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Wednesday, October 31, 2012

Know the competition and key decision maker before your next pitch

My tactor is GREEN and the others RED.  That is just what you need to improve your business!

Planning a business and developing a sales pitch for customers, partners, or investors is part of the startup effort.  The advantages of the technology or products become part of the CEO’s pitch to show the listener how they will benefit from an engagement with the startup.  Everyone is aware that competition exists.  However, it is not always so easy to determine whether competitors known or unknown visited your audience previously. 
Sometimes a listener asks about your awareness of company X that has similar technology.    On other occasions, they may ask how you differ from other technologies in the same field.  Every entrepreneur believes his or her technology is unique and special.  They cite the advantages and special considerations of why they are the preferred business.  However, many times the CEO and team are not aware of all of their competitors or what the competitive pitches. It is surprising to hear that competitors are claiming to have all they key advantages of your products and team.  It is hard to counter this comment when nothing is known about the competitor.
A great technology has features that separate it from the others.  The benefits are important to define and describe to the listener.  It is critical the listener see how the technology will benefit the customer and how the company will drive use of the product.  Demonstrating these factors is what most CEOs do in their pitch.  The question and answer segment that takes place after the pitch is where surprises can occur.  The following is a summary of a session that stumped the team:
               Customer:  “We love what you have and immediately see the benefits.”
 
               Company:  “How can we partner to advance the technology?”
 
               Customer: “You should adjust your pitch to include info which we described as important.  Then plan to give your pitch to person Y. 
 
               Company:  “Great we will do just that.  Keep in mind the advantages of our technology and   how much it will benefit you.”
 
               Customer: “You should know there have been a number of companies making a nearly identical pitch and stating they have all the same advantages.  Just keep that in mind when you speak with person Y.”
  
What happened in this discussion were two very important things; 1) the people the team thought were the decision makers were NOT, and 2) the company was not aware of stealth companies pitching nearly identical technologies.  This happens more than one would like.  It is not enough to have a green tractor while everyone has a different color.  You must have and describe real advantages you bring to the relationship.  This includes a differentiation of your technology from that of the competition.  It is not possible to show how your technology is the best if you have not identified all the competition.  There are unknown competitors, so do not act surprised when someone tells you about them in a meeting.
The key is maintaining a constant vigilance for the competition.  Create a slide as part of your pitch and highlight how and why your technology is better for the listener than others they have seen.   Expect to find someone bring up a company you never heard of or a vague reference to undefined competition.  Make every effort to learn more about the competition and modify your presentation accordingly.  You may get the opportunity to send the listener a follow up email or phone call to describe what you have learned.  If you have the incorrect decision maker, establish whom the best person would be to make a follow up presentation.  Most often, the listeners will provide the info if you ask politely. 
Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

Monday, October 29, 2012

Finding Investors is highly dependent on your ability to network

Grow your network far and wide.  It will serve you well!

 
Startups always are seeking funding, the task that is a never-ending battle.  Questions in social networking sites suggest that many entrepreneurs do not know how to start the process or how to find investors.  The answer is NETWORK!  Experienced entrepreneurs use their network extensively in seeking funding.  The inexperienced need to develop a network but can make use of their limited contacts to help.  The key is to learn to network in a focused manner and continue to build and cultivate the network.

Investors come in a wide range of experiences.  The hedge funds, traditional funds, and VCs are filled with professionals with extensive experience in the investment business.  Angel investors may have experience investing in the area of your technology but many do not.  Family and friends are likely the least experienced at investing.  The investment made by each will depend on their financial capacity, internal limits of the finances for each investment, and their comfort with the company.  The deal structures will vary significantly dependent on their experience investing in early stage companies.  Finding the best match for your company requires reaching out to many and finding the few that will consider an investment.

If you have previously raised capital in a similar field, you likely have met many of the investors with interest in the space your new company is working.  The fund investors tend to move around a lot, but most likely, you still know people in the funds.  You may be lucky to find a very familiar person having moved to a new fund with greater capacity to invest.  A new entrepreneur will not have the same knowledge of the investment community.  In addition, if you have not worked on related technology, you may be familiar with investments in general, but not know the people in the funds.  You must network to get to the right investors for you.

Regardless of your experience level, networking is crucial to finding the best investors for your stage of development.  Many times, you can get introductions to angels and professionals via your friends, family, or service providers.  Others that have viewed the technology and passed because it was not a fit may be willing to introduce you to an investor more likely to take interest.  Introduction by someone known and trusted improves the comfort level of the investor.  The fact that someone vouched for you may be just enough to get a meeting.

In a recent conference, a well-known VC stated that they received many business plans each year; usually the number was in the 500 – 800 range.  They found it impossible to review all of them and their goal was to make 4-8 investments per year.  One of the strategies this VC used was to determine if they knew any of the people or were if someone they knew introduced the company to them.  This factor of being known or introduced was essential to having a closer review of the business plan and important to getting a meeting.

One of the greatest skills that will carry you and your company further is the skill of networking.  You should approach conferences, meetings, and events with the idea of getting to know people.  Follow up with new contacts and establish a relationship.  Determine those most like the people you want to work with in the future.  Spend time speaking with your service providers like lawyers and accountants.  They usually work for other companies and some know funds or angels.  When your network better understand your skills and values, they will usually be more than willing to introduce you to someone that could become a future investor.

One of the best ways you can help your company is networking.  This single skill will take you well beyond what you can do alone.  Your network is a great asset if you use them properly and do not abuse them!

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

Friday, October 26, 2012

Diversity of ideas can lead to novel solutions of problems or conflict

Looks like stormy weather ahead; better call for help!

Entrepreneurs never have a smooth ride because problems arise all the time.  Complex problems can occasionally have easy solutions and easy problems can have complex solutions.  The problem complexity and degree of creativity contribute significantly to the ease of the solution.  The experience an entrepreneur carried to the startup may not be the same as those experiences by the advisors.  The mix of the ideas from the novice coupled with the contributions from highly experienced advisors often lead to the most creative solutions.

Goals often vary when seeking the best solution to problems.  Great solutions can end with a win-win resolution while in other situations simply eliminating the complex problem by walking away is the answer.  Resolutions are necessary because failure to fix problems can lead to the demise of the business or significant slow-downs in progress of building the business.  Some of the problems can create morale issues with the team and this in turn can lessen their performance.

One of the entrepreneur’s greatest assets is the team, a great network, and experienced advisors.  The combination working either independently or in groups can offer diverse means of addressing resolution of problems.  The wide range of ideas contributed may not solve the problems, but they certainly can help you creatively identify a resolution. Members of your network may be eager and willing to help by pitch-in to work on identifying or negotiating a compromise.  Turning to the network for help is not ones first thought but it is a great way to look at the situation differently and enhance the ability to identify creative solutions.  Sometimes, learning to view bad situations differently is an alternative to seeking resolutions because you learn to adapt and make the situation work for you.

In the book “Imagine” by Jonah Lehrer, Mr. Lehrer reviews practices leading to the high level of creativity at Pixar.  A few of the tactics are: 1) enhancing ways to enhance communication between employees of different backgrounds, 2) allowing ideas to be challenged but including advancement of the idea, and 3) breaking the anchoring that takes place with status quo.  In several examples throughout the book, he describes the value of encouraging increased idea flow and value of challenging the status quo.  Clearly, the described tactics worked for Pixar because they generate superior films and demonstrate a high level of creativity.

Entrepreneurs must learn to see alternatives and integrate a broadened of ideas to find creative solutions.  They may also need to learn how to view a conflict from the other point of view.  This sometimes is the only way to find a winning solution that works for both parties.

You may have heard someone threaten litigation as a means of addressing a problem.  People often forget the complexity and costs involved in being locked in battle and this should always be a last resort.  It is easy for situations to get out of hand and lack of control on both sides leads to horrid situations.   Running away or shutting down has downsides as well. Seeking resolutions that work for two parties in conflict is usually best and costs less in the end.  The conflicts can cause morale issues, lack of focus on core business, and increased expense.

Resolution of major problems and conflicts is something that every entrepreneur needs to learn.  Skills will improve over time, but you are not likely to have the same problems repeatedly.  This is why learning to use a mix of methods to solve them will help as new issues come up.  In short, when faced with problems or adversity: 1) seek help from your network, 2) view the situation from different perspectives, 3) confront and attempt to resolve the situations through negotiation, and 4) fight or flee.  Most adverse situations have a resolution and a bright side.  All you have to do is find it! 

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

Wednesday, October 24, 2012

Founders behaving badly negatively affect the business

I may look cute, but will certainly do dumb stuff!

I have interacted and/or observed many entrepreneurs and startup companies.  Some of the relationships were start a company, others to attempt to resurrect the dead, some to identify and adjust directions, others to serve as advisor or board member.  I often attempt to help struggling companies because I know a founder, an investor, or an introduction by a friend.  The result of these interactions over time resulted in exposure to the smartest people doing some of the dumbest things imaginable.  In other cases, the smartest do great things that just turned out wrong.  The result is trying to resolve a messy situation.

The issues generated by founders with non-liquid equity that has great value can lead to major financial problems.  For example, one founder sold a home, bought $1MM of property, and failed to obtain a new construction loan.  The result was no place to live, no money to build, and an unhappy banking situation!  As another example, a married couple purchased a $1MM house on equity loans only to find the valuation of the company dramatically fell off before selling the shares.  Then there are those founders that obtained personal loans for their business and later had problems when the company fell on hard times.  In this case, the ultimate disposition of the company was not enough to cover the personal loans thus leaving them with personal debt with not much way out!

How about management that decided to save money and not use proper accounting people or methods?  The company went through 4 audits to correct the books when confronted by investors.  A different company had an executive become personally involved with a staff member and engage in life-style changes.  This disrupted the entire company.  In another case, the ego of an executive caused a major shareholder to dump a few million shares on the market with no regard to price of exit; ouch, that was painful to watch!

These are just a scant few of the ways founders have negatively affected their company.  The following are just a few areas you should be aware of and consider carefully.

Visions of wealth:  Non-liquid equity may be worth a lot of money on paper, but the true value is zero until you can sell it.  Borrowing beyond the means of your actual salary has potential risks if you use a non-liquid asset.  You may be rich on paper, but wait until the money is available and in your account before you act rich.

Personal life impact: Make every effort to leave your personal life at home.  People are negatively impacted when you bring a personal relationship to the office.  They become even more disenchanted if you proceed to leave your significant-other and have your new friend remain in a key position at work.  Keep a solid non-contaminated business professional environment for the sake of the team.  On another note, a company becoming partly owned by a spouse because of a breakup may have negative consequences.

Personal finance issues: Keep your financial issues out of the company business.  If you decide to owe money, keep that issue away from the company.  Your debts tied to the company will drag it down.  Make every effort to keep your personal life on a solid financial basis.  Live on your income not your projected wealth.

Cash management issues: Spend wisely.  Saving money by limiting quality, needed services may not work out the way you think.  Remember the accounting problem above!  The cost of several audits to fix a problem was far more than the cost of having a qualified accounting person full time. The same goes for selecting non-quality service providers or lower cost employees.  Saving money is great, but not at the expense of having to redo all the work.

Ego: Check your ego at the door.  It can prevent business deals; turn off employees; and in strange cases like the one above, make your valuation drop by more than 50% in a few hours.

Issues with decision-making: Failing to make critical decisions can be a huge issue.  Your team is dependent on you.  Most decisions are difficult but failing to decide something can cause major problems.  You can read more on this topic by seeing an earlier article:  Risk and uncertainty stymies decision making.”

Negative impact on employees: Morale is important to performance of the team.  Making them feel negatively will result in poorer performance and greatly reduced creativity.  You do not want zombies walking around the office. You want highly motivated and enthusiastic people performing at their peak.

Failed management: The management team is critical.  The team will follow great leaders that they respect.  Ensure you maximize the leadership and relationship factors within your business.

Clouding ownership: Employees can leave at any time.  Non-employees may be potential business partners or future employees.  Ideas are tossed around in discussion frequently.  It can be very easy to have people come up with a novel idea and the ownership be clouded.  This causes significant problems if not carefully managed.  As one example, a university professor claimed to invent a product at the university a year after joining a company.  The situation degraded to a point where it took legal action and a six figure of expense to clean the mess up! 

 

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

Tuesday, October 23, 2012

Productivity and creativity can come via different styles of work and relaxation

Quiet times can enhance creativity

Have you ever spent the day at work wondering how a fellow employee gets away with what looks like goofing off?  It can be aggravating and cause discontent among employees when one of them does not carry their equal share of the workload.  The complaints to management take time to resolve and finding ways to encourage the employee to do a proper amount of work during the day will eat up your energy and time.  Documenting the poor effort and managing the employee becomes a task that makes you feel like giving up as a manager.  There is no great answer to motivating those poor performers.  Each person will require a different set of tools to make them either a good employee or an employee that no longer works there.  Improvement in their performance helps the company and it helps you develop as a true leader.  Many times the solutions you use to assist an unproductive employee and help them improve come from your creativity in solving a problem. 

Your company may face many problems beyond the employees; manufacturing problems, new product inventions, customer satisfaction, and cash flow.   Creativity is needed to address many of the more severe problems because simple solutions just will not work.  Sometimes, employees spending time on different tasks or giving them time to reflect and think helps the creative process.   When people are quiet and not actively thinking a problem, their creativity comes to the forefront.  Likewise, having employees work on tasks widely different from the norm helps them see solutions to problems without the encumbrance of knowing something will not work.  Some companies provide free time to employees to work on special projects of the employees choosing.  In these cases, the company benefits by new inventions from motivated employees allowed to enhance their creativity.  The time commitment may be 1 hr per day, but the benefits can be huge. If done correctly, the results are creative solutions to problems or new products for the market place.

You may have experienced an ability to solve a problem while exercising, taking a trip, or dining out.  Your novel solution came after your review of all the background information and extensive attempts to solve a major problem.  Creative solutions often arise during those quiet times away from the problem; it is like having a novel idea just pop in your head. The answers come from the initial processing by your brain followed by the creative side of your brain showing you a new path.

Finding ways to share problems with those in the company having limited exposure to the problem can help achieve a creative solution.  People can become limited by seeing what appears to be an insolvable problem.  Someone from a different discipline can bring fresh ideas to solving the issues.  Creative solutions can come from use of experiences from a very different field when applied to your issues.    

Encouraging the creativity is important in any business.  Your company is likely to experience many problems. The ability to overcome them and continue to move forward makes a big difference between success and failure.  Creating new products and converting them to marketed products requires creativity. Converting an idea to something a consumer wants requires creativity.  Creativity must be encouraged and enhanced in all your employees.  Your success will depend on it.

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

Wednesday, October 17, 2012

5 Actions may enhance customer diversity or allow you to recover from a loss

What plans do you have before they are GONE?

San Francisco is a great place to visit and walk around.  I often like to walk down to Fisherman’s Warf to look around.  Pier 39 has numerous shops of different types and is a little like an outdoor mall.  Just outside of the shops are a number of platforms where tourists would stand and watch the sea lions.   The sea lions were there for many years but the numbers tended to fluctuate as the animals migrated.  One Thanksgiving week yielded reports of as many as 1,700 sea lions present on the outdoor landings.   Tourists usually stand and watch the sea lions but they mostly annoy the local boating community.

A few years ago my visit to the area resulted in a surprise.  No sea lions were present! Google searches yielded articles suggesting they left for places unknown.  There were no reports of harm, but suggestions that they may have chased a source of food down the coast.  In any event, after many years that area was void of sea lions.

This is just another illustration of how unexpected events can cause changes that affect what seem to be the most stable situations.  A recent article, “Your best customers sometimes kill your company“, described the hazard of having one of your major customer leave.  Such events can take place for reasons other than actions on your part.  The loss is not a trivial issue to manage or predict.  It is much more devastating than having sea lions migrate away from a tourist location.  You cannot control the sea lions any more than you can control your largest customer, but you can be proactive in seeking ways to lessen the loss.  It will hurt no matter what you do but maybe you can keep your company from going under.  There is no activity assured to save you.  The stress and work required to survive will be exceptional.  In the end, your company may fail.  That said the following are a few considerations that may be useful for lessening the damage and providing a window to adjust and survive.

Plan – Consider the alternatives of customers that your business may appeal to.  Create a chart and determine the most diversity you can obtain as well as what type of revenue achievable.  Develop a strategy to sell to these and add to the mix of your customers long before you lose the big one.  Try to keep your mix such that you can survive the loss of one big customer.

Diversify -  Having a big customer is a great thing.  It will take significant resources to keep them happy and you should do that.  One way to diversify is to assign or hire a business development or sales person to seek other clients in different sectors.  Make every effort to create a range of customers, hopefully in different sectors.  Keep in mind that the loss of your big customer should leave you with residual revenues sufficient to survive.

Save -  Take a portion of your revenues and save them for a rainy day.   You can always use the funds for other things, but if you lose a customer, the funds may keep you afloat until you can find other sources of revenue.

Downsize – Have a plan to reduce the expenses of the company.  Also, determine the trigger point where you must implement the plan.  It is too late to try to save the company after all your funds are gone; act before it is too late.  Determine the residual window post downsizing and the events you must execute to keep the company alive.

Seek alternatives – If you have a cushion, one option may be to seek a merger or acquisition immediately.  The downsized company with residual sales may be a perfect fit with a different business.  Knowing these businesses in advance will cut the time it takes to engage in discussion.  The combined businesses may be able to grow sufficiently to make everyone whole again.
 

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

 

Tuesday, October 16, 2012

Your best customers sometimes kill your company

Sorry I must say "Good Bye and I Am Leaving"!

The old saying “Don’t Put All Your Eggs in One Basket” relates to your customers as well.  Diversification is a highly important characteristic to develop for many endeavors.  Spreading risk does dilute the potential for reward, but it protects the downside as well.  There are many reasons to adopt this philosophy in your business and this includes your customer base.

Diversifying investments of funds in the stock market provides a means of spreading the risk.  Investing $2,000 in each of 10 companies ($20,000 total) means the most you can lose in any single company is  $2,000.  However, your upside is unlimited for each company.   In 2000 or 2007 when the markets were falling, you may have been down on each of your investments, but if you selected wisely, you are most likely in the profit column on at least 80% of the investments.  You spread the risk of a Lehman Brothers, Wachovia, Enron, or other major loss.   You may have not made as much as if you invested all the funds in Apple, but you protected your downside.

In 2002, a consulting practice on the east coast had developed a significant client providing a 7-figure fee.  The client, a Fortune 100 company, planned to add new projects to the pipeline of the consulting practice.  The revenue stream of the practice had grown significantly over a few years.  Revenues from the big company grew to become more than 80% of the total revenues of the consulting practice.  One day the Fortune 100 company decided to spin-off a part of the business into a new company and completely restructure.  The result left the consulting practice with a significant loss in the revenues and they had to survive on 20% of the projected revenue stream.

In the early 2000s, a pharmaceutical company on the west coast was developing a product for treating patients exposed to radiation.  The US Government was the primary customer and maybe the only customer.  The company spent more than $170 MM of investor’s money to gain approval from the FDA to market the product.  When the company asked for the first order from the federal government, a onetime order of around $100,000 was received.  There were no follow-up orders planned and no other customers to approach.  The company went under shortly after that.

Around 2007, a company selling products to a major retail chain enjoyed significant growth and revenue.  The small business provided excellent products and planned to expand.  Expansion funds allocated to the process were significant in order to cover the new proposed site.  One day, the business received notification the retail chain was cutting back and future orders were terminated.  The company in mid-expansion had to deal with cut backs in revenue and later closed the business.

Diversification is not always possible, but is highly desirable.  The customer base of your business is just one area that diversification is important. Going on a buffalo hunt and landing your biggest target is wonderful until they disappear overnight.  Have a party when you get a huge customer, but attempt to build out your customer base such that the loss of the customer does not cause the demise of your company. 

Leave some comments about ways you might protect your business.  Thanks in advance!

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.

 

Friday, October 12, 2012

Things are not always as they seem





New Mexico has some amazing areas with scenic views.  One of the areas is Ghost Ranch a location where Georgia O’Keeffe spent time painting and developing her skills.  A Presbyterian organization runs the ranch and they host many different types of retreats, educational events, and courses.  One does not need to be Presbyterian to enjoy the activities. 

During a visit to New Mexico, I took the long dirt road to the ranch and stopped to see the old ranch house on the side.  It seemed to be well preserved and there was nothing at all around the house.  No other buildings, fences, or other structures were visible.  I was amazed at how well preserved the house was and guessed it was due to the dry climate of the region. 

On reaching the main part of the ranch, I entered a gift shop and started a conversation with the attendant.  I learned a bit about the history of the ranch, local areas like Chimney Rock, and hiking trails.  I mentioned the old house and asked who lived there in the past.  To my surprise, the attendant informed me the house was built by a movie studio for the movie “City Slickers”!

The point of this story is that people see and interpret what they see based on a set of facts.  My interpretation based on location and a very old and famous ranch.   Obviously, the house was of similar age and belonged to a previous owner, Wrong! I saw and interpreted based on logic of location and surroundings, but there was info I was missing; i.e.you don’t know what you don’t know”!

Making assumptions in your business is going to happen.  Your assumptions may be based on the best data and logic available.  Moving forward you may never have a problem, but there is always a factor of running into glitches because you did not have a complete set of facts.  The fact that you do not know everything should cause some caution in your thought processes as you develop your plans.  Missing information may affect your business in severe ways.  Having people with significant experiences in areas you are not familiar may allow you to identify likely missed information that would improve and enhance your plans. 

One of the best skills you can learn is to re-examine your proposed path with highly experienced mentors, consultants, advisors, or other people.  The external look may show you missing pieces that will save you time and money.  You spent a lot of energy raising the capital to move forward with your business and you owe those investors the best deliverables and use of the proceeds.  You most likely will learn that 75% of the time your first analysis is correct.  Now learn to guard against the other 25% and enhance your chances for success. 

Taffy Williams is on Twitter by @twilli2861.  Email questions to twilli2861@aol.com. More is available via his company website ,  photo website, or “LIKE” ColonialTDC on Facebook.  You can also find him in the group Startup Group on Linkedin. Other articles are in the Charlotte, NC- small business section of Examiner.com.