Tag Archives: Growth

Better Than Dilution & Debt

One of the most interesting websites we’ve discovered recently about entrepreneurs is called Under30CEO. Today the site featured an interview with Trevor Mauch, founder of AutomizeIt and Mach One Media, serial entrepreneur and founder of a few multimillion dollar businesses. Excerpted from the interview is the quoted section below:

One of the things I see a lot of people I’m coming across, they’re making the funding part (of entrepreneurship) out to be a huge deal [when it’s not.] As a great example…this guy was selling his linen [or garment] business services for hotels or whatnot. He bought his equipment for 500 bucks. And this guy bought this equipment, and then he went to the biggest account in town, which is our local hospital and said “what do I have to do to have your business?” (After he heard the answer,) ..he said “okay, I can’t do all of this capacity right now but if you fund $25,000 to get into a facility and to buy our equipment that can service ..what you need, then will accept this bid.”  …The hospital..it’s like (a) $15,000 – $20,000 dollar a month account! ..The hospital ended up going with this guy and funded the whole growth of his business!

..With two of my different businesses, …we saw what people wanted, and we went out there and pre-sold one of our training programs before it was ever created! We made sure that people wanted it, made sure it’s really quality, and we pre-sold to our customers, and our customers funded that startup.  And same thing with our software company.  We funded that company with our revenues from the publishing company, and same thing we went out there before we were finished. We pre-sold memberships in it and that help us get some cash to start that goal. So yeah definitely don’t look at funding as an obstacle because there’s a lot of different ways to get funding, especially from your customers, and sites like Kickstarter.

(At Kickstarter) anybody can go there and post their project, their business or products whatever their looking at launching. And they raise funds for their business by getting people to “pre-buy” whatever it is. So, I was last week and uhmm there’s this one [business], that was some kind an iPod speaker and so they had a prototype…they sold a prototype and said “that’s what you’re gonna get,” and they had a goal they wanted to raise, I think that one is about $50,000 bucks. And they raised their $50 grand in about 14 days after they started, just from people seeing this idea and jumping pre-buying one of the things from it!! And that’s just a killer model.

So, the moral of the story is…become creative in your approach to funding your business! It’s not necessary to run up exorbitant credit card debt, nor follow the angel-VC-dilution pattern. Mauch started his first business with $600 cash. Stretch your mind–think hard about how you can accomplish your objectives without copying someone else’s success path. You will be so happy you did when it’s your turn to be interviewed.

Bureaucracy: The Entrepreneur’s Kryptonite

As Dan Sullivan says in The Strategic Coach® Program, “The human brain cannot do extraordinary things, only normal things.” “So the trick,” he says, “is to make the extraordinary normal.”

Corporate employees operate based on policy: that’s what keeps them from having to think. Entrepreneurs depend thrive on having the freedom to constantly grow and change, to make new connections, and to ask questions that shake everything up. To an entrepreneur, groupthink (i.e. bureaucracy) is like Kryptonite.

Just because we don’t like being bogged down by over reliance on structure doesn’t mean that we are always creative. Following established patterns and trying to approach every issue with the same solution is a bad habit even for an entrepreneur. Rather than seeing opportunity, we can become fixated on solving a problem.

When Jim Collins wrote about Big Hairy Audacious Goals (“BHAGs”), he was challenging small thinking. Simply considering an aggressive goal causes the mind to see the environment differently. Unable to stop thinking about the “What ifs,” we are empowered to consider new concepts,  linkage and alternative ways of viewing the same issue. Divergent thinking is modeled by the likes of Richard Branson, who tweeted, “My interest in life comes from setting myself huge, apparently unachievable challenges, and trying to rise above them.”

Your definition of “normal” daily experience becomes unique when you think in terms of BHAGs.  Dream for a moment about what life could look like in 5-7 years. Can you imagine performing at 10x today’s level? Earning 10X what you do today?

Bureaucracies are based on keeping everything the same so they can preserve their status. Policy and rules “protect” the structure from the effects of individuals, whose participation is measured in hours on the clock, not in results. In an entrepreneurial organization, by contrast, change is life, because “holding your ground” means stagnating and falling behind. Individuals are sought out and rewarded for their ability to think, create, and make a unique contribution.

Make a habit of  what Sullivan terms the “10x Mindset,” and innovation, risk-taking, and teamwork will all come together for you in a completely new way. Bureaucratic thinking and structures simply won’t survive in your environment because you and the people around you will be entirely focused on building, adapting, and expanding a path toward your “bigger future” vision.

Cultivate a creative mindset that makes growth and progress “normal.”

What Entrepreneurs Should NOT Do

When entrepreneurs start businesses, they are susceptible to making mistakes that others have made before them, climbing an unnecessarily steep learning curve, and burning through dollars and emotional energy. Without the help of an experienced mentor and some principles of start-up management, it is no wonder that many start-ups are not in existence 5 years later. Yes–success stories abound–mainly because few want to read or write about businesses that didn’t make it!

David Bakke is a writer for Money Crashers, and was featured on Brazen Life, a Brazen Careerist site recently with the list below of mistakes an entrepreneur should seek to avoid (& can with mentoring and education): http://ow.ly/ataho

1. Starting a business in a new field

Trying to launch a business in an industry or area where you don’t have any prior experience can quickly lead to failure. Before you make the leap into starting a business, make sure you focus on your talents, passion and experience to pinpoint the right business for you. Combine your enthusiasm, experience and knowledge with a solid, organized business plan if you really want to succeed.

2. Trying to start your business on your own

Trying to go it alone will only hamper your efforts to grow and expand your business. Initially it makes sense to cut costs by working alone, but soon enough you’ll need to make intelligent, calculated decisions about working with like-minded individuals to help your business grow.

3. Not adapting to changing business conditions

Learn to adapt as you grow your business. Don’t be afraid to change your target market or scrap unsatisfactory marketing initiatives. Recognize the fluidity of your small business, focus on what positively and negatively affects your business plan, and adjust your growth model accordingly.

4. Being deathly afraid of making mistakes

You engage in a great deal of risk when you launch a small business, and most of it involves your personal finances. Learn to quickly identify errors in judgment, determine why they occurred, and make immediate adjustments so they don’t happen again.

5. Avoiding risk

Continue to take risks as your business evolves. If you encounter an idea to expand your business that feels “risky,” research the pros and cons of the concept. If the idea still seems viable after your analysis, go for it!

6. Quitting if you run out of cash

No successful entrepreneur ever let money stand in the way of achieving business goals. If you have a great business plan, a passion for the concept, and you’re willing to work hard, you can always find ways to fund your business proposition. Cut costs in your everyday life to free up capital, apply for an SBA loan, approach angel investors, or even approach friends and family after you’ve bootstrapped as much as you can.

If you can’t find funding, you don’t have to give up on the business idea altogether. Timing also plays a role in business success. It might make sense to start more slowly, and to put off aggressive expansion efforts and attempts to find additional funding until your business begins to show a steady profit.

http://www.Entredot.org is one approach to what entrepreneurs SHOULD do–come check it out!

 

Better Feedback Models

Traditionally feedback has been seen as occurring externally between a customer and a provider and internally as flowing from a manager to a direct report. Many changes in the work environment, including self-directed project teams, matrix management, flat organizational structures, and doing more with less resources, lead employees to work more closely with one another and become less dependent on management to provide them with feedback.

The Feedback Cycle graphic below illustrates that, these days, we must recognize that feedback – from project team members, peers, and direct reports – is the primary way to give and provide information and suggestions to each other to improve work output and performance. We must also be certain to listen for emotions and feelings as part of the feedback process. Whether your role is within a multinational corporation or a small start-up, the need to look around you 360 degrees and see yourself and your work product as others see it is critical to charting your own and team success.

Within the field of emotional intelligence, there’s a best practice of trying to see matters from another’s perspective. It is in this ability to “be on the outside looking in,” observing our decisions as a series of choices based on information we have processed, that we gain insight, perspective, and mutually desirable outcomes. Intentionally studying how our actions will affect others, asking for their input, and incorporating a “win-win” scenario into our decisions makes for better management of self, projects, and others.

In the start-up world, the Feedback Model can be used to test and validate “fit” with co-founders, employees, strategic vendors, investors, professional services providers, and so on. If the other party is not incorporating your input into their communication, planning, and execution, they are not a good fit. Likewise, if we are not able to receive feedback from others, we will not be successful in executing our business/departmental/project strategy.

Non Profit Your Way to Helping Others

One of the interesting things we are discovering at EntreDot is the power of a non-profit to garner collaboration. EntreDot™ is a newly formed business mentoring organization that is committed to ensuring entrepreneurial success. Our objective is to increase the chances of entrepreneurial success by creating high impact companies that are run by entrepreneurs with sustainable business management and leadership capabilities. By providing needed business assistance, we will help entrepreneurs increase revenue and job growth for their companies and communities.

Were we simply a management consulting firm, we would be perceived as being in competition with other consultants, certified public accountants, attorneys, angel funds, investment bankers, and so on… in which case, we would be left to ourselves to try and help one entrepreneur at a time. We knew that we wanted the cooperation of people from all of the categories above, plus many more, so it was a strategic business model decision to become a 501 (c) (3).

What we did not count on, however, is the strong community support. Whether it is the local government (Thank you Mayor McFarlane, Council members Bonner Gaylord and Mary Ann Baldwin for your support evident last night at the Innovate Raleigh event at REDii!), paragovernment organizations like the Cary Chamber and the Downtown Raleigh Alliance, educational groups like the NCSU School of Textiles and School of Design plus Wake Technical Community College, volunteers who serve tirelessly, or great sponsors, we have been overwhelmed at the synergy created by bringing people together who all want to see more entrepreneurs be successful.

The benefits to the entrepreneurs and to their communities are:

  • Avoiding critical errors that lead to business failure
  • Improving the business skills of local entrepreneurs
  • Having a second set of eyes on key business issues like financing, cash flow management, marketing programs, sales traction, and many more
  • Validating entrepreneurs’ their ideas and decisions
  • Helping entrepreneurs build the right management team to run their companies
  • Assisting entrepreneurs in building relationships with all their stakeholders, and potentially steering them to new customers, suppliers and financing sources
  • Retaining local entrepreneurs who will stay in their communities to create new businesses; reducing the “brain drain”
  • Increasing the number of good jobs within the rapidly growing new companies throughout NC, including in its most distressed counties
  • Increasing revenue to local communities via the expansion of local economies

Recently, I had the distinct pleasure of hearing Nobel prize winner Muhammad Yunus espouse the virtues of social business as a means to solve community issues. This is an idea whose time has come! We are excited to be helping entrepreneurs create better local economies, with the myriad of spillover effects.

What non-profit can you help create that will solve community needs through strong collaboration?