Category Archives: Keys to Success

Why They Call It Serial Entrepreneurship

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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.

(almost) Everything you’ll ever need to know about business

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There was an excerpt posted today on the Four Hour Workweek blog from a new 81-page book: A Few Lessons for Investors and Managers from Warren E. Buffett.

I love succinctness, and you can’t get much better than distilling the essence of “what Charlie and I have been saying over the years in annual reports and at annual meetings” into 81 pages.

Here’s one of my favorite sections:

THE REALLY GREAT BUSINESS: High returns, a sustainable competitive advantage and obstacles that make it tough for new companies to enter

A truly great business must have an enduring “moat” that protects excellent returns on invested capital. (2007)

“Moats”—a metaphor for the superiorities they possess that make life difficult for their competitors. (2007)

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Early Stage Priorities

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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.

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Cash Flow

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Cash flow is the top challenge for just about every new business in the world.

Most people who are new to business are fearful, if not overwhelmed, by the financial side of the business. Not many new entrepreneurs have a working understanding of the financial terms, much less the reports, used by business finance professionals. How many new entrepreneurs understand the differences between and the implications of cash versus accrual accounting? Not many.

This is a problem because people tend to avoid, downplay and fear that which they don’t understand. Accounting and finance are no exception. Entrepreneurs who have little to no understanding of finance and even less available time to go up the learning curve on it are naturally vulnerable to financial challenges, if not disaster, in their businesses.

The key to overcoming this is to focus on cash flow, because that is what will kill your business.

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Work Life Balance

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Balance

Achieving balance while building a business is very challenging. The rule of thumb when starting and growing a business is that you will work much, much too hard in the initial stages. It’s better to come to terms with that reality going in, make your peace with it, and just buckle down and put in the effort required to get the business up and running.

If you are constantly beating yourself up because you are not living the perfect balanced life featured on the magazine covers, you are not helping the cause. Those ideal versions of life are mostly fantasies or one-in-a-million stories.

Starting and building a business, especially in the initial stages, requires huge amounts of time, energy and focus. It is important to understand that going in. It is very important that those important to you, those in your support network, understand that going in. If you and those around you are not fully in tune with the resource, time and energy requirements of starting and building a business, the psychic and emotional tolls that ensue can destroy your business, your relationships and your life.

I will say this again: Starting a building a business, especially in the initial stages, requires huge amounts of time, energy and focus. Don’t diminish any of those three by fighting a running battle with yourself or those around you regarding this issue.

Having said all of that, it is important to carve out some moments for yourself and for your life on a regular basis, even in the early days of starting your business. Make a point of taking a few minutes to do something just for you and something just for those around you. Have a plan, and stick to it, of gradually increasing those moments as the business gets up on its feet.

Once your business is operational, things change. No business model is valid if it is based on heroic effort by those involved. If the only way your business works is if you neglect yourself, those around you and your life, then the business model is flawed and it is doomed to failure in the mid- to long-term. Once your business is operational, you must be in balance or the business will fail; it’s only a matter of time. You simply can’t sustain an unbalanced energy and time investment in a business at the cost of all other aspects of your life. It will eventually kill the business, kill your life or kill you. For a business to be sustainable, you, and everyone else associated with the business, must be in a reasonable state of life/work balance.

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Diverse Offerings

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This challenge is one I see a lot while providing management consulting, mentoring and coaching to entrepreneurs and startup teams.

For example, a business plans to offer the following products and services:

  1. web design
  2. web site maintenance
  3. web design instruction
  4. instructional packages for website owners
  5. life coaching
  6. photography
  7. public speaking
  8. writing
  9. professional skating instruction

You can make the case that 1-4 are related products and could be complementary offerings.

You can also make a case that public speaking and writing can address any of the other offerings.

However, you cannot make a case that attempting to sell all of these diverse products and services is possible in a brand coherent, much less an energy and capital efficient, manner.

I have personally been a professional photographer, public speaker and writer. I know, first-hand, how much time, energy and marketing focus is required to be a success in any one of those three endeavors.

And that is really the point here. It is tough enough to build a successful business around any one, single offering, much less nine, and especially nine that are either completely disparate or tenuously related.

Each offering you sell has its own set of development, maintenance, delivery and support requirements. Each offering has its own market and customers, each requiring very specific value propositions, brand positionings, marketing messages, sales channels and execution.

Each business is a bucking bronco in its own right.

Photo: Meralain via Flickr

 

Trying to ride multiple horses at once is tough enough as a rodeo trick.

It is not a valid business model.

You need to pick a horse and ride it.

Pick one horse, one market, one set of customers, one value proposition, one brand position, one marketing message, one sales channel and one business model to execute.

Find a market niche and own that niche. Then expand from there.

Nine horses is too many to ride.

Before you build a business plan, pick a horse and ride it.

 

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Getting Money to Start My Business

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Your biggest business challenge this week: money to start my business idea

Capitalizing a new business is one of the largest challenges to overcome.

However, most entrepreneurs focus too much on this factor. They think that their business idea is so foolproof, all they need is some money to bring their idea to market and the business is guaranteed success.

In fact, that is very rarely the case.

Only one in 10 new businesses survives a decade. The failure rate is the highest in the early months and years.

Although a primary cause of business failure is often attributed to “lack of capital,” the real reason is that the failed businesses ran out of time. They ran out of time because most of the new businesses burned through their available money trying to figure out a viable, sustainable business model.

The moral of the story is, before you go seek capital for a new business, be sure you have a proven business model. Take your idea and make a prototype. Do some tests with real customers. Make some sales or get signed letters of commitment to purchase your product or service once you have it ready to sell.

The key to success in business is selling something people want to buy. That is true whether you are tying to start an enterprise B2B company or a local retail business. The only way to ensure that the money you are seeking is going to build a business that sells something people want to buy is to prove that idea before you invest the big amounts of money.

To accomplish that goal, one task I recommend, developed by Dr. Rob Adams, is the 100 Customers Test. Talk to 100 prospective customers first, before you do anything else. You will learn more talking to those customers that you will by obtaining and spending just about any amount of money in the early stages of your business.

Prove your idea and your business model first, then seek and inject capital to scale the business model.

If you need money to prove your business model, start by talking to 100 Customers first. That will cost little to nothing and will almost certainly guarantee that when you do build a business, it will be selling something people want to buy.

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Accounting

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Accounting

Your accounting resource will be one of the most important vendor relationships in your business. An accountant often provides day-to-day tactical support via bookkeeping resources (or referrals to same). In addition, your accountant is a critical strategic resource for tax planning, networking and referrals into their network of professional services providers such as legal, consulting, business brokers, banking, etc.

Consequently, it is very important to have a solid, mutually beneficial relationship with your accountant.

Start by asking other business owners for referrals. Ask people who run businesses that you aspire to emulate for a referral. That immediately puts you into a network of professional and business suppliers that will match your business as you grow. If you start by asking business owners at the size and scale you are now, you can end up with an accounting resource that cannot scale with you as you grow and whose network is not well matched for your aspirations.

Next, talk with at least five potential accountants by phone and meet personally with at least three. Do not settle for anything less than a good to perfect fit with your accountant. In particular, it is critically important that you share common values related to integrity, honesty and trust.

Your accounting and bookkeeping resources can literally make or break your business, so choose them wisely and with due time, effort and consideration.

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Sales

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“Nothing happens until somebody sells something” – Zig Ziglar

It’s a fundamental rule of business that sales drive everything. If you don’t have any sales, then you don’t have a business—pure and simple. You might have a charity or a hobby, but if you don’t have sales that drive sustainable profitability, you don’t have a business.

“Sales” is what happens when a customer’s perceived needs match your value proposition.

Your value proposition is more than just the specific product and/or service and its price that most people consider when they think about sales.

Your value proposition includes:

  • Brand
  • Time
  • Benefits
  • Features
  • Capabilities
  • Price

Of all of these factors, your brand carries the heaviest load. It stands for your reliability, trustworthiness, and, very importantly, aspirational value. For instance, what’s the difference between a Timex and a Rolex? Both tell time. Only one tells an aspirational story.

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The Nature of Change

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More than 9 out of 10 patients do not change their lifestyles in response to their doctor’s recommendations.

More than 70 percent of corporate change efforts fail.

Humans hate change.

It’s a simple fact of life. There isn’t any easy way around it. In general, humans hate change.

That rule extends beyond individuals into groups of humans: families, tribes, organizations, companies, communities and nations. Humans hate change.

As individuals and groups, we tend to get locked into a way of doing things, a set of perceptions and a set of expectations. Anything that forces us to change anything about what we consider normal is usually resisted.

Even in the face of overwhelming evidence for the need for change, we will resist change. For example, the majority of people who suffer heart attacks do not make long term changes in their lifestyles to eliminate or limit factors that contribute to heart disease. In other words, even when it’s a matter of life and death, humans hate change so much they won’t change even to save their own lives.

There are university degree programs in change management; multiple national and global professional associations of practicing change management consultants; countless thousands of trained, certified and degreed change management practitioners and a cornucopia of books, videos, workshops and tutorials on implementing change. In spite of all this learning and all these resources, there has been relatively little improvement in change rates in humans or groups of humans.

Why is this so?

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