year. Discuss how much money you think you will need to get started, how it will be used, and where you plan to obtain it.
I suggest you put together a power point slide presentation to use during any briefs and meetings where you'll be "selling" your proposal. Construct that presentation as follows ....
Slide 1: Mission Statement
This is the one liner of the company that describes what it's doing. It's best here if you relate to a past success.
What the Investor is Thinking: "Why should I be interested in this?"
Slide 2: Market
How big is it and how fast is it growing? That's what you want to convey.
What the Investor is thinking: "Can I build a billion dollar company?"
Slide 3: Problem
How big is the customer's problem that you are solving?
What the Investor is thinking: "How good will my gross margins be?"
Slide 4: Solution to the Problem
What is your company's unique solution?
What the Investor is thinking: "Why hasn't anybody done this before?"
Slide 5: Team
Who is the team, what is their past experience?
What the Investor is thinking: "Would I bet my childrens' future on this team?"
Slide 6: Technology
What's your technology and why is it defensible?
What the Investor is thinking: "How long will it take to deliver this technology? 1 year, or 5 years?
Slide 7: Customers
Who is buying the product and why?
What the Investor is thinking: "Does the value proposition hold water?"
Slide 8: PER CUSTOMER ECONOMICS
Slide 9: Go To Market Strategy
Slide 10: Milestones
Slide 11: Financials
Slide 12: Competition
Slide 13: Financing History
Slide 14: Why This Investor
Now you have a plan and raod map to put together a business plan that will work for you. The next step .... just do it!
Thursday, August 23, 2012
The key here is to conduct a market research and evaluation to determine the best possible business idea that would work or succeed in that particular type of environment. Now, let's say that you have a business idea in mind (e.x. high-end restaurants), you need to find or locate the market niche where this business would really flourish and develop patrons and loyal customers.
Like what I've said earlier, there is no specific "best or worst" business idea. Others might say that "this is a good business" this year, but after some years it would just go bankrupt and all. It is best that you stick with a business that you like and love doing. After that, everything else would follow.
That said ... Kenneth Larson, a volunteer counselor with SCORE and Micro Mentor the last 6 years, considers these the worst and best startup ideas in his experience....
** Exercise Studios
** High End Restaurants
** Travel Agencies
** Construction and Real Estate Related Enterprises
**On line administrative assistant
** Services to the elderly- transportation, errands etc
** Pet Care and Training Services
** Federal government contracting to tap stimulus funding coming through 123 federal agencies in almost every field of endeavor
** "GREEN " Environmental initiatives in almost every venue
** Maintenance, Repair and upkeep of foreclosed properties
** Non-profit organizations for community development chasing grants
** Self-Help Guides for Business
** Training on all aspects of small business Management
** On-line Books
Successful small businesses are developing enterprises in these fields through market research and business plans to deliver unique products and services - then pricing them and comparing them to the existing market, the competition and client demographics to determine feasibility before applying for financing and launching an enterprise.
Monday, August 20, 2012
1)Technology Ventures: From Idea to Enterprise
2) The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Company By Steve Blank, Bob Dorf
3) Entrepreneurship: An Innovator's Guide to Startups and Corporate Ventures by By Marc H. Meyer, Frederick G. Crane
4) What I Wish I Knew When I Was 20: A Crash Course on Making Your Place in the World By Tina Seeling
5) Trump University Entrepreneurship 101: How to Turn Your Idea into a Money Machine by Michael Gordon
6) The E-Myth Revisited by Michael E. Gerber
7) The Millionaire Maker's Guide to Creating a Cash Machine for Life by Loral Langemeier
8) Rework by Jason Fried and David Heinemeier Hansson
9) "Effectual Entrepreneurship" by Stuart Read, Saras Sarasvathy, Nick Dew, Robert Wiltbank, Anne-Valérie Ohlsson
10) Great by Choice by Jim Collins and Morten T. Hansen
11) Art of the Start by Guy Kawasaki
12) The E-Myth - Michael Gerber
13) 9 Lies That Are Holding Your Business Back...: And the Truth That Will Set It Free - Steve Chandler & Sam Beckford
14) EntreLeadership: 20 Years of Practical Business Wisdom from the Trenches - Dave Ramsay
Thursday, August 16, 2012
Here's the story about Team Grayscale. I'm quite proud of them.
The startup culture hit India about 2-3 years ago, Parth Saxena tells
us. Until then, even top MBA students would generally get hired by
international companies, rather than start a venture on their own.
Recently, an incredible change has occurred in the mindset of Indian
youth, and many seek to form their own companies. However,
opportunities such as incubators are still scarce and budding
entrepreneurs are not aware of what measures to take. “What is
required is a great network of mentors and venture-capitalists which
can guide young startups to move on the right path,” says Parth. This
is precisely the gap that Venture Lab seeks to bridge internationally.
The Grayscale team consists of two brothers, Parth and Dhruv Saxena,
and their close friend Nikhil Kapur. Parth and Nikhil, both
23-year-old fresh graduates, have been friends since their early
college days and yearned to start a company together. Their shared
passion for music and Parth’s experience as a guitarist in local bands
sparked the idea of TommyJams in early 2012. The duo noted that
despite the rapid growth of the Indian live music industry, venues
still sought event managers or personal connections to hire live
performance artists, which both resulted in limited choice of artists
and higher prices for the venues. Furthermore, it limits opportunities
for new, budding artists who lack personal connections. Team
Grayscale’s idea of TommyJams would provide an online platform to
bring together artists, venues, fans, and advertisers. Venues can
simply publish upcoming events and interested artists can submit a
portfolio to be considered for the gig. Moreover, for perhaps the
first time, the website will provide fans an opportunity to follow
their favorite artists and venues. With this dream in mind, the team
joined Venture Lab.
Having worked on involved programming projects at multiple internships
and competitions, the team had no lack of technical expertise. Parth
had extensive experience with databases and server-side interactions
and began working on the backend; Nikhil’s experience concerned
user-driven software, and he took over the front-end and the user
interface. Dhruv, who still attends college, was an ideal
point-of-contact for campus networking, and helped Parth with the
backend in his spare time. However, the team lacked entrepreneurial
knowledge and an appropriate plan of action for understanding the
customer segment. Working through Venture Lab’s course videos and
assignments, the team performed extensive market analysis and many
customer interviews. The feedback they gathered brought many useful,
fundamental changes to their proposed product, says Parth , describing
their key lesson as ‘Do not assume, go out and look!’ Moreover, the
team joined hands with four experienced mentors from Venture Lab’s
extensive network and received advice through regular Skype calls.
Over the past few months, the team has been working long hours to put
together a fully-functional prototype, and they are getting ready to
launch a beta version. In preparation, Parth and Nikhil are quitting
their full-time jobs at Texas Instruments and Microsoft respectively.
“We need every spare moment after the launch to market the product and
make it truly viral,” says Parth. “Venture Lab was one of the best
things that could have happened for our venture. Not only did we learn
so much, but it has given us so much confidence that we are chucking
our jobs to become full-time entrepreneurs!”
We, at Venture Lab, wish these new entrepreneurs the best of luck!!
The biggest mistakes ...
1) You assume you know what folks want
2) You try to sell & you are not good at it or you hate it.
3) You fail to define/understand that being an expert doesn't assure connecting with & acquiring paying customers.
These missteps are preventable. You can, with a few easy steps & ways of thinking get your messaging right so it does connect with & gain customers.
Try these steps for doing that....
1.People do things for their reason's not yours
If you have not done the in depth homework to see how a target audience thinks, what it cares about, & how to link what you want to what they want so they say "Hey, thats me - lets talk" ... you probably will be disappointed in your results.
2. Its hard to hear folks with a background in messaging and connecting for getting results trying to tell you that. That's because your belief in your direction is so strong in you that you think everyone will agree & want to join in. You get blinded by that belief & it prevents you from being objective about how best to get followers & customers.
Even hearing the communication "experts" saying things like "folks just do not care about that" referring to your pet project, being so caught up in the value of your idea, you resist their expert advice. Its just too hard on you & your deep seeded beliefs, values to accept what they say.
3. You just can not wish things into reality. If the audience has or sees no real buy in reason that, to them, resonates and says "that's me - that's exactly what I need to do and I am doing it" ... your message & recruiting efforts will fail.
There's just too many "you need to do this" messages bombarding us so its critical that you do what is suggested in this step in the way you reach out to folks.
4. Looking at ourselves, our core traits and what we are really good at, we should see what we are good at & not good at and accept it. If we are not marketing types & we want our idea to connect, get the marketing type to figure out how to do that.
5. Its not ego, its pragmatism that should govern how you & your strengths and weaknesses are played out in trying to make something happen. "Why go it alone when you don't have to?" Why risk failure trying to do what you know you are not good at, especially something as important as gaining willing customers?.
This is especially true when you want to influence people, their thoughts, manage your messaging so you do gain traction for your idea or project amongst the many different types of audiences out there.
Knowing precisely how to do this with differing approaches that resonate with differing target audiences is how you get to "yes, that's exactly what I need and I want to do it" from the members of the target audiences you have identified as folks who could benefit from what you offer. If you are not good at that, be brutally honest & let someone who is great at that help you by doing that part for you.
Failure is a learning experience but you can, especially if you want to create active acceptance/participation in something, avoid failure if you can adopt the thinking of what's been suggested here in this post.
And remember this very simple but useful way of thinking as you try to go gain joiners, genuine prospects, customers...
1. "People do things for their reason's not yours"
2. "Imagine the prospect or target audience has a sign on their forehead that says so what!"
Living those two axioms when charting connecting, influencing, getting supporters, getting customers goes a long way to realizing success for gaining acceptance of your idea. It goes a long way for you in getting folks to participate and willingly join in with your "vision" &, for their reasons, not yours, make it theirs as well.
Courtesy of Neil Licht,Chief Advisor, HereWeAre, Growing your business group firstname.lastname@example.org
Wednesday, August 15, 2012
In a recent paper I look at a similar question, using a broader dataset of all founding attempts by MIT alumni. Instead of IPOs which are a goal of only a subset of entrepreneurs, I look at revenues as the success or performance measure. What my coauthor and I find is that the advantage of prior experience depends on how similar the current venture is to the previous one. The more dissimilar, in terms of industry or technology, the less experience helps and the more important innate talent is for performance. The empirical challenge here is that more talented entrepreneurs may be more likely to go on and found more companies, so we needed some sophisticated statistics to disentangle the impact of experience vs. innate entrepreneurial talent.
Overall, revenues are 52% higher for the experienced entrepreneur and 113% higher for the experienced entrepreneur starting a firm in the same industry. Mean revenues in this sample are $328,000. So for the experienced founder, mean revenues would be $498,000. However, if the experienced founder starts a company in an unfamiliar setting then experience becomes a liability. With a very innovative technology revenues are actually 6.8% lower. If your prior experience was before the dotcom internet disruption then for the next firm your revenues are likely to be 43.8% lower. So whether experience helps or hurts very much depends on the context and how similar the current venture and industry environment is to the previous experience.
I include the citation, abstract and a bit of the text of the paper below to give more of an example of the theoretical arguments and reasons why this may be the case.
Eesley and Roberts. Strategic Entrepreneurship Journal, 6: 207–219 (2012)
Abstract: We explore whether entrepreneurial performance is due to innate talent or the accumulation of entrepreneurial experience. Using a novel data set with multiple observations of founding attempts per individual, we generate a unique measure of entrepreneurial talent. In contrast to prior findings, the relative importance of experience versus talent changes with the context.
When the current market or technology is familiar, experience dominates. However, when the venture context is unfamiliar, talent is more important. Individuals with experience and talent handle both familiar and unfamiliar aspects and may extract more from a given level of experience. The findings advance our understanding of how the drivers of venture performance shift with the broader technological and industry environment and places limits on when experience aids performance.
Overall, this ‘learning by doing’ enables experienced entrepreneurs to imprint their ventures more effectively at the outset by choosing better opportunities (Huber, 1991; Ingram and Baum, 1997; Baum and Ingram, 1998). As time goes on, they are better able to develop viable business models, raise funding, install superior strategic processes, and complete the tasks involved in setting up a new firm. Prior experience in this case allows the entrepreneur to reuse strategies, network connections, and industry-specific knowledge. With more prior founding experience, the entrepreneur has seen a wider spectrum of issues and problems during the start-up process. The greater the number of prior start-up experiences he/she has to draw from, the less likely that the decisions that need to be made in the next venture will be unexpected or unknown to the entrepreneur. While an inexperienced entrepreneur may spend valuable time and money discussing and trying out different solutions to problems that arise, the experienced entrepreneur has likely already encountered these problems and has solutions. Specifically, we propose:
Hypothesis 1a: An entrepreneur with more venture founding experience is more likely to found a high-performing venture.
We also expect that venture experience will be particularly advantageous for focal venture performance when the entrepreneur is familiar with critical aspects of that venture. That is, when the context surrounding the new venture is more familiar to the entrepreneur and, thus, more similar to the past, learning from prior entrepreneurial experience will be of particular relevance (Argote and Ingram, 2000; Argote, Beckman, and Epple, 1990). Lessons from the past will more directly transfer to the current situation. We define familiarity as having a close acquaintance or being well known. For example, when entrepreneurs engage with familiar technologies, they are likely to face fewer surprises and less likelihood to encounter problems. There have been opportunities to work out bugs, increase predictability, and better understand customer needs related to the technology (Levinthal and March, 1993; Meyer and Roberts, 1986). Similarly, when an entrepreneur starts a firm in a familiar industry, he/she is likely to understand the competitive dynamics of the industry. He/she will already be familiar with customers, suppliers, and ways of doing business in the industry. He/she may be able to use analogies from prior experience that fit particularly well with the current venture (Gavetti, Levinthal, and Rivkin, 2005), and he/she can reuse existing relationships. When problems arise, in a more familiar context, there is a greater likelihood that they have an overlap with problems that the entrepreneur has already faced in a previous venture.
Even when choosing which entrepreneurial opportunity to pursue, if entrepreneurs stick to an industry or technology they are familiar with, they are more likely to identify a valuable opportunity. When the entrepreneur knows the market, customer preferences, and potential distribution or channel partners, he/she is more likely to choose a promising opportunity. In contrast, if the experienced entrepreneur strays into potential opportunities in an unknown area, it is more likely that unexpected challenges will arise or that the product will not be exactly what consumers want or a critical sales strategy or aspect of the business model will not work in the end. The experienced entrepreneur in a familiar domain has experience with a greater number of the constraints that must be satisfied for an idea to be a good business opportunity.
Finally, and in contrast with the benefits gained from experiences, experienced entrepreneurs may gain hubris and overconfidence along with experience (Hiller and Hambrick, 2005), making them particularly ineffective in unfamiliar contexts. For example, they may underestimate the uncertainty associated with a less familiar technology. Entrepreneurs will be less likely to benefit from their prior venture experience if their focal industry has undergone a major disruption. When the industry is disrupted, experienced entrepreneurs no longer have an understanding of industry dynamics and their experience is not likely to give them an advantage. It is then less likely that problems they encounter will be ones with which they are familiar and have a known solution from experience. Overall, we argue that entrepreneurial experience will be particularly likely to aid venture performance when the focal venture is in a context that is familiar to the entrepreneur. Both in opportunity selection and in execution, the more an experienced entrepreneur remains in a familiar context, the fewer surprises that will be encountered and the higher the likely performance of the venture.
Hypothesis 1b: The positive effect predicted in H1a will be stronger for ventures started under more familiar conditions.
Talent is a second, yet less explored, explanation for the positive link between serial entrepreneurs and performance. Here we argue that a significant source of success in starting ventures is time-invariant entrepreneurial talent differences across individuals. Schumpeter (1934) was the first in the literature to suggest that entrepreneurs have skill or talent, rather than simply being bearers of risk. Since then, relatively little scholarly work has examined entrepreneurial talent. Lucas (1978) refers to managerial talent in firm formation and defines it as an ability to get more output per worker. Others similarly have defined talent as the ability to get greater entrepreneurial earnings out of a given amount of capital invested (Evans and Jovanovic, 1989). Amit, Glosten, and Muller (1990: p. 1233) define entrepreneurial talent as ‘the ability to combine tangible and intangible assets and to deploy them to meet customer needs in a manner that cannot easily be imitated.’ Others have defined talent as having a market timing and managerial component (Gompers et al., 2010). We attempt to synthesize and simplify these definitions. By entrepreneurial talent, we mean superior ability to consistently see viable entrepreneurial opportunities and effectively act upon them to generate greater venture performance.
Given their superior ability, talented entrepreneurs are more likely to succeed in their initial ventures, and these successes are then likely to motivate them to found successive firms (Gompers et al., 2010). As a result, serial entrepreneurs may form a more talented pool of individuals than the pool of all entrepreneurs. Less talented first-time entrepreneurs may fail in their initial ventures and decide not to found a subsequent firm. Alternatively, they may face difficulty in recruiting new cofounders or raising capital. This may lead to the well-known relationship between serial entrepreneurs and venture performance.
Innate entrepreneurial talent involves more abstract reasoning, divergent thinking, synthesizing disparate ideas, and frame-breaking behaviors. These talents allow them to identify higher quality entrepreneurial opportunities since this task requires more than simply applying prior, historical experience. Every potentially valuable entrepreneurial opportunity has some aspects that are unique or unexpected. Where merely experienced entrepreneurs might mistakenly apply prior lessons, talented entrepreneurs can more naturally think through the more novel, less familiar aspects of the venture. A new opportunity may require a business model that has not been tried before or a distribution channel that needs to be created from scratch. If the opportunity requires that new markets are created or new sales and marketing strategies be generated, then the talented entrepreneur has an advantage in being able to think more flexibly rather than reflexively applying an old strategy from a prior venture.Appropriate strategic actions may be ambiguous and unpredictable or experience may not apply when an entrepreneurial opportunity is very new, highly risky, and unfamiliar. Precisely in these conditions, experience may not apply and talented entrepreneurs will excel. Overall, these arguments lead us to propose:
Hypothesis 2a: An entrepreneur with more innate talent is more likely to found a high-performing venture.
Entrepreneurial talent will be less advantageous when entrepreneurs encounter more familiar conditions. Talent is less of an advantage when the entrepreneur has already experienced this set of conditions and is already familiar with the appropriate strategic decisions and responses. In familiar conditions, the talented entrepreneur does not need to sort out new frameworks or work out the best commercialization choices to make. Talent is less relevant, when familiar contexts allow the selection and reuse of prior experience. In a familiar context, if decisions or problems arise that the entrepreneur has seen and solved previously, then talent is less useful because the problem is not one of generating new solutions but simply applying prior experience. The talented but inexperienced entrepreneur might waste valuable time thinking up possible commercialization choices and reinventing the wheel, while an experienced entrepreneur already knows the solution and can more quickly make decisions and move forward.
Correspondingly, we also expect that entrepreneurial talent will be particularly advantageous when entrepreneurs face less familiar conditions (e.g., different industry, disrupted industry, and novel technology). In these contexts, entrepreneurs must sort out appropriate strategic actions when many factors—such as market opportunities, business models, customers, and marketing channels—are ambiguous and unpredictable. Entrepreneurs with innate talent may find it easier to apply their talent toward thinking through these novel situations in which experience may simply not apply. Similar to an individual with mathematical talent who can derive an appropriate formula from first principles, talented entrepreneurs can rely less on memorized routines learned from past experience. Instead, they are more able to figure out correct strategic actions from reasoning through the appropriate choices in a new situation. They are capable of more abstract reasoning and synthesizing information. In addition, talented entrepreneurs may be more confident of their abilities when faced with unpredictability. Finally, they are more likely to engage in frame-breaking activities—such as experimentation, questioning, and observation—that are associated with divergent thinking (Dyer, Gregersen, and Christensen, 2008). Such thinking enables entrepreneurs to spot viable opportunities sooner and provide novel insights for executing them in less familiar contexts. The ability to handle the unfamiliar and unexpected results in more consistently high performance since the unfamiliar and unexpected are aspects that introduce inconsistency into performance.
Tuesday, August 14, 2012
Ben Franklin wasn’t exactly a marketer; but he was many other things.
He was one of America’s founding fathers, and the dude sure was pithy with his business advice. So here we have some bits of his wisdom, passed down from his Poor Richard’s Almanacs and showing you how they can help you grow your business.
Here are our favorite Poor Richard-isms. Don’t market without them.
If you’ve ever been to a webinars, you’ve seen how useful they can be when it comes to delivering content to an audience. The word “webinar” is an amalgamation of the words “web” and “seminar” — basically a presentation you give to an audience over the web.
With clear instructions and educational webinars, people are more likely to sign up for your information, buy your product and/or stay with your business.
Read more about how you can use webinars to advance your business interests here ....
Monday, August 13, 2012
- You need to know who exactly your target market is.
- How are you going to get access to them? (List, phone book,....etc)
- How are you going to organize your day? How many calls will you make, how will you track your calls, what will you do for follow-up.
- How comfortable are you on the phone? Do you have a script?
-How comfortable are you in presenting your products and services, do you know how to go for the close?
-How do you track and manage your prospects? What kind of reporting do you do (pipeline, forecast,...etc)
-Do you know the sales cycle for products / services you are selling?
These are just the basics and usually someone who has NEVER sold does not know where to start, so I would advise even if they feel comfortable to enroll in a sales training course to get the basics or get coaching. Coaching will help as it will give the person someone to work with along the way and gain feedback.
It is a big mistake "to try to figure it out" as you go. People who do usually get behind the 8 ball. They can't organize themselves, have a quota to hit and are not focused properly. Everyone needs some help at new things.
Thursday, August 9, 2012
For example, typically you might think artist, writer, and musician are the main creative fields. But the guys on American Choppers are just as creative with motorcycle mechanics. Even lumber-jacks have those log chain saw carvings...
In their own way lots of careers have a creative/ artistic niche - seek them out. Don't feel pigeon holed into arts and crafts as the only options. Spend more time doing creative activities you enjoy, that leave you feeling energized and satisfied.
I really enjoy cooking, its fun for me. Gardening not so much, but other people LOVE the garden center as much as I love my Williams Sonoma store. For me it helped to realize I don't have to love the same creative pursuits that my friends and family love - especially if their hobby feels like chore to me.
Creative problem solving is useful on every job. Brainstorm on your own without editing yourself, then once you have all your ideas out on paper you have lots to pick from.
Fun exercise, set a timer for 1 minute and write down all the uses for a bucket.
Also, we often ignore the direct impact our physical health and mind/body balance have on our creativity.
The human physiology has not evolved to match the pace at which we live today and the technology available to us. Gadgets (or "Gadget" programs) for fitness are a fad, cost money and supply relatively little value. They espouse the quick and easy because that is what sells. Diet programs are the same.
The following 4 basics are suggested for starters. They can be efficiently achieved but not quickly and for many not easily. But they are monumentally worth the investment. Like many other challenges they require management and synchrony with the other elements of our life.
1. Realign a long walk with problem solving and family time to have a clear horizon and put mind and body in synchrony. Our bodies still require moderate exercise to function because we have not yet evolved out of your "Hunter/Gatherer/Fight/Flight" physiology.
2. Develop habits that permit the subliminal mind to work while the body rests as least 7 hours a day with sleep.
3. The human body needs a mix of lean meat and vegetables. The artificial junk clogs us up and wears us down.
4. Manage expectations - those others have for us and those we have for ourselves. We are sensitive and vulnerable creatures, designed in a complex and vastly varying ways. The pace of life these days requires cultivation of expectation management and everyone must evolve their own unique form of that art.
Tuesday, August 7, 2012
Stanford University Pres. Hennessy is mentioning the class in an article that he's working on so we pulled together some of the numbers. The total number of students was 82,303. The number of students who chose to do a start-up project was 37,606. The number of countries represented is over 150. We had over 200 mentors (I'm also hoping that many of you will sign up to mentor the new students the next time around).
Our student body was very diverse. The percentage of women in the class was 17% which is above the norm in Silicon valley (8%). We had students who were Stanford alumni or experienced entrepreneurs in Silicon Valley; we had women from Iran leading a team of entrepreneurs; we had a group of students from Nairobi and from Ghana who would travel to an Internet cafe to access class materials.
For the OEP, the biggest lessons were the following:
1.) Once again, a great set of teammates who are engaged and nearby makes all the difference. It's so much easier to stay motivated and make rapid progress when you can see your teammates really pulling their weight and getting a lot done as well. It just makes you want to work harder and makes it more fun. Entrepreneurship is truly a team sport.
2.) Getting out of your head and out into the real world to show and talk about your startup with others makes it much more real and allows you to see what is working and what isn't with your business model. It's easy to say that you will partner with such and such company for distribution, but when you have to get a meeting with them and really discuss what such a partnership would require, you really learn a lot more. Or with marketing, it's easy to say, we will use social media and blogs to get the word out. But when you have to actually start that social media campaign and keep track of how much time you spent and how many people actually came to your site and left their email, you see that it's not so easy.
3.) A prototype in some form really helps a lot. When you can really put a version of your product or service in front of customers and they can see it and use it, then you get much more useful feedback compared with when it was just an idea that you were telling them about.
4.) Negative feedback on some part of your business model is not the end of the world. Entrepreneurship is a roller coaster of emotional ups and downs. Negative feedback is just getting you one step closer to figuring out a model that will work. Work experience in the industry helps, but at the end of the day you've just got to take the first step and get out there and start iterating and learning from the market what aspects of the business model need to be modified.
5.) Choosing the right revenue model is not always straightforward. It is difficult to really show with real data that the business will make money. Until you're out there with a website or product and making some sales, it's not easy to guess ahead of time what the costs will really look like for customer acquisition or how much revenue you can expect from subscriptions or advertising. Relatively few teams made it to this stage where they could really compare revenue per user data against costs of acquiring that customer to see if the business model would truly scale.
6.) It is not easy to be concise with the OEP presentation. There is a lot of information to convey about your project and the team and getting just the write amount of key information out there in a short amount of time takes some practice.
7.) Having a mentor is a tremendous help. I noticed that a lot of teams spoke very highly of the feedback and help that they got from their mentors. Many mentors seemed to enjoy the process as well. Some of them ended up mentoring more teams than they initially thought they would!
Lessons from Students:
- Gabriel Bianconi wrote up a great set of lessons that he took away.
- I will add other lessons from students here as I come across them.