Sunday, December 18, 2011

Hire Humans


Open your mind and open the door to a lot of great potential candidates

This wonderful piece of advice is offered by just about everyone, and it is totally wrong.

I see companies all the time advertising for people all across the country and even internationally for quite mundane roles.

Let’s go through the basic reasons.    
  1. Get a grip – there are only so many truly talented people out there, the rest are ordinary humans.
  2. What makes your company attractive to a highly talented individual? Salary, opportunity, equity? If they are truly any good then why aren’t they working in a highly paid job.
  3. Are you or your business “stars”?  (sorry, but I genuinely doubt it).
  4. A business doesn’t run on its stars – it runs on normal people with normal intelligence and skills performing their normal job – following normal procedures. If you require superhumans to make your business work then your business model is broken.

I’m a big advocate of hiring good people locally and promoting good people from within (if you have them.) It’s amazing what giving a bit of authority and encouragement to a person will do.

If the position description would require a star to perform it, then try looking at the core duties and breaking it into 2 or 3 separate roles that would only require a normal person.

Don’t believe the hype, believe in people instead.

Thursday, December 15, 2011

Business plans are bollocks

This is you - for starting a business. Ignorance is bliss I say.


Depending on what kind of business school hype you are smoking, you will think that all businesses are the same.

Scope out the needs, design a solution, raise funds, develop solution, sell solution and then get rich.

Yep – and I have unicorns in my garden, and I talk to the pixies and leprachauns every night in my dreams and everyone in the whole wide world is my friend.

Are you picking up on any sarcasm yet?

It doesn’t matter whether you work in software, product design or major projects the reality is that business plans and project plans are incremental and repetitive.

The real process is along the lines of the following
  • Identify a market need.
  • Scope out the need.
  • Design a solution.
  • Raise less funds than you wanted – if any at all in which case exit loop and do anything legal that makes money.
  • Make a solution
  • Try to sell the solution – discovering that your idea of what the market wanted was too simplistic and didn’t take their real needs into account.
  • Drink yourself into oblivion for a couple of weeks.
  • Come back to the office determined to do something about it.
  • Work as a team to make your product better match client’s needs.
  • Run out of money.
  • Pay staff using your credit card while begging for funds from everyone you think might have money (this is the point that you will consider selling your soul).
  • Run over your credit card limit and start borrowing from family and friends, basically doing everything you can short of embezzlement.
  • Finally get funds through investors or pre-sales. At this time you will have four separate and entirely made up versions of your business plan which you hand out to investors depending on their attitudes. You may also be indulging in selling vapourware (OMG).
  • Get revised product to market – discover hidden glitches, and fix at a great cost which is written off as capital.
  • Finally get traction and make more sales.
  • Have dinner at home with your partner and children for the first time in 2 years.
  • Enter growth stage and have a whole new set of pains as you take on employees and are forced to make up systems as you go.

 From all this, the point is that you don’t know everything when you start out, the market is a brutal mistress and you will have to reinvent and start again on many aspects of what you are doing. And this is all normal.

Enjoy.

Wednesday, December 14, 2011

Help only those who will be helped


Are you imprisoned by your own desire to help others?


You only have a limited amount of time and energy with which to get your business up and running.

For some reason when you are trying to control your own destiny by setting up a company a lot of people look to you for help. This is mostly positive as through this you learn as much as you help others, and it often helps you out too.

However, there are limits.

Some people ask for help, but never put it into action. You can often tell these because they ask the same questions about the same problems again and again.

Some recognise they need to ask for help, but need help with everything, not just a few things. They appreciate the help you can give, but they have a long personal journey to go on if they really want to learn.

Sometimes your suppliers need help in order to meet deadlines for you to do your job. Often times this is simply because they don’t have enough experience to find solutions – they just see problems.

Sometimes your customers need help because they don’t even understand their own problems or what solutions there are. Educating them is important, but again sometimes people won’t be helped.

Helping others is good, but watch yourself. If it ends up taking too much time from your main business or you find it draining take a break.

Monday, December 12, 2011

Spend your money on the product and the customer’s experience


Hey, it works and the customers are never going to see it


Do you like fast cars, a glamorous lifestyle and the adoration of the masses? If so, business is going to be hard for you.

As a business owner you quickly learn that the scarcest resource is cash, and without it life is very hard.

You will rapidly learn to use your meagre savings on only those things that make a difference.

For example, it is not uncommon to see retail shops that are modern and appealing in the shopfloor and look like an industrial nightmare out the back, with second hand shelving and furniture.

Offices in the best buildings, overinvestment in fitouts, buying buildings and assets when you could rent or hire, encouraging a high flying lifestyle – all these things are warning signs for yourself and your potential investors.

To put it as simply as possible, you need to make your product look professional and up to date, plus you need to make it as easy as possible for customers to find your product and buy it. This is where you should spend your money.

Smart investors also think about this too. Venture capitalists traditionally insist that all funds are spent on the business and that there is no repayment of existing debts or rewards for the founders. They are providing capital to grow the business and want you to see the rewards when you succeed.

Ration your money and use it where it makes a difference.

The importance of letting others fail


This is you - even if you don't admit it.


Setting up a business is a constant learning process. Your ideas are constantly tested against the reality of the market and real customers. Every day contains a small failure that allows you to learn and improve. Then, just as you think you have things figured out there is a change in the economy or your competitors change the game – so previously successful strategies no longer work.

Given the constant level of change you and your people face it is impossible to avoid any kind of failure.

I can hear you thinking that this is completely obvious and are asking why am I even bothering to talk about this. The reason is simple – many company founders are control freaks, and this means you may well be too.

You mightn’t start out as a control freak, but given the incredible amount of work to be done and the limited time and budget you have to do it you learn the hard way the most efficient way to use your time and the cheapest way to achieve your objectives.

When you take on employees by default you will set high expectations of efficiency and value every minute of their time. Your first few employees may deal with this, but you are setting up a toxic culture that will prevent your company growing and trading successfully.

When everyone is trying to be perfect the risk is that they start watching each other to make sure that nothing goes wrong. I’m sure you’ve experienced this kind of situation before – I sure have, and working on high pressure projects I am guilty of maintaining this exactly kind of culture to achieve project outcomes.

For a long term operation you need normal people who aren’t so stressed out that they can’t perform. It has been proved by researchers such as Dan Ariely that if people are too afraid of the consequences of failure their performance degrades dramatically.

So, expect failure, embrace it, and set up your systems and culture so that failure can be remedied in a common sense manner rather than expecting perfection.

Let them fail and let them learn.

Sunday, December 11, 2011

Stick to your knitting


Just because it is possible it doesn't mean you should do it.


There are always distractions.
  • One of your main competitors just started offering prizes to customers.
  • You read in Wired magazine about a new technology that could make all the difference to automating your business.
  • You think that if only you could organise all the files better then everything would work better.
  • You just saw a brilliant new business opportunity that you want to pursue.
  • Business is slow, you get bored and start looking for new things to do.
  • The latest trends in management say that you should eat an orange every morning and talk to small furry animals to boost your own morale.

Okay, so I am deliberately exaggerating on that last one to make the point here.

Stick to your knitting means to always ask the following question – What is that I should do today to help bring in my next sale, or deliver on what I should to my customers.

It’s both that simple and that hard.

Thursday, December 8, 2011

Ask for what you are worth

You may not be able to choose the pricing point for your product


When we start out in business most of us underprice ourselves and overprice our products.

If you sell your own time by the hour or the day the common mistake is to assume that you will work all year round when what you need to do is to assume that you will only work half to two thirds of the time (excluding public holidays, sick leave and holiday leave). This is especially a problem in the services industry.

Yes, low pricing helps win work, but almost guarantees that you will be treated as a disposable employee.

If you can find out roughly what the market price is, then you will have a good guide on pricing your services.

For products we tend to look at the costs of supply, add a share of overheads and then a margin. Sounds simple but unless you are selling into an overpriced market you are likely to hit problems.

Take furniture or household goods as an example. Major manufacturers set up large factories in low labour cost countries to assemble parts supplied by high volume third party suppliers, likewise located in low labour countries.

If you look at software then your biggest competitors can price lower than you can. The equation here is simple – development costs divided by total potential customers. Selling a product into a limited local market means a limited number of potential customers, so even if you work smart and keep development costs down you may not be able to beat the price of a global competitor.

All this seems kind of obvious until you do it yourself, especially in industries where comparable prices are hard to come by.

Too many businesses are set up with dreams of easy profits rolling in the door from day one. Reality is more prosaic than dreams, so if you are in danger of locking yourself into a low profit industry it is better to work that out before you spend all your savings on establishment costs.

Tuesday, December 6, 2011

You only need to be smarter than the next person

"More than one person can eat - maybe I can sell  some."


You don’t need to be smarter than everyone else, just the next person.

When you are selling something you are showing that you have looked at the issues facing the buyer and you have dealt with them. If you can demonstrate this to the buyer then they will be more likely to buy your product than your competitor’s.

When you are in a competitive selection process for services, you need to be the right company for the job. You don’t need to be the best person in the world. Often times you only need to show more knowledge and expertise in the specific area that the client is interested in than your competitors.

For services based companies your clients may know exactly how to do the service you provide, they just don’t have the people or the time to do it yourself. Showing that you are the best company is less important than showing you know how to do the work, you have people available and that you understand the client’s issues.

I say all this because many people oversell themselves. They try to prove that they are the best at everything they do, their people are the best, their company is the best, etc. They would be better placed placing their emphasis on why they are the right company for the job. This is a subtle but important difference.

Leave something on the table



One of the worst complaints that can be made about a company is “they’re greedy.”

Yes, you are allowed to make a profit – most people understand and accept that.

Yes, you are allowed to charge for scarcity or urgency – again this is understood.

However, if you consistently charge more than is normal in the market then customers will notice – and they do gossip.

Also, being unreasonably opportunistic in pricing – i.e. seeing that they have no choice but to use you this time, will lead to long term relationship damage.

People will go out of their way to avoid using a company they think is greedy. They may even pay the same fee, but for better service or a better relationship.

Most transactions in business are a part of a bigger relationship. If you have a one off transaction then you have no motivation to give a better price other than to make a firm sale. If you are looking for repeat business or are interested in your reputation then you need to make the other person feel that a deal is not totally one-sided.

Leave something on the table to have better long term relationships.

Monday, December 5, 2011

You need to be more outrageous

There's nothing wrong with a bit of showmanship


Marketing and promoting your company is absolutely vital. If nobody knows you exist then how are they going to buy your product?

Whatever you are doing now is probably not enough to get attention.
  • I bet your business card is the usual name rank and serial number. Do you use it to provide contact details or is it designed as the mini-marketing tool that it really is?
  • Do you put your opinions about what is not working in your  industry on the record?
  • Do you tell a client when their scope (invitation to offer, etc.) misses the mark?
  • Do you provide a client with what they need as well as what they say they want?
  • Do you fight for recognition when the procurement section of a potential client decides not to use your company?
  • Do you offer your opinions to the press?
  • Does your website and branding reflect what the company needs as opposed to what you prefer? The odds are that you are more conservative than your brand should be.
  • Do you talk to anyone you meet about your business? Sure it might be socially embarrassing on occasion but if you aren’t prepared to risk embarrassment then how will you ever promote yourself.
  • And most importantly – do you attract attention to the business?

Sunday, December 4, 2011

Welcome to the 99%


You are the rule - not the exception. Welcome to the 99%.

Have you had no luck raising venture capital?

Do Angel investors go all quiet and then change the topic to the weather when you approach them?

Does your partner laugh at you when you share your ideas?

Have you discovered that people don’t understand your business model and that rather than having to be shy about sharing your idea with people, you now force it down their throat?

Do you now realise that while most people talk about starting a business almost none do?

Have you found out how much you need to do in order to get things done?

Are you finding ways to get product to customers sooner rather than later?

Have you had all your friends tell you what a dumb idea your business is and that you are not suited to running a company?

Congratulations – welcome to the 99% club.  That is, you are part of the 99% of business that set up and grow a business the normal way – make product, flog product, spend spare cash on improving product and growing, trying not to have a nervous breakdown on the way.

What you need to understand is that most of the popular press about business is about the 1%, and while we all want to get fabulously rich from a great idea those companies are the exception, not the rule.

The good news is that business has been round in one form or another since the beginning of human history. You are not alone. There are plenty of role models around you. Inspiration is everywhere. Success is possible. Getting rich is possible.

Most of all realise that you are heading down a well-trodden path, so call out for help and plenty of people will come to your aid. After all, you are part of the majority.

Thursday, December 1, 2011

Mentor your competitors


Competition makes you stronger


This is controversial to say, but I take great delight in helping out people starting up companies that may be future competitors. What I often find is that they become allies.

We can put in joint bids to take on larger jobs.

You may even combine companies later.

You learn from each other too – everyone has a different way of looking at the world and work.

You are all learning about regulations, IT systems, tax laws, hiring people, firing people, marketing, sales, policy development, and so on. You can share some of your experiences – and maybe save some expenses.

Of course talking about pricing is forbidden.

You can talk about what client’s need and how they view the service providers they deal with.
If your competition is interstate or overseas then you should be fine in terms of losing your own customers.

Even better, you can make good friends for life.

Embrace your competitors.

Wednesday, November 30, 2011

Set it up so they don’t have to get it or get out.


One big happy family - it doesn't just happen by itself


If you have the drive to start a business and the tenacity and ability to learn in order to grow it you are an unusual person. Normal people don’t do these things. Normal people work for others.

When you are hiring at the beginning of a startup you look for people who can deal with the uncertainty and work out what needs to be done for the business to grow. Basically, you are hiring people who are self-guiding and ambitious. With these people you can get the more done with less supervision in a pretty chaotic environment.

Once you get through the chaos of early stage growth you need to start hiring normal people. Normal people need more guidance. They need a system to work with. They need clear job descriptions. They need clear reporting lines and boundaries for responsibility and accountability.

If you don’t set up the work and the systems so that people can get on with the job as best they know how then you are risking a high turnover, presenteeism (people who come to work but don’t do work), bad morale and even counterproductive behaviours.

Ultimately, a company needs some kind of stability in order to grow. Having a core group of people who with the tools/processes they need just get on with the job is one of the best outcomes you can have.

Tuesday, November 29, 2011

Say no to BHAGs

Sometimes you need to think smaller to achieve your big goals. Put your BHAG under the microscope.

There was a time not long ago where everyone was talking about their BHAG – big hairy audacious goals. I was in on the concept as much as anyone else.

What we all liked about it was that thinking of a BHAG helped us to think of the big picture and to be ambitious enough to follow our dreams. If that’s all it did that would have been a great thing.

BHAGs also weren’t new – there were always entrepreneurs naturally wired that way, and they are truly amazing people. The concept was given a name and we learned about it as a way to achieve success. Again, it was good as far as it goes.

Where it all starts to fall apart is in the aims of startups. 
  • Revolutionise retail.
  • Take on Microsoft and take their customer base.
  • Create a single piece of software and turn all hospitals into a utopia of productivity, etc.


These are great goals if you are a large seriously cashed up company, however, as a startup most sensible investors are going to treat you like a leper.

Almost none of the companies that have changed the way we do things were started with that end goal in mind. They started with more prosaic ideas like creating encryption for mobile devices to swap secure information without an intermediate server, or to find a way to automate tedious administration.

It is often when the potential of a product becomes evident for a use other than its original intended purpose that a good market is found. When you start to make sales you take on more people, speak to more customers, test and improve your product, broaden the product range etc. In other words it all happens a step at a time and relies on monetising product on the way.

Some internet based startups have shown the ability to grow amazingly fast – the majority don’t.

You will impress your investors and customers if you have a clearly articulated product and strategy. Try taking away only one of their pains, not all of them, and you will probably start making more sales.

Sunday, November 27, 2011

Getting past your client’s inbuilt bias


Procurement only seem like soulless blood sucking vampires - in reality they like to be helpful and are your best friend for learning how to position yourself in the market.


Selling product can be enormously frustrating at times.

Client representatives don’t understand what they need and don’t understand enough about the problem or the industry to know what you do or not.

Procurement staff can follow a simple checklist and screen you out if you don’t tick the exact boxes they have on the list, even if the list doesn’t make sense.

You may have years of experience in a product, but if you don’t have experience in the client’s industry then they say no, even if it is the same product that is your core business.

It may be that your client doesn’t like anyone other than the major supplier or two.

The procurement policies may prevent buying product from companies with less than 2 or 3 years trading history.

And so on.

There are a few tricks to get past it.

First off – try and look like your competitors. The reasoning for this is that if your branding, promotional literature and product descriptions are similar to that of the major competitors in your industry then your buyers will know what you do. They can then tick that part of the checklist.

Second – anticipate the biases and get on the front foot. Address any and all concerns up front. Use language like – one of the questions our clients ask are XXX, and we help them with that concern by XXX.

Third - recognise procurement policies and practices. One of the best ways to learn about what major clients are looking for is by participating in tenders. By going through a tender process you will learn a lot and even if you don’t get shortlisted by doing it you are putting your name on the radar.
If you have any friends in procurement (regardless of industry) try and seek feedback on what works or not. Also, some industries have common registers of suppliers – get on those registers.

Fourth - recognise what appeals to corporate buyers as opposed to retail buyers. Corporate buyers are looking at price, value, quality, guarantees, etc. Whereas a lot of retail marketing is emotional or aspirational. If you take retail marketing language into a corporate market you may not gain traction.

Saturday, November 26, 2011

Hire someone before you go bankrupt


So you got this far - but I think you need some help to make that a viable business


There’s a reason most of us who start a business are sole practice independent contractors – we don’t take the right steps or the risks to grow.

It can be hard to take this step. As an independent contractor you are making the best money of your life and you are enjoying some of the flexibilities that come with the role. You are also learning firsthand about the insecurities that go with the territory too. Effectively you are a casual worker and can be laid off at any time.

So, while your income is good, you don’t know how long it will last, so you don’t want to risk it.

I see other kinds of startups stuck in the same mindset too. They have burned through their cash reserves and now that they really need to grow they don’t feel they have enough money to hire someone to help out.

When I say someone to help out, it may be as simple as getting someone to answer calls, schedule meetings and manage your diary, or you may be looking for a salesperson or IT administrator.

There comes a point in every business where you are going to have to take a risk and pay someone else from your own meagre income in order to grow. Your partner will hate the fact that you are taking on more risk, your friends will tell you that you are crazy and your accountant might not talk to you for a month after throwing a fit about how you can’t afford it.

If you genuinely need someone to help out in order to make more money faster then you’d be crazy not to. You will know when you are at that point and I hope you have the courage to do it – it should make a difference.

Wednesday, November 23, 2011

When extra people won’t help

Is there room for an extra person without disrupting the others? Plan for it.


The common management mantra is that when you want to speed things up you need to hire more people. This is well known to not actually be true, however, it seems to be the main form of common wisdom passed on to new managers and project managers.

The reasons why it is not true is basically the time and skillsets required for the stage of the project/work.

At the early stages you will need relatively few but experienced people who can adequately define user needs, production needs, organisational planning, scheduling, budgeting, etc. This is an intensive phase in the life of a project.

Bringing on an extra person or two is more likely to slow things down than speed them up at this stage. Basically you would be asking already very busy people to not only take time out to handover work, but they would have to invest considerable amounts of time to educating those people and bringing them up to speed.

During the development phase of products and projects you will need to bring on people in order to deliver the work packages that have already been decided. Bringing on the planned amount of people is good, but there is a limit to bringing on extra unplanned people due to the requirements for packaging up and managing the work.

Also, as a manager you should be thinking about the root cause of delays. For example, is the project/product scope too complex, does the capability of the team match the skills required (I often see this one going wrong), did you allocate an artificial deadline for commercial reasons not linked back to the expected delivery schedule, and so on.

The moral of the story is that if you do bring on extra people then you should plan for it explicitly – don’t just assume it will work.

Staying the course


How do you react when you know it will work out, but it isn't just yet?


What do you when things are going slow? You know, those times where you are making the right sales calls, your staff are doing everything right it’s just that the sales aren’t coming in.

Personally I hate not being busy in paying work – so either I take time off or I go find other paying work.  I know I am not alone in this approach, and it’s taking years for me to learn how to be comfortable letting things take their natural course.

When you know that everything is working as it should and your business model is essentially right it takes a lot of faith to trust that everything will work out according to plan, but maybe a bit behind schedule.

To stay the course you need to turn your days and weeks into routines as best you can. For example, mornings on customers, after lunch on product issues and late afternoon on administration. You might spend Tuesdays making cold calls and Fridays on administration. It’s up to you, but by having that routine you can turn all the gut churning uncertainty that goes with starting a business into a process.

What you really need to watch out for is make work. That is, you make up extra work to do, whether it is new customer types, new business processes, even a new business. This feels productive but is really taking you away from what you need to do.

Your people also need to feel calm in this time of uncertainty. Many will not have any experience to compare with these kind of quiet periods, and they may start applying for jobs – just in case. Some will try to help but end up being destructive. Some will be fatalistic but still come to work every day but not contribute any more than they have to.

The key is to show your determination and let them know that this is entirely expected – after all panic is something you should do behind closed doors.

Stay the course when you know you’ve got the right business and wait for everything to work out.

Monday, November 21, 2011

Letting jealousy work for you



Jealousy can be a great motivator – don’t ignore it.

Constructive jealousy comes into play when you look at your colleagues, competitors and friends and see that they are doing better than you. When you look at what they are doing well you can emulate it yourself.  You want them to succeed so you can ride on their coat-tails or even do better than them. When a group of you start competing a little you will find that all of you improve dramatically. This is a like a chain reaction of behaviours.

Destructive jealousy is about copying people blindly and trying to prevent them from further success. You may buy the same clothes and model of car as them. You may tell your friends and family how much you hate them and how they don’t deserve what they’ve got. Your behaviours become destructive to others and yourself.

If you think I’m just making up all the above, then ask yourself why biographies and self-help books are bestsellers. We like to see what others have done to succeed and try and emulate them. 

Destructive jealousy mostly applies to your relationships with people in a similar circumstance to you – e.g. you went to school together, you were friends growing up, you both started your career with the same employer, etc.

Keep an eye on yourself and next time you feel that pang of enviousness try and find a way to turn it into a positive driver.

Sunday, November 20, 2011

Your credit card is your working capital


Handouts for a startup business?


This piece of advice goes against everything your accountant and bank manager will say to you. If they take you to task just ask them politely if they have ever set up a business.

Taking out a small loan involves a lot of paperwork and distractions during normal work hours which take away from your core business.

Small businesses by definition don’t have comprehensive processes, so keeping it on credit card is one way to keep track of expenses.

It is simpler to use a credit card a lot of the time.

Applying for a working capital loan, including all requests for increase of limit involve a level of dealings with your bank that leave you feeling violated. Let’s be honest, a proctology examination would be relaxing in comparison.

A credit card is simply a pre-approved loan that has a high interest rate. If you are confident you can repay it when you get paid at a later date then there is no reason not to use it (except for higher interest costs).

Working capital is used to cover:
  •  Timing delays between payments and receipts from customers (e.g. payroll, office costs, etc.)
  • Unexpected expenses – e.g. a new computer, travel, software, accounting help when you are getting a surprise audit, etc.
  • Your own costs when you can cover all your other costs but don’t have enough left over to feed yourself.


Be sensible about credit cards and don’t go into debt if you don’t have to, but also see them for the valuable tool they are.

Saturday, November 19, 2011

When no one has the answers everybody has the answer


Let’s talk about what happens when your business isn’t working.

Customers aren’t buying. Your sales strategies have failed. You are running out of cash.

This applies as much to new stores in a bigger company and projects as much as it does to a startup.

If you are lucky all your people will stay calm and carry on. If however you employ normal human beings then 
you are going to some silly politics and potentially destructive behaviours.

We are all taught to be problem solvers at school and university. When things aren’t going well we then apply that mindset to the business.

One person says it is the price, another says it is the sales material, another says it is the lack of sales effort, another says it is poor leadership, another says it is poor systems, and sometimes people just plain blame each other.

Maybe people are right about individual issues, maybe the problem is a mixture of all of the issues, maybe your timing for entering the market didn’t match the economic cycle, or maybe the issue is that your product just plain sucks.

Hey, I don’t have an answer here other than to say that you should look out for the warning signs in your own behaviour and in your people’s behaviour. Find a way to keep people working together and from each other’s throats. 

Wednesday, November 16, 2011

Vanity Metrics


And this morning we was flying over the ocean, and the engine failed, and we crashed, and I saved all the ladies, and the dog in the cargo hold, then I fought the sharks and well all got home in time for dinner.


I only just learned this term from Getting to Plan B, and as someone who works with startups I am loving it.

When the CEO of startup says “I spoke to 50 people this morning”, I am wondering if they mean they were talking to themselves while catching a bus.

When hearing about all the sales calls a company is receiving from amazing clients I am preparing to ask how many have followed through to step 2.

When I hear about the amazing internationally reputable investors interested in the business I look at the amateur business plan and the lack of prototype product I know the investor isn’t opening their wallet anytime soon.

When I hear about the strategic approach they are taking to marketing and all the big companies they are talking too I am thinking that it is often amazing how many sales and opportunities are due to sheer luck, and that as a startup you cling on to your first potential major sale like a limpet on a rock.

When I hear about the amazing functionality coming in a product that will answer all my needs I am thinking that they need to deliver the core product first. I will discount anything that doesn’t exist yet, unless the founders impress me with their flexibility, determination and resilience.

Successful people and companies use metrics that count – like website visits converted to sales, total sales per month, average sales per customer, gross margin per employee, etc.

I like all entrepreneurs and recognise the potential business genius in even the most unlikely packages. A bit of bluster and self-deception goes with the territory, but if you are in a working relationship with me I am going to take a baseball bat to all your vanity metrics (in private of course.)

Or as they used to say, bullshit others but never believe your own bullshit. Yes, I am talking to you.

Tuesday, November 15, 2011

Startup versus starting a business


We're all taking a longshot


I have been hearing and reading a lot about the difference between a startup and starting a business of late, and I am getting a bit sick of the artificial distinctions being made. I call all new businesses startups, and I don’t care how many dictionary definitions and semantic/pedant emails you send me. Here’s why.

Both varieties share 90% of the same problems, with the 10% difference being whether the product is new or not.

Even that is artificial, as very very few startups are a genuinely new product. They are more often better versions of existing products, amalgamations of existing products or online enabled existing business models.

I have seen successful franchises set up in a new country and lose millions. Why? Because while their concept may be popular in one country in another it may fail dismally. Starbucks ongoing inability to thrive in Australia is a good example.

Just because a product already exists is no reason to assume that it will be easy to sell. Too many in the ‘startup’ tent throw rocks at normal businesses.

For both kinds of business, the problems of establishing and growing a business are identical.
  1.  Your business model needs to make sense
  2.  Customers need to buy your product
  3.  You need to hire employees and you are relying on future income to pay for them as you don’t have the money yet.
  4.  Raising capital is hard – many promise but few hand over the dough
  5.  Getting your marketing message right is hard.
  6.  Getting your website right is hard – nobody gets this right first time

Basically business is business – we are all going through the same learning curve on the same issues at the same time – maybe it’s time to share experiences instead of throwing rocks at each other.

Monday, November 14, 2011

Bring on SaaS


We know what is coming!!!

2012 is going to be a fascinating year for all of us – especially in terms of how technology can help us all.

As someone who runs a company I cannot begin to tell you how much I love and hate IT.

When everything is working all is good. When things break down – usually of their own accord and not due to changed settings, then life is not great. For example I have spent the weekend battling problems with Microsoft Outlook, my ISP who doesn’t provide support on weekends, and a major update to Windows and Office. I have put most of the weekend into solving IT issues.

Should I hire someone to sort through it. Yes, I should. Are they available at low cost whenever I need them, not a chance. Startups don’t have much cash.

Back to 2012. There are a number of trends converging in 2012 which will rewrite the way we think of and deal with IT issues.
  1. Software as a service (SaaS) – imagine never having to install and maintain software releases again. I have been using Bullhorn – an online recruiting database/CRM/Email solution from the opposite side of the world, and continue to be amazed that I can touch type as fast as normal with absolutely no lag in what displays. Google Apps, the Zoho suite and Microsoft Office 365 are all the ones to watch.
  2.  The Cloud is coming of age – get rid of the need for running your own servers and only pay for what you use. Online storage will become the norm – and even better, if they have RAID2 or better backups, then recovering data just got that much better too.
  3.  Lawyers are finally recognising that we buy and use things as an individual or a family. A good example is Amazon allowing you to read your Kindle books on all your devices, after all how many sets of eyes do you have. For example, book publishers don’t genuinely expect everyone in a family to buy a separate copies of the same book do they. Likewise on an individual level you can have a desktop, a laptop, a smartphone and a tablet. These devices change regularly, but the one constant is the person or peoples using them.
  4. Windows 8 is coming. I know a lot of people hate Microsoft, but I am not one of them. I value what they do, and as a businessman I look in admiration and envy at the same actions that thy call ruthless. If you are like a lamb in a lions den, expect to get eaten. From what I have seen of Windows 8 and its implications they are taking all of the above trends and combining them in a way that will be great for those of us who want to do business and not do IT. To put it more forcefully – I live on my iPad2 right now, but I will switch to a Windows 8 tablet and smartphone quicksmart if it allows it all to be integrated. I’ll even pay a decent amount for a Windows 8 tablet if I can use it as a real computer too.

Next year will be exciting.

Sunday, November 13, 2011

Simplicity is coming


Do what needs to be done and nothing more - keep it simple

       
Right now we are all being held hostage to multiple software platforms, operating systems, devices, internet service providers, major vendors, etc.

Enterprise systems are ending in larger and larger failures. How many headlines are we all seeing that are along the lines of “Company abandons implementation after $50 million”? Almost weekly I know.

To me the growing answer is complexity.

Major vendors have platforms that can do almost anything for anyone, which seems great. Customers love the idea of having a platform to transact all their daily business in a manner that reflects the way they do business.

It is this that is one of the core drivers of complexity. Not only is it very expensive to tailor a system to match your company, but it is even more expensive to update the system when new releases to the underlying software arise every 6 months or so.

In my day to day business I am asked to put my teams into providing Microsoft Excel solutions for problems that clients have which they should be able to solve using their enterprise solutions. I used to think this is ridiculous and try to talk client’s into dealing with their enterprise vendor, but now I am getting it. It is about simplicity.

There aren’t really that many people available to freelance for updates to enterprise software. They tend to be available through a few companies and hard to schedule when you want.

We are all being held hostage to a few. It is like the old fashioned guilds that used to deny the ability for anyone to work in their area unless they sanction it.

Time to strike back. Enough is enough.

First off – bite the bullet and change your company’s processes to match that of the major software. Hundreds of thousands of hours of collective wisdom have gone into the design of the off the shelf solutions. Stop thinking that your way is the only way and adapt to the collective wisdom instead.

Second – Instead of looking at solutions that take care of all problems remember that the more integrated a system the less stable and predictable it is. Try to find core solutions that take care of the major processes and workflows. Then integrate when and as is sensible over time. Get the minimum viable solution up first.

If you think that I am making this up and you provide software solutions – beware. I know of one major international listed company that has banned Microsoft Access databases in its company – why? Because they don’t have enough expertise to set up and maintain Access databases, especially if the developer has left.

Saturday, November 12, 2011

Want to know if you’re an arsehole – check the sick leave records


Being an arsheole can only get you so far

It takes a fair bit of stubbornness and ego to start a business and then nurse it on its way up.

You will need to provide leadership and vision at times when nobody knows what to do next and the future is seems so bleak that all around you deflate.

Providing certainty is your core job description. If people see you believe in the future of the company then they will have the courage to continue as well.

All strengths can also be a weakness.

As your company grows you will take on more and more people who have less experience with the stresses of a startup. You will need to lead, beg and cajole them to embrace the new working environment. 

Remember that the first few people willing to sign on with a startup are not the average employee. The willingness to embrace the uncertainty of a startup is quite rare, even with a generous employee share option plan.

When things aren’t working out when they should instead of taking it out on your employees take a bit of step back and turn a cold eye towards the situation.

Maybe you have chosen the wrong market, maybe your price is wrong, or just maybe you are holding the company back yourself.

One of the many dirty secrets of management consulting is that when called into a dysfunctional company they need to find ways to politely suggest that it is the behaviour of the founder and the management team that is causing the problems.

If you want to save yourself some money check the sick leave records for your companies. People usually get stressed and don’t come in for two reasons.

First, they may hate dealing with their boss and their co-workers. Basically nothing they do is valued so they feel sick at the thought of coming in to work. They may also be finding a way of avoiding conflict between other people – either so they don’t have to be part of it, or caught in the middle.

Second, they may be judging themselves on their own performance. This trait usually gets worse with higher intelligence and a strong sense of conscientiousness. These people may feel that the system or their boss won’t allow them to do what needs to be done.

I can’t tell you how many managers I have met who are friendly and seemingly competent to their equals or superiors, who are actually clueless idiots who damage their company all in the name of what they see as the right way to do things. You need to be vigilant for them.

The problem may be you, it may be your management team, and it may even be a few of the normal staff members. Patterns in sick leave are the early warning sign of imminent problems.

Wednesday, November 9, 2011

All important decisions are made in the space of 7 breaths


Sometimes you just need to act.


Time to shamelessly quote movie dialogue. Supposedly this is an old Japanese saying – and there is a nice grain of truth to it.

Think about some of the major decisions you have made in life. Think of things like accepting a new job, or quitting a job. How about whether to buy a house or not, or to make a long term commitment to your partner. If you think back you may understand this saying. I’ll bet you did things because they seemed right and you committed to the decision. Likewise, I bet there are a lot of situations where you knew that something wasn’t right and made a snap judgement not to spend any further time on it.

Part of this comes from temperament, some from your willingness to take on new situations, and a lot comes from your life experience.

With experience comes an understanding of the importance of things. As a new business owner you will be go through the same learning curve. A lot of things are new to you and seem important. You don’t want to make a mistake, so you spend time on every decision.

You need to go through this learning curve, and this is the reason I advocate starting a business to learn how to do business.

Also, a warning shot to all of those you with a university education – the long term study results are clear. The more university level education you have the longer will take to make a decision. 

Tuesday, November 8, 2011

Stop trying to do it all yourself


Why are you doing the work yourself?
But darling, I save on fuel.
Yes, but it takes us ten times as long to get there.


The formative stages of your new business venture are hard. You need to be doing a little bit of everything – marketing, legals, accounting, design, IT, HR and more.  You very rapidly learn to be a generalist.

If you can get across the fundamentals then you can help the company grow rapidly with a minimum of indecision. This works for a while, but sooner or later the company gets too big for one individual to be the decision maker – there are just not enough hours in the day.

I have seen many examples of fast growing companies topping out at about 20 employees and having trouble growing beyond that. I have no studies to back this up for you, but the maximum size of a company under a central decision maker seems to be in the 20-30 employee mark.

The issue here is the founder. Once they worked out how to do everything they then try to keep doing it. Sooner or later you need to start trusting your people and managers to do their job.

You can use part-timers to help out. Hire an accountant one day a week. Hire an experienced HR person on a 2-3 days a month basis. Put on salespeople on a commission basis. Have IT support on a retainer.

Give yourself a break and help your company live up to its potential and stop trying to do it all yourself.

Monday, November 7, 2011

Act like you own it


Nah ... not my problem.

When you own a business you own the successes and the failures.

As an employee it is always possible to find a way to put off decisions and deflect blame. A lot of people go their whole careers avoiding making decisions or taking responsibility – and to a degree they are correct as the system largely determines ability to make a difference to outcomes.

The experience of setting up a business is a bit like moving out of your parent’s home. It is scary. There are a lot of things you don’t know how to do, and you didn’t realise how much was done for you.

It’s the weather. It’s the competition. My employees are just lazy. The red tape is too much. My suppliers have it in for me. We have a great product but nobody recognises it.

All these are excuses I have heard and can guarantee I will continue to hear. These come from people who don’t own the outcomes of operating a business.

Now it’s just you. Accept this reality and get on with it.