Wannabe Entrepreneur – Or Real Deal?

 

What’s the difference between an entrepreneur and a “wannabe?” In many settings, there are people who talk a good game, but don’t really have the follow through to launch a business. Erica Douglass, a 20s something entrepreneur who already sold a a business for over $1 million, has identified 5 traits that differentiate earnest entrepreneurs from what she terms “wantrepreneurs:” 

Wannabe

1. A willingness to learn anything.

You’re never going to be successful if you externalize what’s wrong (I can’t hire a developer because I don’t have any money/no one will give me money, and therefore I can’t start or build my product.) It’s a poor attitude.

Isn’t it better to hire someone who knows what they’re doing? In the future, yes. Right now, though, you don’t even know how to tell whether someone knows what they’re doing or not. Plus, without a spec or prototype, you’re going to spend a whole lot of extra money and time having someone else do it wrong over and over again (because again, even the best developer can’t read your mind.)

Once you understand how building a website works, you can dip your toes into code. Read up on the differences between Python, Ruby on Rails, and PHP. Pick one to learn. Spend a week learning the basics. Then spend the next couple of months hacking on weekends. This will help you figure out whether that developer you’re about to pay a fortune to actually knows what he or she is doing.

The point of this exercise is three-fold. One, it gets you familiar with how to articulate your vision to a developer. Two, since you have more time than money, it shows everyone (including prospective developers) that you’re serious and committed to this project. And finally, if you can get something up there, even if it’s just a sketch with buttons that don’t work, you can start showing it to prospective customers and asking them to commit to paying for it. (Note that I didn’t say “Asking them how much they would pay for it.” I said “Asking them to commit to paying for it.” There’s a huge difference. Only one path will show you whether your idea will actually be successful.)

2. Going above and beyond to build something that people want.

If you haven’t been in your market for years, and you have an idea for a product that requires the market–your potential customers–to think about things in a totally different way, that’s the most likely path to failure. So what’s the better option? Finding out what’s in the market and what people hate about what’s out there. Then, instead of trying to “shock” them with something totally new, just incrementally improve on what’s out there.

3. Not knowing where your next dollar is coming from, but going forward anyway.

Startup founders and entrepreneurs are inherently scrappy folks. The people I hear who “pooh-pooh” consulting and “trading dollars for hours” are the ones most likely to fail on a project. If money gets tight, scrape together as much consulting work as you can and live as frugally as you can. Yeah, it’s not ideal to do consulting and try to run your own business, but you do what you have to do.

Ask yourself this: Do you believe in your startup idea so much that you’d be willing to sell your car and drive a beater for the next year in order to fund yourself for another month? If the answer is no, you need to decide: How committed are you to running your own business?

4. Being willing to launch and ship even when it’s not perfect.

This has been the hardest one for me. There’s always one more feature to build, or something that customers expect that you don’t have. Customers (or potential customers!) can even get emotional and/or upset that you don’t offer something they expect. And if what they’re asking for is completely unrealistic and/or it would take your product in a direction you’re not interested in going, cut them loose. Part of the answer is about setting expectations. The other part of the answer is being willing to let go. 

5. Clearly articulating your vision of the future…and getting people to believe it.

The best entrepreneurs and business owners are evangelists. They are passionate about their market. If you have the presence to get other people excited, and sharing in your vision, you can do anything. Great employees will turn down other, more lucrative jobs to work with you. Customers will show up, because your passion will come through.

 

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Overcoming Price Objections in Small Business

Many the small business entrepreneur complains about not being able to charge enough to make good profits. Yet, in the business world around us, we all see businesses who seem to be doing very well and who charge the proverbial “arm and a leg” for what they do. Why is it that some niches seem more capable of avoiding price sensitivity than others? For instance, goods that carry with them a great customer experience command a luxury price. Mark Stiving took note of how the healthcare industry is a conundrum when it comes to pricing. In an article for All Business, he made the following observations:

“It’s something we all need. It’s an industry where there is huge pressure from major insurance companies, the media, governmental agencies, and even consumer groups to cut costs and prices. However, even with these factors prices have never been driven down to commodity levels or even to parity.”

Pricing

This is in sharp contrast with the experience of many small business owners. I hear all the time about being beat up on price, having to price services in competitive bid situations near the bottom, and many other such war stories. As you can imagine, I often am advising clients to compete on value versus price. Just how does one go about this?

Stiving continues in his piece, noting the following consumer behavior in healthcare:

“How is this possible? Like almost everything in pricing, human psychology is at the root. For example, when was the last time you used price to decide where you were going to have a medical procedure done? When was the last time you even knew the price of the service before going in?

Most people don’t pay attention to prices because their insurance company pays. Yet virtually everyone has co-pays, and therefore knows the general cost and has an incentive to ‘price shop’. Think about it. Even a 10% co-pay on $1,000 is $100. Isn’t it worth $100 to find the best deal for a procedure? So most people have financial incentives to shop for price, but don’t.”
Let’s focus on several key words and phrases from the quote.
  1. Human psychology. If you are sharp enough to have built a target market strategy, you have surely thought through who you want to serve. What is often overlooked, however, is how and why people buy. As is pointed out, consumers have habits. Observe the habits and then customize your approach to what you see.
  2. Insurance company pays. This fact is significant because it illustrates that many buying decisions are facilitated by removing the consumer from having to make a painful (excuse the pun) choice. Think of software as a service as another type of business wherein the monthly $9.99 or whatever you allow to be charged to your card on file is “out of sight, out of mind.” How can you make purchasing easier and less “thinky” for your customers so that the decision is almost automatic? Do you have something that could be billed on a recurring basis at a lower price point?
  3. But don’t. In describing how healthcare consumers do not look around for alternatives, Stiving makes a keen observation. Even when alternatives exist, they are often not sought out. Those who study consumer behavior far more than me would point out that the trouble associated with switching to something new holds many buyers back from changing to what may even be a better value. How can you use this behavioral paradigm to your advantage? Can you make it easier for others to but from you instead of the competition? How can you make it harder for existing customers to stop buying from you?

Finding a way to address these three issues in your own business will pay off. As you are able to make inroads, you will find that your pricing becomes justified and that you won’t have to fight as hard to maintain price integrity.

 

Build Human Capital With Interpersonal Savvy

Relationships in business are super important. When tasks and goals are pursued without regard to the interpersonal collateral, it is tragic. Leaders who see human capital as their greatest asset are revered by those who serve alongside them. Those who run roughshod over others are despised–though they may see results from a Machiavellian style in the short run, they never get the voluntary commitment of others and, therefore, cannot take an organization as far.

Three person relationshipJeff Haden recommends the following best (business) relationship practices in an Inc article today:

1. Take the hit.

A customer gets mad. A vendor complains about poor service. Sometimes, whatever the issue and regardless of who is actually at fault, some people step in and take the hit. They’re willing to accept the criticism or abuse because they know they can handle it–and they know that maybe, just maybe, the other person can’t.

2. Step in without being asked.

It’s easy to help when you’re asked. Very few people offer help before they have been asked, even though most of the time that is when a little help will make the greatest impact. People who build extraordinary relationships pay close attention so they can tell when others are struggling. . .they come up with specific ways they can help. 

3. Answer the question that is not asked.

Where relationships are concerned, face value is usually without value. Often people will ask a different question than the one they really want answered. Behind many simple questions is often a larger question that goes unasked. People who build great relationships think about what lies underneath so they can answer that question, too.

4. Know when to dial it back.

Outgoing and charismatic people are usually a lot of fun… until they aren’t. People who build great relationships know when to have fun and when to be serious, when to be over the top and when to be invisible, and when to take charge and when to follow.

5. Prove they think of others.

People who build great relationships don’t just think about other people. They act on those thoughts. One easy way is to give unexpected praise. Take a little time every day to do something nice for someone you know, not because you’re expected to but simply because you can. 

6. Realize when they have acted poorly.

Very few people apologize before they are asked to–or even before anyone notices they should. People who take the blame, who say they are sorry and explain why they are sorry, who don’t try to push any of the blame back on the other person–those are people everyone wants in their lives, because they instantly turn a mistake into a bump in the road rather than a permanent roadblock.

7. Give consistently, receive occasionally.

In business terms that means connecting with people who can be mentors, who can share information, who can help create other connections. . .(also) The person who builds great relationships doesn’t think about what she wants; she starts by thinking about what she can give. 

8. Value the message by always valuing the messenger.

When someone speaks from a position of position of power or authority or fame it’s tempting to place greater emphasis on their input, advice, and ideas. People who build great relationships never automatically discount the message simply because they discount the messenger. They know good advice is good advice, regardless of where it comes from.

In short, taking the time to make much of relationships should be a priority. Doing so builds credibility with others that is huge when it comes time to pursue goals together. 

 

You Can’t Handle A Business Plan!

In preparing for battle I have always found that plans are useless, but planning is indispensable.

-Dwight D. Eisenhower (Thirty-fourth President of the USA)

 

Eisenhower was a military leader of renown prior to becoming president.  His comment on the value of planning illustrates a key point that many who disdain planning would do well to heed: a plan is not the goal, but rather the exercise of thinking strategically through one’s options given a defined situation and set of resources at one’s disposal.

Serving entrepreneurs and existing business owners, I have seen the outcome of both lack of planning and belief that planning unto itself is a cure-all for potential challenges that may come the way of the enterprise. Tim Berry, author of Three Weeks to Startup, writes that, “If you’re serious about starting your business — even if you don’t have anything down in writing — you’ve already started to plan.” Yet, starting to plan is not the same as writing a business plan.

There are several planning steps that I would recommend prior to writing a business plan:

  1. Refine your idea. Think through how your business model would affect potential customers. Have a preliminary strategy in mind for each segment of your target audience.
  2. Conceptualize a winning strategy. Think through what is already available in terms of direct and indirect competition. Adjust your approach to the market based on what can win consistently.
  3. Create value before your first sale. Test your hypothetical product features and benefits, along with pricing model and go-to-market system. Secure feedback and revise your offering accordingly.

Once you have thought through these three main ideas, you are then ready to evaluate how best to launch a business. Evaluation is the point at which your first business plan should be written. Berry recommends “Your plan is for you first. Don’t make it for anybody else. Do it because it helps you divide and manage big goals into practical steps. Instead of looking at it as a document, think of your business plan as a place on your computer where you collect ideas, useful stories, lists and numbers. It’s a place where you keep track of the market, your milestones, goals and projections.”

Business planI could not agree more wholeheartedly! A plan is not a monument; it is a living, flexible document that needs to be modified on a recurring basis as long as you are in business. Early on, Berry recommends the following key components of planning:

  • Milestones: What’s supposed to happen, when, and who’s responsible.
  • Basic numbers: Simple spreadsheet projections for sales, costs and expenses.
  • Strategy: Strategy is about deciding how to focus a business offering on a key target market. It can start with just bullet points. I’ve seen it done well with pictures. It’s mostly a reminder for you and your team.
  • Cash flow: Because profits don’t guarantee enough cash to pay your bills, you need to manage cash from the beginning. Month by month, account for what you spend and what you deposit — not profit as it appears on the books, but money as it shows in the bank.
  • Review schedule: Set aside time for a plan verses actual review once a month to compare what you planned would happen in your business to what really happened. Be brief and practical.

Regardless of your market niche, whether you have attended a “hack-a-thon,” or who is on your start-up team, take the time to consider each of these components thoughtfully. Incorporating them into a plan that you are committed to revisiting and continuously improving will enhance your chances of launching a successful new business!

 

 

Demand Leadership Innovation Like a SEAL

My son is a senior in high school. He has his mind made up on entering the special forces. His top choice would be the Navy SEALs. Many, many, many of our conversations are about the SEALs these days. Recently, I came across the Navy SEAL Creed: “We demand discipline. We expect innovation. The lives of my teammates and the success of our mission depend on me. My training is never complete.”  

Anyone who knows much about the Navy SEAL job requirements would not be surprised that the training required to be selected is extremely rigorous. Physical and mental training beyond compare prepares one a recruit to join the ranks of the “elite.” However, as former Navy SEAL Brent Gleeson writes, “you realize you are just another new guy in an already well-established organization. And it only gets tougher from there. The training never ends, and every single mission is rehearsed.”

Seal subWell-run businesses are very similar. A few months ago, I had the opportunity to attend a presentation by Dan Cathy, the current president of Chick-fil-A. Cathy discussed  the extensive training they provide every new hire and how they try to help the employees to anticipate needs rather than simply wait for them to be expressed. 

Gleeson described key characteristics of leaders:

1.     Leaders define the mission. A clearly defined mission starts with the leadership, is ingrained in the team, and is constantly reviewed. Mission success relies more on training than it does on planning. Rarely is a plan executed exactly as it has been laid out, because external forces prevent this. Thus the leadership and team must be ready to adapt. Adaptation requires ability, and ability comes from training.

2.     Leaders set, and reset, the vision. It’s up to leadership to know when shifts in a company’s vision must happen. The organization’s ultimate direction may not change but how you get there most certainly will. That means having a keen understanding of industry trends, economic cycles, and competitive movement. Leaders must be constantly acquiring knowledge and looking to the future.

3.     Leaders build the team. As a company grows it will require different types of talent. If you find the right people and train them accordingly, they will stick around and the business will thrive. It takes good leadership to identify who to hire and the roles to put those people in. This too requires ongoing knowledge development.

4.     Leaders embrace the necessity of growth, both personal and professional. If the mind and body are not in a constant state of growth, eventually things stagnate and progress stalls. Instilling the importance of learning in the team is one thing, but leadership has to embrace this first. Great leaders are always seeking knowledge, developing their minds, and maintaining their bodies. Mental and physical wellness is essential for optimal leadership.

5.     Leaders execute. An organization’s strategic plan means nothing without exceptional execution. As a company grows, the methods of mission execution will change. So will the way in which products and services are provided. The leadership has to build this into the culture, provide the team the proper resources, and remove obstacles. Companies that fail do not fail because the plan wasn’t good enough. They fail because the leaders didn’t execute.

All of these are great guidelines for leaders. What I want to return to from the SEAL Creed is the expectation of innovation. This expectation is something I’d like to see more businesses embrace. The fact that they don’t creates a need for great leaders to champion culture changes.