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Thursday, July 28, 2011

“Write 3 Letters” You Are Not that Good

Well you are that good, but let’s come back to that.  First a joke:

A new CEO was hired to replace an outgoing CEO.  The outgoing CEO met with the incoming CEO for an exit interview.  During the discussion, the departing CEO stated he had placed 3 very important letters in his drawer just as his predecessor had done for him.  He explained that the new CEO would find opening the letters in order most useful when a serious event took place.  He also stated the letters left for him had really helped him over his tenure.

Several months passed before a major event came up.  The new CEO now remembered the letters and noticed they were numbered 1, 2, and 3. The former CEO had instructed they be opened in order for maximal benefit.  The new CEO opened letter #1 and the paper inside had the words “blame it on your predecessor.”  The new CEO did as the letter stated and amazingly he was able to avert serious problems and keep his job.

Several months passed before the next serious event took place.  This one was growing in magnitude and things were starting to get ugly at the company.  There were even calls for the CEO to step down.  In desperation, the CEO opened the drawer and pulled out letter #2.  With great fear he, opened it carefully to read the word “reorganize.”  He followed the instructions and just as before he was saved. The whole company quieted down and went back to business as usual.

After about a year, a third serious event took place and it was much worse than the rest.  The CEO knew how to get out of the mess because he had a third letter left to open.  With a smile he reached for the letter #3 and opened it to read “write 3 letters.”

As you can tell from late night TV, comics like to make jokes about real life situations.  Almost always some real fact triggered the comic routine.  In some respects, the events above strike home for most managers. They have seen something similar in their organizations.  The point being that as a senior manager or CEO in a startup or even a big company, you know that sooner or later you will get tapped on the shoulder to leave.  It may be that you screwed up big time, but his is not always the case.  The company may be transitioning from one stage of growth to another and the Board of Directors feels a different skill set would be better in the company.  Many CEOs I have spoken to see trends for replacement over a 5 year period.  Some stay much longer, some shorter, but no one stays forever.  It is hard to not take these events personally, but you can’t; it’s business. 

A Navy Captain once told me a story of his retirement ceremony from a hospital in Connecticut.  He worked as a civilian and was chief of surgery for many years.  He was leaving the hospital to return to active duty in the Navy.  At his retirement ceremony he was given a letter describing how much he would be missed.  He provided me a similar letter on leaving the government.  In short the letter described how much the organization would miss the individual leaving.   The whole thing can be summarized by the following:  “if you put your arm into a tub of water and pull it out the hole left in the water shows how much you will be missed.”  Essentially with any vacuum, the whole gets filled by the surroundings.

So what is the point of this article?  You really are that good!  It is just that there is so much diversity of thought and talent; others may feel better by having someone else with a different skill set.  Sometimes it is not your call to leave, but do not take it personal.

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Wednesday, July 27, 2011

Clash of the Titans

No, this not a story of ancient times, but a desire to create an awareness of how EGO can affect a wide array of events in your business. Several levels of effects (good & bad) can emerge if you are not careful to manage how your EGO shows up in the business dealings.  The “Clash of the Titans” can occur in the company between similar level employees, lower level and management, and between key managers in partnerships or business discussions.

People will naturally develop affinities or avoidance to others based on personalities.  This is rather common and does not require a business interaction.  But, when business is overlaid on top of those likes and dislikes, either an improvement in the business or a complete blow up can occur.  You may have heard of longtime partners ending up in court after one leaves the business on bad terms.  You may even see a partner become a future competitor.  On the other hand, a meshing of the personalities can result in an accelerated business transaction that results in two people becoming lifelong friends and business partners.  In this situation, they people have managed to not let their EGO interfere with how the business will be managed.

You cannot always control who you like or dislike, but you can be aware of the potentials that can come from the EGOs associated with those around you.  In respect to M&A, it is often said that there were three things that can kill a deal:  1) Valuation, 2) Location, and 3) Who will run the company.  Valuation is an easy to manage; either you like the value of the deal or you do not.  If not, you attempt to negotiate a better deal or walk away; simple business.  Location is not that much different. In merging the two companies or businesses, where will the merged entity be located?  With location, you can at least apply some logic to identifying the ideal location and attempt to negotiate that location as part of the deal.  But the one deal killer is; Who Will Run It?  Now the central issue deals with EGOs of the Senior Managers which can turn into a real stumbling block if both see themselves as the ideal future leader of the business.

M&A is not the only time there can be a clash of EGOs.  This can take place in a wide array of programs where two people become at odds as to how to manage a program. It can also occur where two people are competing for the same position or promotion.  Sometimes, it is just that two people really do not mesh that well!

You cannot change the personalities of those around you, but you can modify how you adapt to situations.  When it comes to your business, always keep in mind that you have an EGO; big or small.  Then step back and decide whether the events that are causing you the most anxiety are EGO driven, business driven, or both.  Remember that your primary responsibility is to drive improvement in the value of the company.  This is the most difficult when your EGO is involved, but your primary responsibility is to your shareholders, employees, and partners etc.  Then determine what steps lead you toward creating the most value.  You may have to take a hit to your EGO to do your job!

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Friday, July 22, 2011


OK, what is with the title?  Everyone knows how to set priorities.  If this is true for you, read no further, what I will say likely will not mean much anyway.  But in a previous post, I spent time discussing project planning and the need for this in a company.   Developing timelines is critical and putting all the steps/events on the timeline is required if you want to manage the program and get to the proper endpoint in a timely manner.  But sometimes there is more than one activity that must take place immediately while others can wait, yet they are at the same point on the timeline.  Setting the correct priorities is important for every entrepreneur whether you are the Chief Technology Officer, Chief Executive Officer, or any of the other management positions.

The ability to set priorities is not always easy or desired by the manager.  Sometimes, activities of greater interest, when overlaid, are distractive and can cause selection of something other than the true priority.  Take a simple list of activities: fix dinner, pick up the kids, send a letter for a job, go to the mail box, and pay bills.  Seems simple enough, but what if you realize fixing dinner required a trip to the store to buy food.  You remember the car is in the repair shop, but you cannot pick up the car without paying the repair bill. Your paycheck has not arrived and there is not enough funds to pay the repair bill, but it may be in today’s mail.  By the way, the kids can walk home. The school is only two blocks away and the kids know the car is in the shop.  Your priorities might be to pick up the mail and get your check, deposit it, pick up the car, stop by the grocery on the way back, and finally make dinner as long as the kids made it home. Other items can wait.  If any of the parameters changed, you are likely going to adjust your schedule to match the priorities.

Your ability to determine the priorities and put them in order is essential.  It is also important that you be able to make adjustments that allow for adaptation to related changes in events.  When you prepare timelines consider establishing contingency plans for possible events that can require adjustments.  Such planning allows for a better establishment and maintenance of your priority list.  You will be better able to shift workloads accordingly to obtain the proper results.

Not everyone is good at seeing the future or guessing “what ifs”.  But, you can discuss this with your team.  Collectively, you may find it easier to better plan with your team’s input.  The key is to set the proper priorities in order to ensure the most important tasks are completed first, second and so on.  Monitor the events. If things change be prepared to make adjustments. 

  Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Thursday, July 21, 2011

Who’s the Boss?

Entrepreneurs start companies for a wide range of reasons.  Many have the desire to stop working for someone else and to be a business owner, a boss, or CEO.  They have identified a technology or service that they are passionate about and want to see it all the way to market.  They desire to a meaningful part of something and to have the pride that goes with building a business.

As a founder, the first issue you should be aware of is that you will always have a boss.  It may be clients, customers, shareholders, or a Board of Directors.  You will be run something but you will always have to answer to someone.  No business runs in a vacuum without interaction of others.  That said, as a boss you do have to make many important decisions every day.

 “Who is the Boss” is more the question of whether you as the founder want to or should be the boss.  The skill set to run a business can be learned.  Some take to it quickly and others suffer and never really do a great job as the leader.  The ability to coordinate activities and make strategic decisions may not be your strong suite. 

Early on, you may be the only employee.  By default, you run everything.  As the business grows (or if you have more than one founder), decisions will become more complex as will the stresses.  It is best for all, if  you consider the needs of most senior manager of your business early and plan  accordingly.  Don’t get into a trap of running something when that is not your desire or if it does not play to your strengths.

The point of this discussion is to get you to think about what you want, what is best for the business, and what management planning should be developed early.  Running a company can be taxing, just decide early on if this is right for you.  Things to consider

Desire – Do you want to run something?  The first area of concern is whether you really want to be the person running a business.  Just because you are a founder does not mean you have or want to develop the skill set to run a business.  Nor does it mean you want the responsibility.  Make sure you think ahead as to whether you want to run the business and plan accordingly.  Don’t confuse business owner with the person that runs the business.   Even if you are a 100% owner, you can hire someone to run the business.  It is still your business and you made the executive decision that the business would grow better with someone else in charge. 

Skills- Do you have skills or ability to learn to run something?  Organizational skills are natural to many people.  There are some that do everything spur of the moment, last minute, and/or never organize anything.  Try to assess your skill set and determine if you can organize, prioritize, develop a team willing to follow you, and manage finances.  Evaluate your strengths and determine your strengths and weaknesses.  Should you decide to run the business, consider hiring an advisor or a staff member to help with your weak skills.

Business – What is best for the business? One of your considerations is what is best to make the business grow?  Your thoughts and ultimate decision may be one of your first strategic actions to take on behalf of the company.  If you are unsure of yourself, don’t like to be in front of people and answer tough questions, or you are unwilling to take the heat when a bad event happens in the company, the business may do much better with someone else in charge.  The job of the person running the business is complex, but the most important task is increasing the value of the business.  You may have the desire and skills, but you may still not have the personality to be the one to run the business. 

This list is to get you thinking. It does not include everything you should consider.  The point of the whole article is to get you to consider if running something and being the CEO/Boss, is what you want and if it is good for the business as well.

  Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Monday, July 11, 2011

Project Planning Is a Must

People plan for events in a variety of ways.  Some will spend hours planning a vacation while others will do spur-of-the-moment scheduling.  It all depends on the individual.  This is fine for many personal activities, but is not a good idea for a company.  Planning is essential to good and timely execution that allows for maximal value creation. 

Think for a moment about developing a widget that is to be launched in your market in 3 years.  In order to get it ready, further research & development is needed.  A manufacturer must be identified.  The manufacturer will need time to develop the scale up path and equipment.  Maybe you need to test the product before scale up manufacturing.  The sales and marketing team should become involved at some point.  The sequence of all the events leading to a launch is what requires planning and monitoring to ensure a timely product launch. 

The steps leading to a successful product launch vary depending on the type of product.  Some of the steps must be done in a serial or sequential manner.  Others can be in a parallel with others.  The overlap of these and sequences of the steps to market along with timelines and budget are what make up your project plan.  Your ability to lay out this sequence and shave time and costs off the program is essential.  In addition, optimal timings are important for capturing sales before the patents run out.

There are several software programs that allow for project planning. One can even use a spreadsheet or simple word file.  But the key, is identifying all steps, times required for each step, defining how they fit in a sequence, the budgets for each part, and integrating them into something that is easy for the team to follow.  Then get the team to buy off on the timings and the budgets.  Having the team agree with the plan will ensure they manage their activity properly and work to achieve the defined timings.  They will be more likely to alert you when issues that affect timings arise; especially if it is something that keeps them from meeting their schedule.

A good way to initiate the discussion and planning it by getting your team together and having everyone identify all of the steps to get to market.  Try to identify what can only be done in a serial manner and what steps can go on simultaneous with others. Laying these over a time course and fine tuning the sequence of events will come next.  Review the budget for each and determine if this meets your expectations.  If you have clear timing issues or budget issues, it is a good time to lay those constraints on the table before your team starts the planning!

The process becomes more important when the startup is a virtual or semi-virtual company with limited fixed staff.  The core team must have the background and skills to manage the processes.  They should be able to review what is provided from external vendors and determine whether the timelines and budgets are accurate or not. They will be important to integrating the steps and holding the vendors to the standards you require.

Whether the team is in-house or contract services, constant vigilance is a must to maintain the timings and budget.  The managers of each segment must be in constant contact with those performing the different functions.  Sometimes, pressure is needed to keep the process on a ridged schedule or budget.  Failing to maintain timelines and budgets can result in major cost overruns and loss of sales during a patent life.  For example, suppose a product has a sales potential of $120MM per year.  This translates to $333 K per day in lost sales.  Add budget over runs and the loss is even greater. 

Summary:  Manage your project timelines and budgets to maximize returns.

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Saturday, July 9, 2011

SME’s: Get More of What you Want – 8 Tips to Help you Negotiate Better Deals (by Clive Rich)

In the wake of the global financial crisis entrepreneurs, start-up companies and small business owners are finding it harder and harder to get deals, whether with potential funders, or with large customers and suppliers who are putting the squeeze on terms.  It is vital that these smaller companies understand more about the deal-making process or they risk financial ruin as big business and the recession make it harder for SME's to get a foot in the door.

Technology is partly responsible for the increasing importance of deal-making skills because it has made the world a much smaller and more inter-connected place.  As a result, we all need deal-partners to help us reach a potentially much wider audience. Technology also enables everybody to compete in everyone else's space, so we all need deal partners to help us compete effectively. We also have to respond quicker than ever to market opportunities before they disappear, so we all need deal-partners to help us execute at pace.

So, how can start-ups and small companies maximise their chances of closing deals in their favour if they are to prosper in this new ‘Deal Economy’?  Much is often made of the importance of the management team, the protectability of the product and the credibility of the marketing plan, but SME’s should add the importance of negotiation skills to that list. It can be the difference that makes a difference.

Here are some tips to help SME’s negotiate more effectively to get more of what they need when faced with tougher or more experienced opposition:

1.     Have a winning attitude: Good negotiators bring an effective attitude to the negotiating table. Research shows that good negotiators feel positive about themselves, and believe that they can win. Having worked for many years with Simon Cowell (a winner if ever there was one) I can say that this kind of attitude is self-fulfilling.

2.     Understand your own sources of bargaining power: To be able to believe it can win, the SME needs to marshal its bargaining power. Who holds the aces? Un-trained negotiators often under-estimate the bargaining power they have on their side by focusing exclusively on the “market power” of the other side. Yet there are many other sources of bargaining power – nine to be precise – including expertise, information, and access to influential networks. These sources of bargaining power are rarely distributed 9-0 in favour of anybody, so the SME needs to understand that and not be daunted by the perceived market power of the investor.

3.     Know where you are in the negotiation process: Most negotiations follow a set pattern, with a number of recognisable and distinct stages. If you know what stage you are at and how to handle that stage then that will automatically give you a big advantage.

4.     Be prepared: It’s often the early stages of a negotiation that get overlooked, because they require an investment of time. These include “Preparation”, and “Exploring “Needs”. SME’s are always in such a tearing hurry trying to develop business and cash-flow that time spent on preparation can seem like something of a nuisance.

In fact it is an investment of time – fail to prepare and you prepare to fail. I have seen an SME fail to close a deal with an orderly and detail-minded angel investor by turning up for the meeting wearing odd socks. If you don’t know what your deal partner expects from you then you won’t get much of what you want.

5.     Take time to understand the needs on both sides: Good negotiators know that you can’t expect to engineer a win/win outcome if this stage is skipped in the rush to get to the “haggle”. “Needs” are the underlying emotional requirements that each side has from the deal – not to be confused with organisational “wants” such as “price” or “quantity”.

These needs are critical to understand, because they underpin the whole negotiation, and yet they are often unspoken, so they are not easy to spot without a trained eye. Does the investor have a “security” or “reassurance” need? If so they will be focused on guarantees and risk control in the deal. Do they need to achieve something unique as a result of the deal?  If so the SME needs to focus on the innovative and original nature of its product. Does the investor have a “belonging” need? If so the SME must be sure to make them feel at home as part of the company going forward.

6.     Don’t be afraid to bid first: Contrary to popular belief, it can be beneficial to go first when bidding as this sets out your own agenda and allows you to shape the negotiation the way you want.  It's a common misconception that it's better to go second as it avoids giving away your position.  In fact, if you don't set out what you want early in the bidding process you may not get a second chance.

7.     Close as quickly as possible: If the parties can get through these early stages and bargain successfully they will arrive at the final stage of any negotiation, “closure”.  SME’s need to know how fluid this moment can be. It must be bottled immediately before the investor changes his mind, is impacted by new economic factors, or finds something else to invest in.  I remember an SME failing to close its deal with an investor because it insisted on arguing about commitments for the next round of funding before the deal was closed for the current round.

8.     Select the right behaviour:  There are 12 different negotiating behaviours to choose from, but most of us only use one or two (our “favourites”) irrespective of whether they are working or making things worse. Make sure you choose the most appropriate behaviour for the person you are dealing with and for the stage of the negotiation you are at.

Effective negotiators are able to exhibit all of these skills effectively.  If SME’s know the importance of managing the three angles of successful negotiation - attitude, process and behaviour, they will be more equipped than anyone else to prosper in today's new deal economy.

About the Author
Clive Rich is a professional negotiator, lawyer and mediator based in London, who has closed deals and generated new business worth well in excess of $500m for companies and personalities including Sony BMG, Simon Cowell, MySpace, Robbie Williams, 19 Entertainment, Apple and the Royal Opera House.
Clive holds regular 'Secrets of Negotiation' events which provide SMEs, tech start-ups and entrepreneurs with the skills to successfully negotiate investment, licensing, distribution and exit deals.  He also provides a host of affordable legal advice to Digital SME’s via his ‘Orbit’ service, helping to protect them against typical legal “black holes”
The Clive Rich 'Close My Deal' iPhone app delivers a complete set of interactive negotiating tools, content and tips in a single application and is available from the iTunes App Store.

A note from Taffy Williams:
Clive Rich is an excellent negotiator and can be found on Linkedin and the web!  I met him this year and have interacted with him on several occasions.  He hosts a series of videos with key advice on negotiating.  I have seen them all and enjoyed them, you can either try the link or search him in YouTube for more of his videos.  He also has a blog which is very informative and a "Close My Deal" app website.
I was very excited that Clive agreed to write a guest article for this blog.  I am grateful for his input and enlightenment and hope you will find it useful. Thank you Clive!

You can follow Taffy Williams on Twitter by @twilli2861 and you can email me with questions at twilli2861@aol.com and my company website  or photo website. You can also find me in the group Startup Group on Linkedin. The blog is now listed on Alltop®.

Wednesday, July 6, 2011

I Did What?

As the entrepreneur you get rather passionate about your company and technology.  You spend hours and hours learning about the new business and all aspects about it.  So it is not too uncommon to get rather defensive when asked questions by potential investors and partners.  This is especially when you have been asked things that seem to be contrary to your belief of the subject matter.

On the other hand, maybe you are in a partnering meeting.  You get into a heated debate about an aspect of your business or technology with one of the team members from the other side.  Why not, you have a lot at stake and want to show your stuff and have them be your partner.  Your passion will show through.

Both of these scenarios are rather common.  No matter how you describe it, you are debating a person on the other side.  Sometimes, the other team members come to the table and you may not have learned about them in advance.  You get back to the office and one of your colleagues says “by the way, did you know that person was the world authority on the subject.”  Of course, you are now are thinking “I DID WHAT.” Well get over it, this will happen a lot over your time with the company.  If you are careful, you may be able to do it without coming off looking like an ASS.

A few suggestions:

1.     Before every critical meeting, request in advance the names of the people that will attend from the other side.  Then look up as much as you can about their backgrounds before you attend the meeting.

2.     Establish an agenda and get it agreed to by both parties.  This way you will be somewhat prepared and possibly have supporting materials with you.

3.     Remember that is ok to disagree and try to prove your point.  Nothing wrong in trying to demonstrate your understanding of the business and technology is solid.  Just try to not over do it and go beyond your level of understanding.  Never make up information, be overly argumentative, or ugly to the other party.  Certainly refrain from name calling.

4.     You may only be partly right.  It would not be the first time the world expert would know a bit more than the entrepreneur.  While you may have part of the facts of the case, listen to what the other side is saying.  Check it out later.  It may help you improve.

5.     Never get angry or defensive it is kind of a debate, it is not a slug fest. The only winners are those that make money not win fights.  For sure never leave on an angry note.  You may have to work with this person later and you will regret your past words.

6.     If you are right, do not gloat and/or do a victory dance!  This may be just as bad as a slug fest.  Always try to leave the other side with the will or desire to work with you in the future. 

One rule of thumb which was learned the hard way over the years.  “Be nice to everyone around you, you never know who your boss will be next.”  Sounds silly, but it is not possible to count the number of times paths cross in other businesses.  One of the people you made angry earlier, could be running a company that buys yours! Take it from a worlds expert on this subject.

  Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Tuesday, July 5, 2011

Why Do I Keep Doing This to Myself!

The amount of energy and focus needed to build a business from scratch is enormous.  The rush when things go well is a great feeling.  But, there are those days when things seem to go all wrong.  These downer days can steal way your resolve to make the business work and leave you feeling like walking away.  This is when you get the “Why Do I Keep Doing This to Myself” feeling.  It causes the best entrepreneur to question everything and can cause them to see everything in the most negative light.  This is not just for first time entrepreneurs either; serial entrepreneurs can have bad days.  On those really bad days, it seems that nothing is going right and the problems can get blown out of proportion with no solutions are insight. 

It is critical that you be prepared for these days and that you maintain good health and have stress release activities you enjoy.  Some of these events can be overwhelming but, as the founder CEO, it is your job to get the business back on track.  You only make it harder when you dwell on the negative rather than the strategy to move forward. 

A few examples of some bad days:

·       3 days before an annual shareholder meeting to approve a $16MM financing with deal documents executed, the investing syndicate calls the CEO and says they are not going through the deal.  The company had about 2 months of cash left and the CEO is about to hold a shareholder meeting to approve the deal.  The CEO now must tell 60 shareholders in a public company that the meeting is postponed to a date uncertain and then try to answer questions.  You can guess what the questions and comments were.
·       A CEO was introduced to a potential replacement with no warning and it was done in a Board Meeting.  The replacement never happened, but that was after 3 months of continuing to work side by side with the new recruit training him.
·       After finishing a major study requiring regulatory approval which was required to market a product, the manufacturing team demonstrated the product could not be made.  That caused a stir.
·       A company built an $80MM manufacturing facility just in time to find out the product did not work. Actually when tested, the product did the reverse of what the medical claim was to be for the product.
·       A Board Member facilitated a deal for the company which forced unwanted creditors to be inherited.  Every time funds were obtained the creditor got nasty. This lasted for 2 yrs and resulted in a battle almost once every month.  In the mean time, the staff was not getting the resources they needed.
·       Scientists clouded titles to patents and ended up getting law-suits in multiple directions.
·       A law suit was initiated against a very large company causing the very small company to spend, spend, and spend on things not leading to final product.
·       Facing bankruptcy 3 times in the same  company.
·       Bad news was announced about a product study result causing the company to drop from a valuation of $500MM to $40MM in 3 hrs.

These are just a few real examples from real companies.  There are more different types of problems than you can imagine.  Most are not new, but new to you, but enough, you get the idea. 

With no stress relief mechanisms, it becomes very hard to think through what to do and resolve issues and plan next steps.   Actually, some of these were even considered minor problems!  So, what can you do to be prepared and to manage through.  A few ideas;

·       If you do not exercise, get started.  Does not matter what, but try to do at least 20 min per day and as many days a week as you can.  Get in the habit and try to leave the problems at home during this time.  Practice and maybe it will be helpful when you really have an issue.
·       Make sure you take care of your health and eat properly.  Overeating does not help even thought you think it does.  Putting the extra stress on your body will only make you feel worse in the end and it may cause health issues as well.
·       Find calm time to sort out problems and think of solutions.  This may take several attempts, but nearly every problem has a solution.  You need to recognize that and then look for tentative solutions.
·       Talk it over with your partners, mentors, board members or friends.  You may be surprised what kind of input you will get.
·       Break the problem or problems in to components; sometimes they can be addressed in stages.  Try to identify simple steps that can lead to solutions or alternatives to get around the problem.
·       Try to remember that the company needs you and your full attention.  This may add stress, but you created the business. 
·       Remember the old saying “When the going gets tuff, the tuff get going”, well it is true.  You are TUFF, so get going.

  Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Saturday, July 2, 2011

You Have Just Been Told “The Baby Is UGLY”

Every entrepreneur spends extensive time and energy in developing the new company.  The emotions of attachment are rather strong and the entrepreneur has the unshakable belief that the business being created is excellent.  The NewCo is often like having a child that is created, nurtured, and raised.  Thus, many investors recognize the entrepreneur’s company is like the entrepreneur’s baby.

Spending time on the road to raise capital or develop partners takes energy.  A well prepared pitch has been created and will be delivered many times with many variations.  One of the end results of having spent all this energy and presenting the company extensively is that you sometimes become a stronger believer of your own pitch and could lose your ability to take critical comments and use them to improve.

In the movie the Wind and the Lion, Sean Connery provides a comment on criticism which is funny but has a bit of truth to it.  This is not an exact quote so but goes a bit like this:

If one man calls you an ass, you can laugh it off.
If two men call you an ass, you can just walk away.
If three men call you an ass, you may want to go out and buy a saddle!

In short, the feedback from those you present to has value and may have merit.  What you do with the information is even more important.  Keeping your critical side throughout the growth and development of the company allows for improvement.

So what do you do when your potential investors or partners offer the comment that sounds like your Baby is UGLY?  Just a few thoughts:

Ask for Clarification: You just got feedback that something is wrong with the business or model.  Perhaps you overlooked something in your analysis and creation of the business plan and pitch.  Asking what the features are that seem to not be enticing to the investor or partner is important to understanding why they think you have an ugly baby.  You can not address the issues or even determine if they are real if you do not learn what they are.

Understand:  This is a difficult part of the process.  As the creator, you will almost always want to reject anything said in a negative way about the business.  Your first thoughts are to be combative or defensive and try to teach why the person it wrong.  This may only make the situation worse.  It is ok to explain your side but with a goal to understand whether the negative opinion is well founded.

Analyze:  Has the negative opinion been provided by more than one person?  Hearing about an issue more than one time may be indicative of a broader problem.  You are likely to face this opinion in a larger population of the investors you will meet in the future.  Exploring a means to address the negative issues and strengthen the company should be your next steps.  This is one of your main goals from the start of the company, so use the negative feedback to alter and build.

Change:  It is easy to keep going with no changes, but this may produce a less than desired result.  Improving the pitch and business model to account for negative issues seen by others can be beneficial and help you capture more interest.  Try to be objective in the process.  You must feel confident that the changes are real and valuable to the business and to your investor base.  Change without value creation has no place in your business.

Get a New Baby:  Hate to say it, but sometimes you cannot make the baby pretty enough to get an investment. Doesn’t mean you do not love it, but it could mean the baby will not win any beauty pageants.  Picking a different business or approach may be the only answer.  Just do not be so locked to your ideas that you cannot abandon bad ones.

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon