Startup Blog: December 2011

Friday, December 23, 2011

Thursday, December 22, 2011

Buy a Ticket

This is not an article about funding your startup using such risky capital as a lottery ticket. However, there are lessons one can learn about winning the lottery. The lottery is nothing more than legal state sponsored gambling. Many of the states have them and the people that buy the tickets want their chance to strike it rich. Well most entrepreneurs want the same thing with their startup.

There are schemes that suggest how to buy tickets and most of them are nonsense. A few people however, have managed to use science and statistics to determine ways to increase their chances of winning. They determine in advance how many numbers they must purchase in order to increase their odds of winning. Then they organize teams to purchase the required number of tickets. You may have seen the news reports on these schemes because the group wins. Well in your startup, you organize the team and focus them on the projects and timings needed to win. If you are good, you also work to have the odds of success in your favor.

Like the lottery, your startup is risky and you may not make any money. You may also lose your total investment. The odds of your having a big hit are not in your favor, but you can increase your chances by planning. That is one of the most important parts of organizing your startup; i.e. putting the odds of success in your favor.

To this point the message is:

1. Entrepreneurs want to make it big

2. They need to organize the business & team carefully

3. The can increase the odds by good planning

4. They can lose their investment. Startups are not risk free!

There is a final point. The following story will help describe it:

“An old man was down on his luck and really needed help. For 10 years, he made the same prayer each day:

I need help. I am down on my luck and nearly broke. I cannot support my family. My home is going into foreclosure. The family needs food. My children need money for school. I feel like such a bad father. PLEASE LET ME WIN THE LOTTERY.

Finally, in desperation he said the same prayer for one last time. He was ready to give up. He was certain his prayer was not being heard. So he ADDED:

I have asked for these things each day for 10 years. I do not know what else to do. I thought you would grant my prayer requests. What am I doing wrong?

It was at this point that a voice answered “YOU HAVE TO BUY A TICKET”

Maybe you can guess what the last key point is. There may be risk and a need for planning, but if you do not start the company, you have lowered your odds to ZERO. You may not lose, but neither can you WIN.

So if you are an entrepreneur, BUY A TICKET = START A COMPANY. Plan well and increase your chances for winning.

You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com and his company website or photo website. You can also find him in the group Startup Group on Linkedin. Other articles can be found in the Charlotte, NC- small business section of Examiner.com. This blog is now listed on StartUpRoar and on Alltop®.

Tuesday, December 20, 2011

Dialing for Dollars

As stated before, your startup will have little or no money for the first several months. The most important activities you can do in this time are to create as much value to make the company fundable. “Chicken or Egg” is the best analogy one can provide to the situation you will face.

It is possible to find help along the way from people that are former executives and have an ability to take a risk. These highly experienced people are some of the best employees you may ever have because they may work for equity, provide the much needed skill sets, and they serve as mentors for your startup.

You may be able to get some initial funds from Friends, Family, & Fools. These are the ones most likely to invest because they know you, they just do not know any better, or both. Government or not-for-profits agencies have granting processes, loan programs, research contracts, or other services. These are dependent on the field of your technology and the state your company is to reside in. Many companies are able to advance to prototype stage based on some combination of these funding sources.

At some point, you will reach the need to obtain some greater sums of funding. The funds come from a wide range of sources like VCs, Funds, Super Angels, Partners, and other business relationships. Most likely, you do not know these people and the game is a bit like the old TV show “Dialing for Dollars.”

One great way to get non-dilutive financing is by partnering a product you may not wish to develop or sell yourself. Identifying a company that may be interested can be via business associates, board members, advisors, or cold calls. Reaching out to them requires having a sales pitch that is product specific and demonstrates the value of the product in general and to the possible partner. If they are interested, the negotiations start and hopefully end with them paying money for purchase or license of rights to the technology. These deals can take many forms. Having a business advisor and a great corporate counsel is important to the final deals structure.

Finding investors can come from cold calls. Most often, it is better to get an introduction from someone that knows the fund. This can be your counsel, accountant, a friend, an advisor, or someone affiliated with the company for example. Most funding groups see large numbers of deals each year. When they do not know you, it makes it easy for them to ignore you and spend their time with a company introduced by a friend or contact. One local VC indicated they review more than 600 deals per year and invest in around 6. The VC said they typically only review those that came via introductions from friends. They just could not handle all the others.

Maybe you can see why networking is so important. Finding a way to advance your company takes all the resources you can muster. This not only includes your energy, money, but your friends and associates. Your network includes your extended sphere of contacts plus the people they know. Any one of them may be the key to your getting an invite to show your company to a funding group or prospective partner. You will always be “Dialing for Dollars!” If you network well, you may be able to call fewer people before being invited for a visit or even getting the FUNDING.

Thursday, December 15, 2011

Did Simon and Garfunkel Sing About Your Startup?

Simon and Garfunkel produced a song with the lyrics starting “Slow down, you move too fast. You got to make the morning last.” You might not think this relates to a startup, but in some cases, it does. It is important to execute in as an expedient manner in your startup. You have limited resources and potential competition breathing down your neck. After all, first to market may have a significant advantage especially if you have a superior product.

Entrepreneurs sometimes forget that they have limited time and out of concerns or fear go after more than they can handle. Everyone likes to think they can multitask, but not everyone is able to juggle as many balls as the next person. Maybe, they even have a hard time juggling at all and they do not realize it.

Part of juggling is knowing where all the balls are at all times and developing the timing and coordination to manage the process. This is the same for managing multiple projects. Startups may have several key events that need to be managed simultaneously: 1) find money, 2) build a product, 3) find partners, 4) set up overseas operations, and 5) manage a product launch. The team you build will be working on each of these tasks, but as the CEO you really need to be on top of the activities and know the timings, milestones, and issues. As first time CEO, you may even feel the pressure to try and do all of them yourself.

When you are not on top of the activities, there is too much chance for making mistakes. It is harder to monitor activities when you do not take time to develop a means of tracking them. For example, a project software, a spread sheet, a written series of notes, sticky papers on your mirror, or something else. Handling too many things at once with no means of remembering what needs to be done results in forgetting key events or generating confusion in the company. The more you try to do yourself the harder it is to remember what needs to be done especially when you do not develop a system to help remember.

Suggestions:

· Develop a routine of meeting with your team and develop/idenfity timings and milestones

· Put timings and milestones in some format that allows you to track them

· Have timings and milestones available at all times and review regularly

· Split your personal activities with the team and help prioritize the events

· As the CEO you are the Money Person & Overall Manager. You cannot nor should you attempt to do it all!

· Review activities from time to time and narrow activities to a sharp focus to achieve the key milestones in a timely manner. You cannot do everything at once. You may not be able to do everything that is on your to do list. FOCUS on WHAT is IMPORTANT

· Remember the Simon & Garfunkel song lyric: “Slow down, you move too fast.” It is important to be expedient, but when you move too fast and miss things, you cost the company time and money.

Tuesday, December 13, 2011

Quit Complaining and Expand!

Everyone has a sphere of influence. This may start with immediate family, close friends, then school or work place associates. Those contacts have contacts too, stemming from very close to distant contacts. If you are on LinkedIn, you will often see a connection list showing that via your 3^rd level contacts, there are limitless people you have influence over. In reality, the level of influence you have occurs with you first, then with your closest and immediate sphere of friends and family.

It is easy to complain: for example about the bad economy, limited jobs, bad food, and/or whatever bugs you today. Your ability to change your environment rarely comes from complaining but from actions taken to solve a problem. The complaints most originate because you are unable to take direct action to solve the issues. If it were, you would have fixed the problem and moved on.

Complaints are fine, but solving problems is better. No one likes hearing the complaints nor do they like problem situations. You always have an ability to contribute to the solution of problems, but the level of contribution may be limited.

Keep in mind that you have a sphere of influence of your closest contacts. Those are the ones most likely to listen to your problems and get involved in creating a solution. It is not possible to change the way government functions all at once. You can get all your friends to rally behind a new candidate. By having multilevel support via distal contacts, you influence an election. This is part of the basis of campaigns. Changing government one politician at a time becomes a task utilizing extended contacts.

You may dislike your boss. Guess what, the person is still your boss. You can quit or find a way to work with the person. Your boss has influence over your future career and finding a way to work with the person will help your future prospects. You have influence even in those that you do not like. It comes down to how you use that influence to change your situation.

You have little chance of changing things outside of your immediate sphere of influence. This is why EXPANDNG THE SPHERE has great value to you over time. The extended influence you build can help find solutions to current issues in your startup or personal life. Hopefully, you have read the articles in this blog on networking that lay out why it is so essential. Networking is a great way to enhance your sphere of influence.

You cannot change the world all at once. You can change a little bit around you by using your influence. Close friends and family are often more than willing to help if you just ask. This may be from getting advice, speaking to someone on your behalf, or finding you funds for your NewCo. The more people in your current sphere the more your reach. You will become stronger and greater with ability to take on greater challenges because your influential control has expanded.

In short: Quit Complaining and Expand your influence by making new friends. Get them into your inner circle and help each other. Take control of your surroundings and make your life and company better. Rather than complain, find a way to solve a problem.

Monday, December 12, 2011

Fix the Problem, Not the Blame!

I have written about the fact that bad things happen for all kinds of reasons. In fact, this is a common theme in personal endeavors and startups. You cannot control everything around you especially your own Stupidity. It is easy to get help doing dumb things it can be a joint effort. It is what you do to resolve the situation that can make or break success of your startup.

Just the other day I had some help getting in trouble. A decision made to relocate some furniture in the house lead to my agreement to do this. It does not matter that is really was not my decision in the first place nor that I had moved the furniture out of the house a month ago because it was old. I took on the task and as in any business endeavor; I generated a “Quick Well Thought-out Step Wise Plan.”

· First I asked if a neighbor was around to help, but the answer was no

· Next, I reviewed the path from the location of the furniture to the new location

· I determined if I could lift the item alone

· Mapped the shortest path which included taking the item up steps

· Got help opening the door and clearing the path to the room

· Then proceeded to lift and move the item myself

Well this plan had one major flaw and I missed it. I assumed I could lift the item one-step at a time on the way up. After all, I did lift it one-step at a time on the way down to where it was stored. I forgot that I used a narrower entryway with fewer steps that had a way I could brace myself as I negotiated the stairs. You got it! I dropped the table, which broke falling half the length of the stairs; yep, me too. I fell on the concrete and rolled. Luckily, I was not hurt too badly; except for my EGO and it may never be the same!

After I recovered, I reviewed the situation. The Table looked ruined. I picked up the pieces to move them to the trash. Immediately, I realized the top was not damaged it had just come off. The table was now in two pieces and easier to move. I saw that the top could be re-attached so I moved the items separately and reassembled them in the new location. The maars and scratches I was able to touch up via some supplies I found at the hardware store.

I could have gotten angry because I hate to move furniture. I could have been upset because no one could help move the furniture. I could have blamed a number of people for different reasons. However, I made the mistake of moving the item alone.

I could have thrown in the towel and said forget it I am too hurt. I could have gone out and bought new furniture. What I did do was assess the real problem related to my approach and got over it. I then figured a way to get the job done.

Remember the title of an earlier article I wrote. “Get Over It and Move On!” This is a real life example. Remember my discussions on importance of project planning or on using your TEAM. I ignored all of that.

You will have major problems in your startup. I dealt with turn-around of small companies for more than 14 years and there are many types of problems. How the companies get into trouble is a learning exercise, not the final product. The goal has to be fixing the situation and getting back on track to deliver the final product.

I saw a movie a long time ago where one of the actors said, “Fix the Problem, Not the Blame.” In doing so, the staff does not become afraid and are more likely to become part of the solution; “everyone wins.” The table story shows that problems happen even when you think you have a plan. The product was what was intended, the route just became different. The resolution came by not giving up and recognizing a lucky break; i.e. furniture in the right place. I felt stupid, but no one else needed to make to feel bad because of big mistake.

When you find problems, and you will, “Fix the Problem, Not the Blame.”

Friday, December 9, 2011

What Kind of Person Are You?

Starting a company is tough enough without having your personality get in the way. Interactions and first impressions are essential. “You never get a chance to make a first impression.”

A recent discussion with a company prior to a presentation to a VC highlighted this issue, as did the joke presented later. The company scheduled a first meeting and management considered it as an informal discussion. The amount of time for the presentation was 30 min. It may be informal, but this is the first time the management will see the VC. Why take a chance on having the investor remember them as anything less than a stellar investment opportunity? They should prepare to make their same high quality presentation.

When having partnering meetings, the same thing applies. Always have your prospective partners leave wanting to interact with you, not wondering what value you bring to the table. First meetings are always important. This goes for all meetings. The joke below highlights this in a different way:

“TheHaircut

One day a florist went to a barber for a haircut.

After the cut, he asked about his bill, and the barber replied, 'I cannot accept money from you , I'm doing community service this week.' The florist was pleased and left the shop.

When the barber went to open his shop the next morning, there was a 'thank you' card and a dozen roses waiting for him at his door.

Later, a cop comes in for a haircut, and when he tries to pay his bill, the barber again replied, 'I cannot accept money from you , I'm doing community service this week.' The cop was happy and left the shop.

The next morning when the barber went to open up, there was a 'thank you' card and a dozen donuts waiting for him at his door.

Then a Congressman came in for a haircut, and when he went to pay his bill, the barber again replied, 'I cannot accept money from you. I'm doing community service this week.' The Congressman was very happy and left the shop.

The next morning, when the barber went to open up, there were a dozen Congressmen lined up waiting for a free haircut.

And that, my friends, illustrates the fundamental difference between the citizens of our country and the politicians who run it.

BOTH POLITICIANS AND DIAPERS NEED TO BE CHANGED OFTEN AND FOR THE SAME REASON!”

This story says that some people come with a hand full of “Give Me”, while others are willing to share the wealth. When it comes to the final analysis, how do you want your first impression to be?