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Why They Call It Serial Entrepreneurship

They call it serial entrepreneurship for a reason.

In a parallel connection, the data flows through multiple connections simultaneously. This is the same as the turnstiles of an arena where many people pass through multiple turnstiles simultaneously.

But, even though there are many turnstiles, each turnstile can only have one person passing through it a time.

Startup entrepreneurs who attempt to simultaneously execute multiple business models or operate against multiple market segments are attempting to single-handedly go through multiple turnstiles at the same time.

It just can’t be done.

When you are building a business, that business needs at least 100% of you. There is no way you can be fair to that business, and that business’ customers, employees, co-founders, investors and stakeholders if you are trying to split yourself across that business and additional business models.

The same goes for market segments when you are a startup. You cannot fully and effectively serve multiple market segments with startup scale resources.

Conversely, in a serial connection, the data flows through one connection, one block of data at a time, one block of data after another. It’s just like you moving through a turnstile. You go through one turnstile at a time.

Starting a business is the same as passing through a turnstile. You may do many of them in your lifetime, but you can only fully do one at a time.

If you are trying to do more than one at a time, you are doing it wrong.

It’s not called parallel entrepreneurship.

It’s called serial entrepreneurship.

It’s called serial entrepreneurship for a reason.

Struggling for Traction

It’s very easy to get caught up in the day-to-day of the hamster wheel inside the fishbowl of building your business and forget about the overall opportunity parameters.

If you are struggling for traction, it indicates that you may be:

  • Experiencing a mismatch between what you believe to be the opportunity and the reality of the opportunity (this is very common in the immediate-post-bar-napkin, just-keep-grinding and true-believer phases)
  • Building a solution looking for a problem (this is typical of engineering driven companies)
  • Not understanding who your ideal customer is and what their pain is (this is also typical of engineering driven companies)
  • Lacking sufficient ideal customers who are willing to pay for a solution to their pain at a price point that supports a sustainably profitable business model (this is a strategic leadership error, typically a variation of “it’s my idea so it must be good”)
  • Not effectively creating the perception of need in your prospects (this is marketing’s job, and this is fairly common when building solutions looking for a problem)
  • Not closing on the perceived need (this is sales’ job, and this one is rare compared to the others in this list)

Rick Segal’s 12 Step VC Process

Rick Segal had a good post on his The Post Money Value blog regarding the VC process.

He broke it down into the 12 steps that his firm applies to funding opportunities.

It’s a good read, and will give you a brief overview of the VC funding journey.

If you are seriously pursuing VC funding, you’ll want to read up on it.

Here are some relevant titles:

The Startup Game: Inside the Partnership between Venture Capitalists and Entrepreneurs

Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

Mastering the VC Game: A Venture Capital Insider Reveals How to Get from Start-up to IPO on Your Terms

Raising Venture Capital for the Serious Entrepreneur

Term Sheets & Valuations – A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations

The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies

 

 

 

The Big! Long! Scary! Sales Page Questionnaire

One of the most common mistakes entrepreneurs make is being feature focused rather than benefits focused.

When you read most startup web sites or marketing materials, the focus is on features, not benefits.

Those companies all fail the “What’s in it for me?” test for the customer.

Customers are actually not very interested in your product or service features. What they are very interested in is what benefits does your product or feature have for them, directly and specifically.

If you are struggling to conceptualize or articulate your product or service’s answer to the “What’s in it for me?” test, try this excellent questionnaire, courtesy  of Naomi Dunford from the ittybiz blog.

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The Big! Long! Scary! Sales Page Questionnaire
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The secret of a successful sales page is focusing more on the
customer’s needs than the product itself.  You want your customer
to say to themselves that YOU really understand what they’re going
through, and that because of that they can be confident your
product can help them.

The more detail you have on your ideal customers and their needs,
the easier it will to create copy that makes them click that “buy”
button.

IMPORTANT! Try to answer all of the questions that you can, even if
they’re hard to answer in your specific situation. If something
really doesn’t apply to you, you can skip it. But try, though.

» » » Click here to read the rest of this post « « «

How do I start a business?

Because I’m a serial entrepreneur and because some of those companies did well and because I’m a management consultant and startup mentor and coach and because I’m a business plan/pitch competition judge, I get asked this question in various forms—a lot.

Here is one recent example:

How would I go about researching an on-line business idea?  I have an idea and have done some Google searches but don’t know how to tell if there is room in the market for someone else.  I have some ideas to be more unique and have a plan to slowly enter the market, but not sure how to go about everything.  The last time I tried a business it failed miserably, so I want to avoid that and keep things simple.

My answer:

» » » Click here to read the rest of this post « « «

Why didn’t I get funded at the Angel event?

I’ve seen more than 200 startup pitches in the last couple of years.

Most pitches do not get funded.

Sometimes people who don’t get funded reach out to me and ask, “Why?”

Here’s an example of why one entrepreneur’s pitch did not find any response from the Angels in the room:

Congratulations on your idea and your startup.

You have identified a pain point in the marketplace.

Also, as you probably discovered, while you’ve discovered a pain point in the market, nobody at the angel investor pitch event was jumping up to invest in your idea.

I think some of the reasons are:

  • Business model (service vs. product)
  • Scalability (business model and processes)
  • Sales model (scalability, efficiency, etc.)
  • Team (solo startup, almost always a big red flag)

» » » Click here to read the rest of this post « « «

Early Stage Priorities

During the very early days of a business, in stage one, decisions are made which determines the initial trajectory of a business. While you can always pivot and change direction, every pivot costs resources.

In the early stages of a business, you don’t have much in the way of resources, so limiting the number of pivots is directly related to efficiency.

Here’s some counsel I recently provided to a couple of engineers who have an early stage Big Data startup:

You are currently early in stage one here: www.IdeaToExit.com. You have made some preliminary decisions regarding the business model, but have yet to progress through the most important stage one section: market sizing.

» » » Click here to read the rest of this post « « «

A Swing and a Miss

As part of my consulting services, I am tasked with evaluating companies for VC, private equity and angel investors.

I recently attended a private pitch by an experienced entrepreneur to evaluate the potential of the company for some interested investors.

The entrepreneur was the prototype of what many aspiring entrepreneurs or early stage founders wish they could be:

  • Silicon Valley startup veteran
  • Multiple startups
  • VC funded in previous companies
  • Had successfully exited and made his investors money
  • Talented engineer

In short, he had a sterling track record, impeccable credentials and noteworthy references.

To the run-of-the-mill tech startup founder, he was the poster child for “who gets funded when I don’t.”

And, he failed.

» » » Click here to read the rest of this post « « «

Small Business Acquisition

I’ve been involved with acquisitions, big and small, on both sides of the table.

With small businesses, especially lifestyle businesses, these are some typical factors and scenarios:

Factors that will shape the deal:

  • Your goals for exit (financial, personal and schedule freedom, ongoing participation, etc.)
  • A specific “magic number” financial goal that will enable the future you desire
  • Your timeline for exit
  • Your market size (be as specific as possible)(industry association press releases, manufacturers’ press releases, market analysts reports and trade press stories are great sources for market sizing information) You’ll need to come up with specific $ sizing amounts for the applicable current and projected market segments. At a minimum, you need an “order of magnitude” number for your current and projected markets size, e.g. $2m, $20m, $200m, $2b.
  • Market growth rate (see previous point on good sources)
  • Your current revenue run rate (current revenue rate projected over 12 months)
  • Your trailing 12 months revenue (if you have annual revenues over $10m it greatly enhances your chances of acquisition by putting you into a large, general pool of viable businesses)
  • EBITDA run rate (current EBITA projected over 12 months)
  • Trailing 12 and 36 month EBITDA
  • Gross margin %
  • Comparable acquisitions in your market or adjacent markets
  • Top five companies most likely to acquire your company
  • The one company you think would be the best fit to acquire your company and why
  • Provisional or issued patents for any of the products
  • Trademark, trade secret or any other form of Intellectual Property (IP) protection on any of the products or designs
  • Barriers to entry that prevent your existing or new competitors from entering your market by duplicating your designs / products or designing around any of your IP protection

Does my startup idea suck?

Here’s how you answer that question in 10 steps:

  1. The top five things that differentiate your company from your competition (these must be things that make you different, not better)
  2. The specific pain that you solve for your customers
  3. No more than eight words that describe how you solve that specific pain
  4. The six defining characteristics of your ideal customer
  5. Your market size in annual spending on your products/services expressed as ARTS:
    1. Addressable (all customers on the planet who could conceivably buy your products/services)
    2. Relevant (the portion of the addressable market who currently buys your products/services)
    3. Target (your ideal customers)
    4. Serviceable (the customers you could service with your available resources; here assume that you obtained sufficient startup capital to create the minimum business model reflected in your financial projection scenarios)
  6. The four reasons your products/services are need to have purchases for your customers (as opposed to nice to have or want to have)
  7. The most important customer benefits of your products/services (these must be customer benefits, not product/service features)
  8. Your top three barriers to entry (the things that your company has that prevent competitive entry, e.g. intellectual property / patents, technology, sales channels, trade secrets, etc.)
  9. The three things that make this new business a low-risk proposition for potential investors
  10. One sentence that states the reasons why your founding team are people worth investing in

The answers to those 10 questions will tell you if your startup idea sucks.

 

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