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If the only thing you DVR is Dragon's Den or Shark Tank, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Although this blog, Shoestring Advice for Technology Startups, is geared to the hi-tech startup audience, this particular blog posting applies to anyone considering entrepreneurialism and establishing a startup.
The first reality to understand is that it is as hard and as tough as people say it is to build a successful company from the napkin idea. Also, having a great idea is only a part of the equation, and a small part at that. Not to put a too finer point on it – although I feel obliged to share the bad news before continuing with this post – statistics state that 85% of new business fail within 5 years (these numbers are worse in some industries, like hi-tech.) So clearly having a startup is not for the faint of heart and spirit.
However, this statistics doesn't really tell us anything, other than most new businesses fail. That is to say, it doesn't tell as why they failed and are they all failing for the same reasons? Perhaps if we knew why they failed we could avoid the same mistakes and not be included in the future 85% statistic. Better still, if more people read this blog perhaps we can bring this number down altogether.
I think it’s important to understand the sequence of events that bring people to the point where they start considering entrepreneurialism and establishing a startup, at least from my experience working with startups. The events leading up to the conclusion, i.e., to start a startup, differs between industries, but what should and doesn’t happen is universal.
In hi-tech what usually happens is that some event causes the “pre” entrepreneur to say there should be an application for that (whatever ‘that’ be) and then execute on the urge to comply. For example, say an individual is at a restaurant with friends and the restaurant says there’s a 90 minute wait for the next table. And say that it occurs to her that if she gave her mobile phone number to the restaurant, the restaurant could send her a text 10 minutes before her table is ready. This way the individual and friends can either go to a bar to wait or check out other restaurants. The individual shares this moment of brilliance with her friends, who respond with “Wow, what a killer idea, I’d use that app in a second.”
So now in possession of a great idea, that has been validated by friends and no apparent competition, the ‘ah ha’ moment happens. The individual decides to create a startup company to build the app and sell it to Google or Facebook for billions.
At this point it is typical for the new entrepreneur to make the decision that the first thing she needs to do is find a programmer to develop the app. This act is one of the reasons why so many hi-tech startups fail. Because this is the precise moment that the individual should first consider the following questions, before rushing to spend money:
• Am I prepared to work harder than I’ll ever have to work for an employer?
• Can I deal with constant high levels of stress?
• Am I prepared to do selling, to sell me and my idea?
• Am I prepared to eat Ramen noodles all the time and consider delivered pizza a luxury over the next few years?
• Am I prepared to spend the next 5 years out of my comfort zone
• Can I handle a lot of setbacks?
• Can I learn to ask people for money?
• Am I teachable?
• Can I learn to handle failure but keep going?
• Am I prepared to work through the night with no guaranteed rewards?
• Am I prepared to invest all my savings?
• Do I accept that I don’t know anything but I am hungry to learn?
• Do I want to be a business person? Do I like doing business or could I grow to like it?
• Can I focus and stick to the job in hand?
• Am I prepared to do any activity to achieve success (notwithstanding, maintaining integrity)
• Et al
If the answer to these questions is in the affirmative, the next set of questions and actions should focus on the business that will build and sell the app. Yes, a business needs to be built because ideas don’t make money, businesses make money. The two specific questions that need to be addressed are:
• What is the business model? I.e., how will it make money?
• Is there a market ready, willing and able to buy the idea and is it sufficiently large enough to build a business around?
I would argue that these lists are the minimum questions that need to be answered before spending any money or at least before building the application.
As I mentioned earlier, there ARE many reasons behind failing businesses, such as cash flow problems, changes in the law, new strong competition, people’s needs change, poor quality products and service, no team, no mentor, etc. But my experience is that if the questions listed above were addressed first, before a business was established, businesses that were destined to fail would never have been started in the first place; saving many individuals time, money and heartache.
At this point you’re probably left with the question, well I can answer the first list of questions in the affirmative, but how do I go about answering the second? This is when it’s time to spend a few dollars. Find someone or an organization like KENOVA Technologies, that can help you work through these questions.
If you end up spending a couple/few thousand dollars and a few weeks of your time simply to find out that there is no market / business, or in the restaurant example above, that are already many entrenched competitors, this is money very well spent, because you’ll spend a great deal more money and time building and selling an application that should not have been built.
Related Posts:
You have a business idea? Now what?
Productizing Your Idea
Startup Tactical Quick Reference Guide
How to Start a Successful Hi-Tech Startup
7 Success Tips Startups Should Not Follow
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
One of our partner clients recently sent us this link Elements Of A Good Pitch Deck . We liked it and feel it's worth sharing. For your convenience I'm including most of the article here. I did make a couple / few changes, as I didn't agree with everything, but it's mostly intact.
"For an entrepreneur, life’s a pitch!”—Guy Kawasaki
The pitch deck (also known as a slide deck or pitch slide deck ) might be the first thing you will use when interacting with a potential investor. In many ways, it is one of your most important tools. The content of the pitch deck, along with your presentation, can help the investor to determine whether or not to continue evaluating your business opportunity.
You may give the pitch in person, on the internet (using Skype, GoToMeeting, Join.me, etc.) or you may simply be asked to email it. Either way, to some extent it needs to be able to stand on it's own.
The following table from Guy Kawasaki’sThe Art of the Start serves as a pitch deck template. It summarizes the key information that should be included in the initial pitch deck. Remember the“10/20/30 rule of PowerPoint”—10 slides, 20 minutes and no font smaller than 30 point.
| Slide | Content | Comments |
|
Title |
Include your organization’s name, your name and title, and contact information. | The audience can read the slide—cut to the chase and summarize what you do (e.g., we sell software, we protect the environment). Open simply with,“This is my company and this is what we do.” You want to get investors thinking about the potential for your company and the size of the market. |
| Problem | Describe the pain that you’re alleviating. The goal is to get everyone nodding and buying in. | Avoid looking for a solution that is searching for a problem. Minimize or eliminate citations of consulting studies about the future size of the market. |
| Solution | Explain how you alleviate this pain and the meaning that you make. Ensure that the audience clearly understands what you sell and your value proposition. | This is not the place for an in-depth technical explanation. Provide just the gist of how you fix the pain. |
| Business Model | Explain how you make money—who pays you, your channels of distribution and your gross margins. | In general, a unique, untested business model is a scary proposition. If you truly have a revolutionary business model, explain it in terms of familiar ones. This is your opportunity to drop the names of organizations that are already using your product or service. |
| Underlying Magic | Describe the technology, secret sauce or magic behind your product or service. | Aim for less text and more diagrams, schematics and flowcharts on this slide. White papers and objective proofs of concepts are helpful here. |
| Marketing and Sales | Explain how you will reach your customer and your marketing leverage points. | Convince the audience that you have an effective go-to-market strategy that will not break the bank. |
| Competition | Provide a com plete view of the competitive landscape. Too much is better than too little. |
Never dismiss your competition. Everyone—customers, investors and employees—wants to hear why you’re good, not why the competition is bad. |
| Management Team | Describe the key players on your management team, board of directors and board of advisors, as well as your major investors. | Do not be afraid to show up with less than a perfect team. All startups have holes in their team—what’s truly important is whether you understand that there are holes and you are willing to fix them. |
| Financial Projections and Key Metrics | Provide a three- to five-year forecast containing not only dollars but also key metrics, such as number of customers and conversion rate. | Do a bottom-up forecast. Include long sales cycles and seasonality. Making people understand the underlying assumptions of your forecast is as important as the numbers you’ve fabricated. |
| Current Status, Accomplishments to Date, Timeline and Use of Funds | Explain the current status of your product or service, what the near future looks like and how you’ll use the money you’re trying to raise. | Share the details of your positive momentum and traction. Then use this slide to close with a bias toward action. |
Your pitch deck should fit in with your business plan, but is not simply a regurgitation of the plan. Consider using a whiteboard to scope out the content of the slides rather than jumping right in with PowerPoint or Keynote. Make sure that the content flows well. The ten slides outlined in the table above provide the core content for any pitch deck. The goal of the first meeting using the pitch deck is to engage the investors sufficiently such that they take the next step with you. The next step could involve doing further due diligence, referring you to another investor or introducing a strategic partner. If the investor is not willing to invest any further in the opportunity (either within their own firm or by opening their Rolodex to help you), do not expect any additional feedback.
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If you only do 2 things, work and network, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
A common mistake made by startups is to believe they have to write a 30 page business plan before doing anything (see blog postings Should you write a business plan – Part 1? and Should you write a business plan – Part 2?). And with so much invested in a plan like this, there’s a tendency to focus on adhering to the plan rather than focusing on building a successful business.This
may sound contradictory, i.e., it sounds like I’m saying don’t follow the business plan if you want a successful business. Of course this is not what I’m saying. What I’m saying is that for the business plan to represent a successful business model, it needs to be revised regularly to include what you are learning as you move forward with your business.
On many occasions KENOVA and its partner company JMPstart Ventures meet startups, usually 1 to 2 years old, that are having problems building traction with customers and investors. After investigation we find they are being persistent in the execution of their business plan, which is 1 to 2 years old. In most cases we’ve pointed out that the business plan is based on a flawed business model and needs changing, usually via a pivot. Unfortunately, too often they refuse to take our advice. Why? Because they are convinced the plan is good and the world just needs to catch up. Unfortunately without exceptions this is the wrong conclusion!
We always say the word 'startup' is a metaphor for learning, which means as a startup entrepreneur you should be measuring the results of your activities, especially in regards to customers, and recalibrating your business in light of what you learn. In other words, when you try something and you’re not getting the results you hoped, you should try something else.
This is especially important in the early stages of the startup, i.e., the first 1 to 2 years. Also known as test and measure, the practicing of trying something different is something isn't working should be at least a once a month event. During these informative years this approach should be applied to the business / revenue model(s), solution / product(s) and pricing.
The learning should then be translated into updates in the business plan. So, as in the principles of Agile Project Management, the end result is what counts, not the plan. So remember, the business plan is simply a communication tool to express to others your idea of a successful business; the successful business IS the most important artifact.
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If you can no longer read the characters on your laptop's keyboard, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Recently I received a link to an article suggesting I should re-blog it in our blog Shoestring Advice for Technology Startups. I’m not going to re-blog it or link to it as it frustrated me! It was typical of information being regurgitated on the internet that really isn’t helpful to startups. In fact I would go so far as to say I believe it is harmful to startups. I believe the information leads startups down the wrong path and causing them to focus on the wrong things and thus waste their most valuable resource, their time. Cash is king, but you can’t buy time.
It was your typical startup’s 7 points to success type article. I’m not going to go into detail about what the article said, but I shall share the 7 points. The article was saying that startups should focus on the following 7 things in order to achieve success:
You might be confused at this point, wondering why these things are so bad. It’s not that they’re bad or wrong in general, but for a startup they are time wasters and misleading. So what I’m going to do for you now is translate these items into reality, i.e., from a startup perspective I’m going to provide some clarity:
As a startup I understand where you’re coming from. You have an idea, but really have no idea how to bring it to market. So you’re in the mode of reading anything you can lay your eyes on in order to transition onto the super highway of entrepreneurism as quickly and painlessly as possible. This is why I’ve written this blog. Hopefully I’ve helped you to identify the articles to avoid as you come across them or at least not take too seriously.
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In their raw form, few ideas can make money. That is to say, an idea typically requires a lot of supporting functionality to make it attractive enough to people to want to use it, let alone pay for it. This process of taking an idea and turning it into a business starts with productization, aka conceptualization. This is the highly skilled process of building out an idea to achieve, in phase 1, the minimum viable product.
From our experience, this is the first of the three Achilles heels the startup experiences.The second two, which will not be covered in this blog, are strategic marketing activities (such as defining a viable sustainable business and go-to-market) and strategic sales (how to sell the product/service).
Let’s examine the productization process from a real world experience:
A number of years back I joined a startup that was building the world’s first commercially available computer that was designed solely to be a network server. In order to accommodate the large 5Mb* Winchester hard drives (what a beast…weighing in at about 10 to 15 pounds), the company had to design and build its own computer chassis and case.
One day, one of the co-founder siblings decided to edit a drawing of a chassis (using AutoCAD 1.x) and then accidently saved his edits on top of another version of the drawing. Turns out this other version was the final version one of the other brothers had spent weeks working on.
While waiting in the emergency room for their injuries to be taken care of, due to the altercation that ensued, the brothers decided to invest in some software to prevent this from happening again, lest they kill each other. It turned out that the only systems available were proprietary solutions in the domain of giants like McDonald Douglass, Boeing, etc., that cost hundreds of thousands of dollars.
So the idea was born. That is to say, they decide to build software to manage drawings and their revisions and sell the software to users of CAD (computer aided design) applications. Sounds simple enough, but they found in order to build something people would pay for they had to deal with related issues. Such as providing a database for meta data; to provide a title for drawings to address the 8 characters filename limitation of DOS; date drawing was created; name of the author; what project the drawing was related to, etc. They had to make the database searchable. They had to address version numbering and provide unique filenames and on and on.
We didn’t realize it back then, but we were productizing the idea. But, because we didn’t really know what we were doing, we did it poorly. We built what we wanted and not what the customer wanted. It didn’t occur to us to approach early adopters and build an MVP for THEM. We also didn’t realize we needed a different product for the mainstream market. Unfortunately our competition did…that’s a whole other story. We also learned how quickly other people catch on and that every idea has a very short shelf life in terms of having the advantage of being first to market.
If you’re a startup with an idea you have to be aware that you have to go through the productization process, and for most of us mere mortals, it’s almost impossible to do it alone. You really need to have a small team to help you. It’s also very important to go through the problem and solution process described in our other blogs, to validate what you want to do and how you need to do it.
*5Mb is not a typo, I did say “a number of years ago”…late 80s actually.
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First of all, what does MVP stand for? MVP means "minimum viable product". It's usually defined as the first version of a product release that exhibits the minimum functionality the target customer is willing to pay for. The MVP is aimed at the early adopter, NOT THE MAINSTREAM customer. At KENOVA we also refer to the MVP as the “early revenue strategy”.
The objective of the MVP is to build something at the lowest possible expense, but still offer enough value that the early adopter will pay for it. The skill is determining what this minimum value is.
Startups have a really hard time with this. Their first mistake is thinking that their first release, aka MVP, has to be “perfect”, “robust”, “bug free”, have all the bells and whistles, etc. This is the strategy of death and for the MVP nothing is further from the truth.
The first thing I try to get the startup to understand is the early adopter is very forgiving! They’re in it partly because it isn’t all the above, i.e., they see the MVP as solving a huge problem for them, it’s giving them an edge, it’s cutting edge and thus gives them bragging rights, etc. So the fact it doesn’t have the bells and whistles, some typos, has a bug here and there is not an issue for them.
In return for letting the early adopter have the privilege of paying for such an early version you’ll want to make sure you can get feedback from them. It’s especially important when paying signup isn’t growing sufficiently. That is to say, with the MVP you’ll want to establish metrics of a user’s interaction with your software. E.g., record when they registered for the free evaluation, when they signed up for the subscription, how often they login, when they unsubscribe, etc. This will help you to identify what you need to focus on.
We refer to these as bottleneck metrics. And as with manufacturing, you keep fixing the bottlenecks until you have a system that is flowing at capacity, i.e., achieving adequate growth.
But remember, the MVP = early adopter, not the mainstream customer. This animal is exactly the opposite. They do require a perfect product with all the bells and whistles. And if you did your job right with the early adopters you should be in a good position to give mainstream what they want.
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As a startup you have the unenviable distinction of having to be the master of all the “trades” required to build a startup. And unless you’ve built a startup before or you have a mentor or coach, you’re probably running around like a chicken with its head cut off trying to do everything yourself at once. In addition, a large portion of your money is being invested in the startup.
What this all adds up to is neglect. Neglect of your social life, neglect of your family, neglect of your friends and neglect of your nearest and dearest; your husband or wife, girlfriend or boyfriend. So Valentine’s Day is a great wakeup call to redeem yourself for your past transgressions. The good news is your redemption fits nicely into your budget.
As necessity is the mother of invention, lack of money is the creator of romance (I made up the last piece). Sure, any woman would like diamonds for Valentine’s Day, but what I’ve found is that a handmade card containing words from the heart is more valuable and helps a relation last longer than any diamond.
I learned this a number of years ago when my wife lost the diamond from her engagement ring. Although she wasn’t happy about it, I recall how much more upset she was when the ring I actually proposed with finally fell apart. You see, the ring I proposed with was one I made from leather. At the time I was still making layaway payments on the diamond ring I chose for her (by “chose” I mean the only ring with a diamond I could afford), so it wasn’t available to me on the date I wanted to propose, creating a need for the handmade version.
I’ve noticed when things are good and money is not an issue and I buy cards, flowers, and expensive chocolates, I don’t get anywhere near the response as I do when I make a card and share my own words. With my daughters it’s the same thing, even though they’re all under thirteen.
So if you’re a startup, a male and stressing about what you’re going to do for Valentine’s Day for your partner (partner in life that is), make a heartfelt card and get a takeout. Or even better, cook something yourself. If you’re a startup and a woman it’s even easier-takeout and a six pack (although a handmade card is still appreciated).
Remember this is a day to show your love, not waste your money.
(Disclaimer: My apologies to all the restaurants, jewelry and card stores, but this is a blog for technology startups and surviving on a shoestring budget.)
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Confucius was a Chinese thinker and philosipher around 550 BC. Although there isn't a great deal of written information of his actual body of works, he is well known for sayings like "Do not do to others what you do not want done to yourself". This inspired me to start a log of my own confucian principles, stemming from my experiences with my own startups, and other startups I work with. We'll be regulrly adding to this list:
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"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you don't have a hobby anymore, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
With all the startups we’ve worked with, there’s one common denominator that holds them back, and that is focusing on the wrong thing at the wrong time. Specifically, they don’t put enough focus on strategic marketing, marcom (marketing communication, i.e., getting the word out) and sales. They generally tend to focus on the development of technology, which is a huge mistake, being that the technology they’re developing is actually a product of a marketing strategy.
When I refer to marketing strategy I’m referring to why you’re building what you’re building, who has the problem the software is solving and will they pay to solve it. In the post How To Start A Successful Hi-Tech Startup we discuss these issues in more detail.
I understand why this is the case, i.e., why startups tend to focus on the build; Strategic marketing is very hard, especially for the nascent entrepreneur; while focusing on building the technology is much easier and a lot more fun. But the fact is “build it and they will come” is a foolhardy approach to strategic marketing.
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If you believe the reason the sales for your startup are poor is because your target customers are stupid, you might be a startup.
(This one is for Eric Ries and Ash Maurya)
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
We've noticed how software companies, and software developers courting hi-tech startups, are using phrases like Agile, Running Lean, Lean Startup, Scrum, Iterative, etc., quite liberally in their marketing material. These are very serious solutions to very big problems in our industry, so I just hope they're being used with integrity. Implementing these disciplines, or remedies, depending when they're implemented, will, if done by experienced practitioners, dramatically reduce the risk of failure.
As a 20+ year veteran developer, I know there is absolutely no better way than Agile Project Management (APM) to develop the best software possible. The same goes for Lean Startup for new initiatives. I also know that they are not easy to implement and it’s hard to get everyone on-board. So entrepreneurs beware.
After failing to convince numerous companies that APM is the way to go, KENOVA was born. Formed on the basis that it's an APM company that builds software technology and not a technology company that decided to use APM, the company has had zero failed projects. That shows you how good APM is. Not only that, the projects have always exceeded expectation…now I've gone and done it. But the point is, APM is a well proven model that out performs any waterfall based model any day. That's it, the gauntlet has been thrown for you PMIs and PMPs around the world…go ahead, bring it on.
But seriously, if you are considering a developer who claims to use an APM methodology: 1) make sure they can prove it, and 2) speak to three of their customers. My experience is, if the customers are not ecstatic about the process, there's a good chance the developer is not truly implementing APM.
I fell into APM completely by accident in the early 2000's. It's an interesting story actually…to me anyway. You see, after years of failed experiments / projects using waterfall based project management, I had come to the conclusion that as a project leader it's impossible to develop software without the project being late, over budget, low quality and, worst of all, didn't meet customer's expectations.
This made me decide to leave the industry, feeling I'd done everything I could. This was huge for me because I love the hi-tech industry. I'm an engineer by trade and if I'm not building huge metal things then building software applications is the next best thing. (I always referred to software development as academic engineering.)
Anyway, there I was, walking up and down the bookshelves of a now defunct book store looking for "How to analyze your transferable skills for your next career" when I noticed a book titled something like "How to Use Lean Manufacturing Techniques In Software Development". I remember doing one of those moves where your head stays in place looking at the book while your legs keep walking until you almost fall on ya'bum. So, being a guy who has super dooper ADD, I completely forgot about my caree changing objective and grabbed this curious book. It turns out it was an early version of the Agile Project Management movement and when I read the intro. the heavens seemed to open up and shine a beam of light on me while a voice said "Don't leave the industry James, don't leave." Well actually it was "Can you please leave, the store is closing."
Needless to say, I immediately recognized this book was on to something and I devoured it and everything and anything APM. After practicing it for a number of projects / years I was even published by the Cuter Consortium and developed Syncromatic(R), the tool at the heart of KENOVA’s operations?
For those of you who consider yourself experienced APM practitioners, you should be saying to yourself "Hey, what happened to 'Individuals and interactions over processes and tools'?" If you're not asking that question, you may need to do some more reading on APM.
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If you don't remember what an IRA is for, you might be a startup. (US audiance only)
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
It's common for our startups to believe that budgets are only for established businesses with revenue / sales forecast. Fewer things are further from the truth. In actual fact, the less revenue and cash on-hand the greater the importance of budgets. We always advise our clients to begin a budget as soon as possible because it's easier to adapt the budget to changes to the business than to start a budget once a business is established.
So the question is why is a budget worth the time to maintain. The simple answer is if you don't manage a budget you can find yourself either in financial trouble in a hurry or find yourself incapable of making effective financial decisions, such as buying software tools, a new laptop, outsourcing, buying market research data, covering the cost of a pivot (more on this in other blogs), etc. When you manage a budget you can quickly see what can be cut out when cash is short.
Another very important benefit is to understand the length of your Runway. Runway is a term used by startups to represent how much time the company has left based on their burn rate and revenue plus cash in the bank (or available credit).
By starting a budget early you have the benefit of simplicity. We recommend using a spreadsheet application like Excel. Setup 3 tabs; Profit / Loss, Expenses and Revenue. So, respectively, these tabs represent; what money is available to you to use, the cost of running the startup and how much cash the company has / is getting. Track the numbers by the month. The Profit / Loss data will be determined by data contained under the Expenses and Revenue tabs.
Start with the expenses as this is usually the most complicated category. And start with the numbers for the last month. This gives you a baseline for the next 12 months. List all the outgoings, e.g., gas for car, standing bills (such as electricity), phone, internet, insurance, etc. If you have a lot of a particular category, such as networking events, use one line "Networking Events" and total them up. When you're happy with the list, copy all the values to the next 12 months. When you add additional monthly expenses, add them to the month they first apply then replicate them to the subsequent months.
Now move on to the Revenue tab. List the incoming revenue, whatever they are. Again do this for each month.
You build the Profit / Loss tab by displaying the total monthy expenses, the total revenue and show profit / loss as revenue minus expenses for each month. Also on this page include cash in the bank or line of credit and apply the P & L value for each month.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you don't remember the last time you used the word 'savings', you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Meetings drive business! Ineffective meetings can stall or even retard business. So if meetings are so important why do so few people not know how to manage them effectively?
Startups will have thousands of meetings while they’re building their business. Meetings to get team consensus, make team decisions, brainstorm and hatch new ideas, communicate concepts, solve problems, address emergencies, etc. So the sooner the startup learns how to have effective meetings, the quicker their company will move forward and thus the quicker it will grow.
Most people don’t like meetings; they often feel they are a waste of time. Unfortunately many are, but that’s not necessarily because of the subject matter, it’s often due to the way the meeting is conducted. Meetings should follow an agenda, with a conclusion for each agenda item. When conclusions are achieved people tend to be more positive about meetings.
In this posting we’re offering a basic formula for conducting effective and successful business meetings.
Meeting setup:
Confirm meeting:
A day before the meeting send a reminder confirmation. CRM software usually does this automatically. Most calendars offer a reminder, so use this function if it’s available.
Conducting meetings:
Meeting structure:
Effective meetings follow a structure and thus keep the meeting on point and moving forward. This is the structure we use at KENOVA.
For further details, we’ve included the following document from the HR department at Vanderbilt University.
How to Conduct an Effective Meeting
PURPOSE
• Identify the purpose and desired outcomes of the meeting.
• Determine if the meeting is necessary or if the issues can be addressed outside of a meeting.
• Should only use meetings for brainstorming, delivering information or gathering information.
PEOPLE
• Identify and invite only the necessary and appropriate people for the meeting.
• Make sure all attendees can contribute.
• Communicate the meeting’s purpose and desired outcomes to all attendees.
• Schedule guests who don’t need to be at the entire meeting, which can be an incentive to stay within the meeting’s time limits.
PREPARATION
• Organize meeting venue.
• Provide the agenda and any other supporting documentation (e.g. reports, handouts and spreadsheets) to the attendees at least 24 hours prior to the meeting time.
• Ensure the comfort, quietness and set-up of the space before the meeting.
• Provide water or other refreshments when possible.
AGENDA
• Include items to be discussed, and then for each item specify the person leading the discussion, the desired outcome, and the estimated time.
• Provide meeting evaluation time and documentation (if applicable).
• Limit number of items to a reasonable amount for the meeting’s timeframe
• Be realistic about the timeframe for each item.
• Schedule breaks periodically for longer meetings.
MEETING LEADER
• Designate a meeting leader who understands meeting principles, is familiar with the agenda and is a skilled facilitator.
• Rotate facilitators for regularly scheduled meetings.
• Open meeting with setting or reviewing ground rules and reviewing the agenda, making changes when appropriate.
• Clarify roles within the group.
• Maintain focus and keep meeting moving at comfortable pace.
• Cover one item at a time.
• Summarize discussion and recommendations at the end of each logical section.
• Make a note of any follow-up actions that can be resolved outside of the meeting and move on to next point.
• Manage discussion and encourage participation, even explicitly inviting everyone to participate.
• Use parking lot list for issues or questions that need to be dealt with outside of the meeting and review at end of meeting.
• Review issues discussed at the meeting and identify each actions step with those responsible for the step and the timeframe.
• Solicit agenda items for the next meeting.
• Review time and place for next meeting, if applicable.
• Lead evaluation discussion or collect written evaluations.
• Thank the attendees.
TIME
• Designate a timekeeper who will work with the meeting leader to keep the pace.
• Start and end on time, regardless of late attendees.
• Periodically check the time estimates for each item to see how close they were to the time actually spent.
• Allow flexibility in the schedule when the need arises.
GROUND RULES
• Request that all pagers and cell phones be turned to silent or vibrate.
• Establish a policy disallowing electronic communications during the meeting.
• Start and stop on time.
• Request that any pages or messages be returned outside of the meeting space.
• Determine that each participant’s opinion should be respected.
• Encourage participation and openness.
• Ask questions for clarity.
• Don’t interrupt.
• Be careful about tangents – stay focused.
• Invite and give meaningful feedback.
• Honor commitments.
• Be present.
• Talk about difficult topics within the team at the table.
• Give each other the benefit of the doubt.
MINUTES
• Designate a note-taker.
• Make detailed minutes when the record is important and simple lists of decisions made and actions to be taken (with responsible person identified) when the exact record is not as important.
• Capture key points for each item, highlight anything that will be deferred until a future meeting.
• Include timeframes for action steps.
• Include parking lot issues with follow up information.
EVALUATION
• Have each attendee evaluate the meeting, using a round-robin, written, or open discussion approach.
• Ask questions such as “what can we do better next time?” and “what parts of the meeting worked well?”
FOLLOW UP
• Return readable or typed minutes to attendees within 24 hours if possible (same day is even better).
• Be consistent with meeting habits.
Compiled by the HR Organizational Effectiveness Team
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you look on the rack and see 15 hats, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Starting a new business and making it successful is a huge undertaking and if most entrepreneurs really knew what they were getting them selves into, there’s a good chance they would never go ahead with it. Fortunately for the world, ignorance is bliss, otherwise we wouldn’t have many of the things we love and enjoy today. But this ignorance is why most startups fail and why the successful ones take much longer and more money than the startup forecast.
In this blog I’m providing the minimum first steps a hi-tech startup should follow in order to establish a solid foundation upon which it will build its business. The majority do not follow these steps and thus build products no one wants.
Step 1: The Idea
All startups begin with an idea. Not a vision or mission statement, but an idea usually hatched when the soon-to-be entrepreneur identifies a problem or gap in the market.
Step 2: Develop a One Page Business Plan
Until the entrepreneur writes down their idea, all they really have is a bunch of neurons running round her head. Until the idea is written down in a form that looks like a business, it will be really hard to attract partners and investors. So write down the idea ASAP.
Now, when the idea is written down, it needs to be kept to one page using the structure below. This is a very important exercise, as it forces the entrepreneur to be concise, thus making it easy to present their idea to other people. It also makes it easy to revise and share the idea as it evolves.
When KENOVA takes its clients through this process it uses a revised form of the Lean Canvas referenced by Ash Maurya in his book Running Lean. KENOVA’s version is based on a spreadsheet, where each item listed below has its own box.
Like all business plans, the OPBP is a best guess at what the business will look like in the future. In other words a business hypothesis that the startup will prove. Because, in reality, the OPBP is only a hypothesis waiting to be proven, you shouldn’t spend more than a few hours completing it.
One Page Business Plan Structure:
1. Define the problem (see below)
2. Who is the target customer (see below)
3. Define the solution to the problem (see below)
4. Construct the unique value proposition (another blog posting)
5. Determine the channels to the customer (another blog posting)
6. Revenue streams (another blog posting)
7. Cost to build the business (another blog posting)
8. Key metrics for measuring progress (another blog posting)
9. What are the unfair advantages (another blog posting)
10. What is the size of your target market (another blog posting)
11. Team (another blog posting)
12. Advisory board (another blog posting)
Step 3: How Big is The Problem?
This is a crucial question to be answered before spending any money or other resources such as precious time that can never be reclaimed. A problem may well have been identified, but what if only 100 people in the world care about it enough to pay for it. Even if it’s a 1,000 or even 100,000 people, there may not be enough of a market to justify building a business. But understand also, with a target market as little as 1,000 customers, a small business could be had, known as a life style business (a business only capable of supporting the life style of the owner and a few employees). It’s important to understand this before progressing further, because in order to attract private investors you must have the potential to tap into a very large market, at least millions of dollars in annual sales.
Step 4: Vision / Idea Team or Advisory Board
If possible this step should be done before Step 3, as a team can help you interrogate a market from numerous angles much better than an individual. But, the Catch 22 is that you don’t want to waste yours or anyone else’s time until the idea has been validated, especially if you have a new idea every day. So that’s why this step is sequenced after Step 3.
No matter what one calls it, i.e., Vision Team, Idea Team, Advisory Board, one should look to start building a team as soon as possible to accelerate the project. There are many benefits to this exercise, such as identifying future partners, a core from which to build a network, potential investors, hone the entrepreneur’s team building and management skills, etc.
At this stage though, a team will help to form the vision and mission for the company. They will broaden the horizon and possibly turn a $1,000,000 potential into a $1,000,000,000 potential…why not, it happens all the time.
Step 5: Clearly Define the Target Customer or Customers
Make sure you know who the customer is. This is the person who pays for the product or service. Don’t confuse the user with the customer. They are often the same person, but don’t make that assumption. The reason this is important is because you have to appeal to both the user and customer, which usually requires two different messages, i.e., 2 different business value propositions. For example, think of kid’s cereal, the message to the “user” (the kid) would be very different than the message to the customer (the parent). Also, be prepared for the fact there may be multiple customers, which means you need multiple OPBPs.
Step 6: Define and Validate Your Solution
At this stage, where the problem(s) and the target customer(s) have been identified, the startup is NOW ready to envision and speculate the solution. For example, if the startup doesn’t thoroughly understand the problem, how can they expect to truly provide a solution? And it’s essential to understand the target customer and user to be sure the solution is appropriate. For example, if your user is a retired senior, you wouldn’t want to build a phone app. Also, the senior might be the user, but their kids are probably the customer.
When building the solution, first build a minimum viable product (a solution with the least amount of investment of time and money that is sufficient for the early adopter to use). A startup is all about learning, finidng out what the customer wants, so early feedback is crucial!! At this stage we don’t mind a few bugs or complaints, as long as people want to use it. In fact, if we get a lot of RFC (requests for change), we probably have a lot of engaged users, which is a very good sign.
Step 7: Revenue Stream – How Will The Business Make Money
During an investor presentation, the most common question put to the startup by investors is "How is the business going to make money?". I'm always amazed how many startups are unable to give a straightforward answer to such a fundamental question. How can someone ask for an investment if they have no idea how the investor will make money? It's OK to not have all the answers, it's a startup after all, but the startup must have a sense of where the revenue is going to come from and some idea of the potential amount.
In concluion, if you follow the steps above, this business sequencing, you’re way ahead of the majority of startups and will greatly increase your odds of success. Also, investors will see you as a lower risk than other potential investments, which may be enough for you to get their dough.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If your name is in every box of the company org chart, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
At KENOVA we use the phrase 'business sequencing' to describe the process of executing business activities in the correct order. So, if you need to offer equity to investors, partners, employees, etc., one of the first business activities in your sequence is to establish a legal business entity. The question is, what form should you use? The following blog is written by contributing blogger Carl Kemph of the Law Offices of Carleton R. Kemph.
Presently, there are the following formats available to a startup business:
“C” corporation – This is the “basic” form of corporation commonly utilized by public companies listed on stock exchanges. It provides some degree of insulation from personal liability and is subject to federal “double taxation” – i.e., profits are taxed at the corporate level and dividends to shareholders are again taxed as income.
“S” corporation – This is an option that can be elected subject to certain conditions. It provides some degree of insulation from personal liability but reduces or eliminates “double taxation”.
Partnership – General partnerships provide no insulation from personal liability. Limited Partnerships provide insulation from personal liability for certain “limited”) partners who are generally investors with no management role. Under certain conditions, the “general” partner(s) can be incorporated, largely eliminating exposure to personal liability. Generally speaking, partnerships are not subject to multiple levels of taxation.
Sole Proprietorship – this is simply opening a business as an individual. It affords no insulation from personal liability and there is no exposure to double taxation.
Limited Liability Company/Partnership – this is the most recently form of entity, created state-by-state and now dating back decades. The essential purpose of the LLC is to afford an entity that insulates against personal liability, has a single level of taxation and profoundly simplifies the ongoing entity requirements.
For most of the twentieth century, startup enterprises were compelled to choose between avoiding personal financial liability on the one hand and federal income tax advantages on the other. By this we mean that the Internal Revenue Code enforced a policy imposing a second tier of taxation on entities insulating principals from personal liability. The LLC format was specifically designed and implemented to blend insulation from personal liability with a single tier structure. Additionally, the state statutes that created these entities did away with much of the obsolete housekeeping and maintenance required by the corporate format.
Compared with corporations, LLC’s are structurally quite similar. In lieu of shareholders LLC’s are owned by “members”. In lieu of stock they issue interests, which can be certificated just like shares in a corporation. There are managers rather than a board of directors, and there is no need for officers such as a president, vice president, secretary and treasurer. LLC’s can be governed via an “operating agreement”, which serves much as a partnership agreement governs partnerships. Routine management, equity calls, distributions and transfers of interest are governed in much the same manner as a shareholders agreement governs a corporation. In terms of ongoing entity housekeeping, LLC’s are more similar to a partnership, and typically impose no obligation to hold annual meetings, elect a board, install officers and so on.
Finally, while “Wall Street” does have a historical predisposition favoring the corporate format in the context of a public offering, many states have statutes that are extremely accommodating regarding merger-conversion from LLC to corporation when the situation becomes ripe.
Bottom line: In our view this format offers protection, federal tax efficiency and simplicity in the legal formalities surrounding attendance to routine operation of the entity.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
______________________________________________________________________________
* This article provides a generic overview as a beginning point for selecting the entity format you deem desirable for formation of a company through which to start your business. The foregoing does not constitute legal or any other advice, and you cannot rely upon it as such. Complete counseling in this area requires extensive discussion and analysis of specific circumstances, objectives and the like, in consultation with an appropriate group of advisors having the necessary specialties, and who are licensed in the germane jurisdictions.
Law Offices of Carleton R. Kemph
~ Counselor at Law ~
Business • Real Estate • Property Tax Appeals
Voice: 908-621-1110
Text: 908-621-1120
Fax: 908-636-2376
6 Hampshire Court
Springfield, NJ 07081
If you are busier than you have ever been in your life and you are not making any money, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
I recall in my early entrepreneurial days reading that entrepreneurs were special individuals with a never say die attitude and an unwavering belief in their idea. Captain Kirk always appeared in my mind’s eye. Today I realize these are the traits of many failed startups.
Entrepreneurs are definitely special people. They generally see things other people don't, especially opportunity. That is to say, where most people would be satisfied to simply complain about a problem or ignore someone else’s complaint about a problem, the entrepreneur inherently sees this as an opportunity and runs with it, i.e., decides to build a company around it.
But this is where the "old school" entrepreneur gets snagged. They convince themselves they've unearthed an unsolved problem, write a business plan, supported by numbers they've found to valid their idea, spend months raising money, while burning through their own money and money from friends and family. Eventually they find an angel to invest. They convince everyone that although sales are slow they're on track for the main stream market, the real money. They are unwavering in their belief in the idea and will not quit, because that's what loses do. They refuse to hear that their baby is actually ugly (translation: their idea is not a sustainable business model) and continue to burn through the money until they fly the plane into the mountain.
I've learned that the true, i.e., successful, entrepreneur is actually someone who a) is the first one to point out that their baby is ugly and b) makes this statement as soon as possible. The true entrepreneur is also disciplined enough to get to this point without burning through investor dollars and has other incremental ideas of making the business grow or has a full blown pivot in mind (new business idea.)
We are currently going through this with one of our client/partners. The company came to us with the product largely built so all we had to do was apply the finishing touches and bring it to market. Sales have been very sluggish; none of the forecast has been met. So KENOVA proposed a market survey of the main problems solved by the software to understand their level of importance in the eyes of the target market. The results were very disappointing, only 29% of interviewees said that the software was addressing problems they cared about.
This explained the sluggish sales and also told us that the product was still at the early adopter stage so we were facing the chasm to the main stream. The founder is facing the fact that their baby is ugly and they need to make changes – more on this in the future.
So it’s crucial as an entrepreneur to not give up at the first sign of trouble, however, it’s also crucial for the entrepreneur not to persevere to death.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you find yourself pitching at a funeral, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
I recently attended the NJ Tech Meetup (http://www.meetup.com/njtech/) event at Howe Center – Stevens Institute of Technology, NJ, where the topic was Angel Investing Secrets. The speaker, Fabrice Grinda, was excellent. Unfortunately I think a lot of what he said may have been hard for the young entrepreneur to follow, based on the discussions I had after the event. The investors and veteran entrepreneurs, on the other hand were easy to spot due to their head nodding and audible confirmations…myself included.
Fabrice made the point that he will not invest in the "lone wolf entrepreneur", a.k.a. solopreneur, unless there was some extraordinary justification. But rather looks to invest in a 2 to 3 co-founder startup., which is the norm for angels. What was interesting to me was how this escaped the solopreneurs, that approached me after the presentation looking for funding. So I thought I should do a quick blog to reinforce this point.
I have pointed out in previous postings that investors are risk managers, so when they see a deal (a startup looking for investment) they use a physical or mental checklist to eliminate the opportunities. For example, Fabrice, referred to above, uses a 9 point checklist. Common to all lists is The Team. A solopreneur is not a team, so is considered an extremely high risk. Thus, if the first item in the checklist is "team validation" and there isn't one, then the investor won't continue down their list, they'll simply move on to the next deal.
So what do you do about this?
If you are a solepreneur and you need outside investment, your first activity is to sketch out a basic Org Chart (a diagram that identifies the roles/responsibilities within a company, starting or ending with the CEO / President). At the beginning your name will be assigned to every position, but what this will do is help you to identify who you need to bring in as co-founder. My first tip is DO NOT MAKE IT A CLONE OF YOU!!! E.g., if you're technical, such as a programmer, DO NOT bring in another programmer! Bring in someone who gets your idea, is passionate about it, but has other skils, such as marketing and sales. With two or more of you each representing different roles, especially with prior experience in those roles, you are becoming investment material.
How do you build a team without revenue to pay for it?
Investors are smart people. They know that a startup doesn't have the money for a staff, but they do need to see a Team. This means the people on your team do not have to be on the payroll. But, if they are crucial to the success of the startup, they need to be committed to joining the company once it's able to compensate them. BTW, I deliberately use the term compensate and not pay, because everyone's situation is different, so you'll WANT to negotiate separately with each member of the team. E.g., some people may be able to accept 100% equity for the commitment to you. Some may want a 50-50 mix of equity and cash, and so on.
The Team is important for various reasons:
Again, investors are smart people. They understand how hard it is to build a team and attract people when you only have a dream, a wing and a prayer to offer. So having a team is a sort of right of passage in that if you're capable of assembling a group of people, you must have a decent idea, you must be a people person or at least a person people trust, which are all good attributes for growing a business.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you don't know that next monday is a holiday, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Startups have a million diverse things to do to keep their vision moving forward. One minute they're paying bills, next minute they're buying technology, then they're on the phone selling, then operations, finance, writing a blog, Twittering, Facebooking, cleaning the "office" so on and so on. So it's no wonder there's a phrase out there "right action, right now", which simply means right now there is always one thing that's the highest priority. Ergo it needs to be done right now.
I often get a client-partner on the phone in a tizzy because they have a million things that need to be done and, according to them, they all have to be done right now, apparently simultaneously. I always find this a little amusing because unless they also exist in a parallel universe they're going to be disappointed. And so at some point they come to the realization that they're not Captain Kirk and start to doubt themsleves and their abailit to bring their dream to life. Every entrepreneur goes through this at some point.
If you find yourself there from time to time stop beating yourself up. If you have a brain you can do this, you just need the tools to help you.
I learned this about 15 years ago during my first startup experience. I had become COO with many hats and feeling that I wasn't doing a very good job when wearing any of them. I was working 12 to 16 hour days, 6 to 7 days a week. I had grown so used to being a pinball bouncing from one thing to another that it didn't occur to me that this was something that needed to be addressed. Then I read a short story about Charles Schwab and how he paid $25,000 for an idea which made him the best known steel man in the world. (That's a decent sum today, right, but that was back in the early 1900s!)
When Charles asked how to get more done with his time, the idea his consultant gave him was this: "Write down the most important tasks you have to do tomorrow and number them in the order of their importance. When you arrive in the morning, begin at once on number 1 and stay on it until it is completed. Recheck your priorities; then begin with number 2. If any task takes all day, never mind. Stick with it as long as it is the most important one. If you don't finish them all, you probably couldn't do so with any other method, and without some system you would probably not even decide which one was the most important. Make this a habit every working day. When it works for you teach it to others. Try it as long as you like. Then send me a check for what you think it is worth." Several weeks later Charles sent the check.
I took this theme and gave it a 20th century spin. What I did was start with an electronic list of things that needed to be done, e.g., call prospects, test software, arrange meetings, etc. I then broke the document into 2 parts; part 1 is "Things I must do today: (put date here)"; part 2 is "Backlog" of things to do some time in the future. Part 1 never exceeds on page, part 2 always starts on the second page, and can grow to many pages.
I then print out page 1, i.e., "Things I need to do today: (date)". During the day I cross out the things I've done and make comments on the sheet of new things that pop up. At the end of every day or every other day, I edit the electronic document. I start by removing the things I've completed. I then add the new things that popped up and prioritize them on page 1. Page 1 becomes a mix of new things that came up and things from the backlog. I then print page 1 again ready for the next day.
The benefits of doing this are tremendous. For example, when I get to my desk in the morning I hit the ground running, i.e., I never have to waste time trying to decide what I should be working on. I rarely, if ever, wake up in the middle of the night anymore because I forgot something. I don't spend any where near as much time at the office as I used to, but I am much, much more effective. And now with kids I can easily find some time for them.
If you're in a startup, I urge you to try this out for 28 days (that's how long it takes to create a habit.)
Tip regarding priorities:
Sometimes, you get so subjective, so lost in the quagmire of daily things you lose connection with what is truly a priority. Third-party enter stage left. Find someone you can sit down with and run through your lists. In just a few minutes you'll find the priorities come leaping out at you. My wife is great for this activity.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you know that seed money has nothing to do with farming, you might be a startup.
Inpsired by Jeff Foxworthy "you might be a redneck if".
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Let’s say you’re a budding entrepreneur, you have brilliant idea for a business and that you believe in your heart-of-hearts that it's a winner, but you also know that you don’t have enough funds to bring your idea to market. So you think “Ah ha, I’ll raise the funds. There’s billions of investor dollars out there waiting for an idea like mine and I read of projects being funded all the time.” Great, that’s music to our ears and what this country is built on, but before you go rushing off to meet investors, make sure you're prepared! Raising funds for a project is practically a full-time job, so you need to be careful with your time. Also, it's very hard to get a second chance with investors, I we recommend you do everything you can to be ready for the first encounter.
We've created the following list to help you in this preparation. The goal with this list is to try to get you to understand your investment opportunity from the perspective of the investor, so you can position yourself in the best possible way and be prepared for the inevitable question(s).
(as more facts come to mind we'll keep adding to this list)
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
In this blog I’m simply illustrating the basic stages of funding a project, where the funds come from and when. Funds come in stages known as series and rounds. The funds are also referred to as internal or external. Internal refers to your initial and subsequent investments, and monies from friends, families and fanatics. External monies are monies from angels, VCs, banks, etc.
Seed / Friends and Family Round - Entrepreneur invests own money and monies from friends, family members and fanatics to get ball rolling. Grants and philanthropic donors / investors are also an option (say $10k to $100k) (see JMPstart Ventures)
Series A – Version 1 of product, secured bank / SBA loan, angel and early stage venture capitalist (say $50k to $1mm, yr 1 to yr 2)
Series B – Version 2.x plus of product, expanding product line or had to pivot, VC funding, strategic partners, various rounds ($1mm plus, yr 2 to yr 4)
Series C – Venture capitalist, strategic partners, company is mature, multiple products, significant growth strategies ($50mm to you name the figure) Note: Some things are excluded from above, such as incubators, which will be addressed in future blogs.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you're looking to raise seed funds for your start-up, you need to create the appropriate business plan for this audience, as mentioned in part 1 on this topic.
This second level of business plan would be a 3 to 5 pager but updated and expanded with what you've learned. I.e., clearly explain the problem you are solving, how you intend to solve it, the value proposition, who your customers will be, the channels to them, how you’re going to make money, what you expect the costs to be, your bio and your next 5 activities to keep the project moving forward. You don't want to do the 30 to 50 pager because it will confuse, "scare" and generally put off the potential investor.
Raising money from more professional sources, such as angels, venture capitalists, banks or other institutions, requires different levels of plans, as they will respond more favorably to your business opportunity if the plan is written to their needs. A bank, for example, requires the big jobbie with detailed financials, forecasts, etc ., whereas the angel and VC look less at the numbers and more at the team and it's ability to execute and if the idea is validated (i.e., has paying customers.
As an "anchor investor", KENOVA will accept the one pager described above, but if that’s not sufficient it will take the entrepreneur through its One Page Business Plan strategy (see below). Whereas the angel may be happy with a “napkin idea” level plan, but usually they want a document that clearly articulates the investment opportunity. If the project and the opportunity are clearly understandable, the 3 to 5 pager can suffice – it depends on the angel. For example, I know of projects that have been offered funding solely on the basis of a PowerPoint presentation. Just think what if this CEO had spent months writing a 30 to 50 page business plan document, just to find out that they were able to raise the funds with a presentation that only took 12 hours to develop.
Venture capitalists and angels range from “I haven’t read a plan in 10 years” to “We expect to receive a fully fleshed out 30 page value proposition with projections and full financial disclosure”. So ask the investor what kind of plan they would like before spending too much time writing one. For example, I once asked a VC if they had a business plan format they prefer that my clients could follow. They said no, we take them how they come. I then asked how would you like KENOVA to present deals them. To cut a longer story short, they were more interested in receiving a paragraph in an email or an executive summary and if they wanted more, they’d like a “slide deck” (I’ll be talking about slide decks in a future blog), and only expected a business plan to confirm that the entrepreneur had done her due diligence.
Earlier I mentioned KENOVA’s One Page Business Plan strategy. What this is is a process of identifying the business hypothesis from the problem being solved through to defining a team and an advisory board. It’s an 11 point process that is arguably the most important activity the entrepreneur must do and do before spending any time or money on anything else. For more details please see One Page Business Plan in KENOVA’s Services. So there you have it. Yes, you need a business plan, but there are a number of different levels, dictated by the intended audience. Also, think of a plan this way – a business plan should be a living referential document that should evolve as the business evolves. And as the business is evolving, the intended audiences will evolve, generally requiring a more sophisticated document. And finally, it is crucial that whatever the format of the plan, whoever the target audience is, as a minimum the plan must clearly define the problem or need identified, how the business intends to solve the problem or fulfill the need and how this will be achieved profitably.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
If you have a vested interest in issues relating to entrepreneurs, start-ups and early stage businesses that we have not yet addressed, please post a comment below explaining the issue and we'll create a posting for you. We have many blog titles in the works, but we'll address requests first…please help us to help you.
Cheers.
I read a lot of debate about whether the entrepreneur of a startup should spend the time to write a business plan or not. Well, the answer is both yes and no. I hear the groans, but bear with me.
Before we go into the reason for my answer, let’s consider what a business plan is for. It’s for 2 basic reasons; Reason one is to get your business idea down on paper, while reason two is to share your idea with people you’d like to involve in the project. KENOVA’s ideology involves a third reason that I will explain in Part 2 of this blog topic (see section One Page Business Plan strategy).
So why do I say “no” to the question? What I’m saying “no” to is not the concept of a business plan, but the traditional understanding of a business plan. That is to say, I’m saying no to the 50 pager, 3 month mammoth of a document explaining the value proposition, vision, mission, values, sales forecasts, marketing strategies, team members, financials, board members, pre-market research, competitive analysis, so on and so on. That sort of plan is reserved for merger and acquisition or securing business loans.
In other words, yes, you must have a business plan, but there are different types or levels of plans for different audiences. If you’re the audience, a one page document is sufficient to get you started. This one pager will explain the idea, why you think it will make money, how it will make money and your next 5 action items to move your project along. You can add a vision and a mission if you like, but don’t spend more than 15 minutes, as they will change as your project develops and evolves. When it’s done, print it out and hang it near your work area so you see it daily.
If you wish to attract people to your project, you’ll want a plan that’s a little more fleshed out than the one pager and needs to clearly explain the problem you are solving, how you intend to solve it, the value proposition, who your customers will be, the channels to them, how you’re going to make money, what you expect the costs to be, your bio and your next 5 activities to keep the project moving forward. Please see my next posting "Should you write a business plan? – Part 2" for a discussion on the other level of business plans needed.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
I meet a lot of entrepreneurs eager for us to convert their idea and vision into an software application and thus start the money machine rolling. They're convinced there's nothing quite like their idea on the market and they're chomping at the bit to get it built and released. Build and they will come is the mantra. You may be one of these people. You have an idea, you're convinced it's a winning "no brainer" and all you need to do is find the cheapest developer to build it for you. If this is you, don't worry you're not alone and the other good news is you're reading this post, so you can be saved.
The objective of this blog is to convince you to stop, look and listen. Remember that phrase from when you were a kid? It isn't just for crossing the road, it's great advice for the entrepreneur, the startup, the early stage company all the way to the Fortune 100 companies…yes, even the Fortune 100 companies need to stop, look and listen when it comes to a new business proposition.
When I say "stop, look and listen" what I'm saying is you have to validate your idea before spending any time and money, especially other people's. What do I mean by "validate your idea"? In short, you need to make sure there's a bunch of people eager to part with their cash to solve a problem, to the extent that you can build a business around it!!
This doesn’t start with looking for a developer (and remember, I am one). It's not even to think about the solution at all. Your first step is to consider the PROBLEM(s) you're trying to solve. In fact, the top three or more problems you're trying to solve. The following steps are expertly defined by Ash Maurya in his book Running Lean. We highly recommend this book to entrepreneurs, startups and early stage companies where technology is the revenue generator. Our services include many of Ash's practices.
So how do you go about validating your idea? You have to start with the problem you are solving. Once you have done this, you must get out of your office and into the field to ask people what they think about the problems and are they a must-have in terms of a solution.
Remember the dot com bubble? Remember the myriad headlines of billions of dollars being thrown at internet projects? And remember that most of them died? That wouldn't have happened if investors had been able to ask “what are the top three problems you are solving?” and make sure the company could validate them.
I’ll warn you now, this is hard! I mean really hard and you can't do it alone…well I can't anyway. For example, I'm pretty good at helping our clients identify the problems they want to solve. But I recently needed someone to help me identify the top problems my company, KENOVA Technologies, is solving. So when you do this exercise, work with someone that's in an objective position and make it clear that you need to identify the problems and to bring you back to this theme when you wonder off into the solution, reasons, justifications, etc.. So make the point with your colleague that your only objective is to define the top 3 problems and nothing else.
The next step is to identify the customers, i.e., the people who would be willing and able to PAY to have one or more of your top three problems solved. Again it’s better to include other people, and at least one person who understands the industry that has the problem(s) you're trying to solve. E.g., if the problems are in education, find someone with experience in teaching.
Now that you have the problem and the customer identified, it’s time to learn if your hypothesis is correct. In other words interview prospective customers and ask them to rate your problems in terms of a solution: “must-have”, “nice-to-have” and “don’t-care”. You’re looking for at least one must-have response from at least 60% of your interviewees to claim your hypothesis has been validated. If you can find 5 to 10 candidates that represent the customer well, then you can move on to the next step, otherwise 20 to 30 interviews would be appropriate.
By the way; keep the interviews to 20 mins; ask them how they are solving the problem(s) today; can you follow up with them and do they know anyone else you can interview.
With the problem validated, you can now justify spending some more time and if necessary some money on your idea. What you need to do now is define the solutions to the three plus problems. This is the time you would want to involve a developer. In regards to developers, they should be able to brainstorm with you to define the solution. This would also be the time to develop a prototype or what KENOVA calls a Concept Presentation System. Armed with the solution, a Concept Presentation System and an idea of the price you want to charge, go back to the people you interviewed before and ask them to rate your solution (use the same criteria as the Problem Interview) and give you feedback on the pricing.
Continue these 2 basic steps; problem and solution interviews until you formulate a validated hypothesis, i.e., 60+% must-have response.
If you do this, you’re in the minority. That is to say, the most startups just don't do this. Therefore you’re ahead of the majority and will have a much greater chance of successes! This will also make it easier to attract partners and investors.
These are the foundation steps for a successful startup project; my other blogs build on this basic approach.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Recently we heard, that the book “Crossing The Chasm” by Geoffrey A. Moore was redundant in today's on-line world. We disagree!
Before I explain, here's a bit of history; In 1991 Geoffrey A. Moore wrote a revolutionary book called “Crossing The Chasm”. Well, it was revolutionary for us techies trying to peddle our wares and when I say “revolutionary”, I mean from a technology perspective, because, as Michael Gerber pointed out in “The E-Myth”, new companies, especially technology based, are typically started by a technician, not an experienced marketing / sales type. So, for these people, i.e., the startup entrepreneur, Crossing The Chasm was a fantastic insight…I recall when I finally got around to reading it how much it inspired me. What Geoffrey did in Crossing The Chasm was take traditional marketing concepts, applied them to selling technology, then wrote the book around the different approach needed in order to sell it. Or, in Geoffrey’s words, make it “easy to buy”.
So the book is based on the premise that your target early adopters, i.e., the pioneer user of the technology, must have a physical connection, relationship, with the next level of adopters in order to cross the gap between them. E.g., think of the first person you met who had an iPhone, these early adopters were probably the reason you got one (if you got one). They're usually gadget people, love to show off the latest piece of technology and told you how great it was. In other words, Geoffrey's principles still apply. The only difference today is that you may be using FaceBook, LinkedIn et al., to have those dialogs in order to cross the chasm.
Having said this, Crossing The Chasm was not written from the perspective of the startup company. It was more entrenched in the established business, i.e., it's examples were existing companies that did a turnaround because they followed his principles. So for those of you who read or heard that Crossing The Chasm is redundant in today's market, please don’t pay attention, it is still a great book and will give you a great foundation for you and your business. But, wait until you have clearly defined the problem you are solving, your customer, validated the solution and have a revenue generating business.
"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."
Now, it is common to see the statement that the lack of cashflow is the reason for the high business failure rate. But we disagree! We believe it’s caused by not doing the right thing at the right time.
For example, I can not recall the last entrepreneur that could show me their pre-market research data validating their idea. But I can tell you they’ve already spent many thousands of dollars on patent pending, websites, business cards, other branding activities, a prototype, etc.
My point here is that they really have no idea if people would be willing to buy their offering, but they’re willing to spend their money. So, when they fail, is cashflow the cause…no, that’s a symptom of the problem. The cause of failure is not doing the things they need to do in the right order, that is, they’re out-of-sequence. They are not executing the business activities in the correct order. Patrick Smyth in his book “Elephant Walk” explains it best with his staircase analogy: “The foundation for each and every step must be sound to support the ascending steps.”
I’ve been in the technology industry since the 80′s; developing all types of software from “off the shelf” to adjuncts for existing systems, from bridging software and middleware, to 100% custom, and just about everythinbg in between – even worked on network card drivers, when that was big. All through my career, the common theme has been entrepreneurs, start-ups and early stage companies. I’ve worked directly or indirectly with many very large companies, e.g., Fortune 100 companies, but my sweet spot is the entrepreneur, startup and early stage organization.
For example, I worked for one software “startup” for 15 years, riding the internal rollercoasters that never seemed to end, while waiting for the big deal to come and solve all our problems. A couple of big deals did eventually materialize, but they only created more, bigger and worse problems.
During the course of my weekly duties I meet many startups; starry eyed entrepreneurs with the next Facebook idea. I see them jumping on the startup bandwagon, careering down the tracks at 200 mph repeating all the mistakes I’ve seen, experienced and made. Which makes sense because, most startups, as pointed out by Michael Gerber of The E-Myth fame, begin with a “technician” with an idea and know nothing about starting a business. So it’s no wonder that statistics report 60 to 85% new business failure.
Although we created KENOVA Technologies to help these pioneers, we felt that a blog might enable us to help the people we’re not able to work with. You see, I remember the pain, partner arguments, sleepless “daemon” field nights, robbing Peter to pay Paul, and all the other trappings that go hand-in-hand with startups. Not to mention the lost income and investment dollars AND TIME. Money I can get back!
So if we can blog on topics that prevents just one entrepreneur from losing his, his friend’s and family’s life savings, then it’ll be worth the effort.
I’d also like to say that although this blog is targeted at the technology entrepreneur, startup and early stage businesses, its content is universal across business. Some of the techniques discussed are geared to the target audience, however, with a little adaptation they can be used for any industry sector.
In addition to my career experience, I’m involved in various groups related to the entrepreneur, which are great for bouncing ideas, thoughts, observations et al. Which I plan to bring to this blog.
Finally, if you know an entrepreneur or wanna’be entrepreneur, start-up or early stage individual or company, please share this blog with them. And I encourage you and them to respond to my postings, especially in regards to topics you’d like me to address.
