Jun 052017
 
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Risk-taking As An Entrepreneur – Are You Free Soloing?

How do you view the risk-taking that you do as an entrepreneur?

Do you feel like it is “all you” and any mistake you make could cost you your business and your financial future? Or, do you feel as though you’ve hedged your most important risks and built a support system that would act as a safety net to help you get through the inevitable mistakes that happen?

Yesterday, news surfaced that Alex Honnold had accomplished one of the greatest – and some would say most risky – climbing feats in history. He did a “free solo” climb of the almost 3,000-foot granite wall know as “El Capitan” in Yosemite National Park, in just under four hours! Free soloing means that he did the climb without the support of ropes or other climbing safety devices and without the help of other climbers.

It was just him, his climbing shoes and a bag of chalk hanging from his waste to help keep his hands dry.

How is that for risk-taking?

To the uninitiated, and to those unaware of the incredible climbing prowess and other free solo feats of Alex Honnold, such an accomplishment would sound unfathomable. Never mind the fact that it’s hard to wrap your head around someone having the physical ability to accomplish such a climb, but what about the nerves and fear that must creep into someone’s mind when they’re a couple thousand feet above the ground, climbing a granite rock face, with no safety gear?

Wouldn’t such a situation cause the mind to get caught in an endless loop of the worse-case scenario and freeze up like a late 80’s PC?

In Alex Honnold’s case, at least, the fear did not paralyze him and he was able to continue all the way to the top and accomplish a goal he’s had since he was a child. For him, the focus was not on risk-taking. Rather, the focus was on what he needed to do to reach his goal and accomplish perhaps (probably) the greatest feat climbing has ever seen and likely will ever see.

So, how did he control his thoughts and fears and how does such risk-taking map to what we as entrepreneurs have to navigate on an ongoing basis?

First, you have to say that on the surface, it’s difficult to compare the two, because unlike Alex Honnold’s free solo conquest of El Capitan, our activities on a daily basis as entrepreneurs are rarely, if ever, life or death. If we make a mistake as entrepreneurs, it’s unlikely that we will suffer the unforgiving nature of the laws of gravity, as Alex surely would.

Second, in our role as entrepreneurs, it’s unusual that we’ll be in a circumstance where we even figuratively speaking we have no safety net in place. Usually, in our risk-taking as entrepreneurs, we design hedges and other safety valves in our financial, operational and marketing activities that allow us to avoid ‘bet the company’ decisions. This is not always true, of course, and sometimes through lack of planning or just simple bad luck, crises arrive or other situations occur that can put a company out of business. But, it’s rare that we consciously say, I’m going to bet the company on this decision, and in order to make it more challenging and more interesting, I’m going to purposely avoid hedging my bets, which is what Alex did with his free solo of “El Cap” and many other challenging rock faces previously.

Third, in addition to putting hedges in place, we usually have a strong support network that we build up over time as entrepreneurs and call on as needed when issues arise. If we don’t have such a network in place, we’re typically aware we should and work to build one over time.

So, if we’re typically not operating completely without a net in our risk-taking as entrepreneurs, as Alex does in his free solo climbing conquests, how is what he does relevant to us as entrepreneurs?

Alex’s free solo climbs speak to a few things that are paramount to being successful as entrepreneurs: 1.) Being committed to what we’re doing, to the point where (figuratively, at least) we’d put our life on the line to reach our goals; 2.) Being prepared, so that we maximize our chances of success, even if what we’re trying to accomplish seems crazy to others; and 3.) Being focused exclusively on the task at hand, not allowing outside distractions to dilute our efforts as we strive to realize the vision that we have for our lives and our entrepreneurial ventures.

In terms of being committed, Alex Honnold has proven time and again that he is willing to put his life on the line to reach his free solo climbing goals. He doesn’t just talk about going out there and doing these climbs that heretofore were considered impossible. He goes out there and makes it happen. How committed are you to doing whatever it takes to make your entrepreneurial endeavor(s) succeed?

In terms of being prepared, Alex Honnold has worked his whole life to reach the point where he could free solo El Capitan. He’s honed his craft on safer, roped ascents. He’s spent countless hours preparing his body physically to withstand the fatigue that is sure to set in on such an endeavor. He’s scouted El Capitan and rehearsed in detail the climbing moves he’d have to make, particularly in the most challenging areas of the climb. He’s free soloed lesser, but still challenging other rock faces to prepare his mind and his body for the stress that comes with climbing “without a net”. This list goes on and on of the preparation Alex has done to maximize the odds that he could safely accomplish his objective. How would your business look if you did a similar level of preparation?

In terms of being focused, Alex knows that when he’s on a rock face with no safety equipment to catch him in case of a mistake, he must be 100% focused on the task at hand. In his case, that focus is quite literally a matter of life or death. How focused are you when you are involved in the key activities you know are vital to the success of your business? If you could be completely focused as Alex must be, how much further could you go as an entrepreneur?

Well, congratulations to Alex Honnold on his extraordinary feat of free soloing El Capitan. Here’s to learning the lessons of commitment, preparation and focus that Alex has modeled before and during this amazing accomplishment, and putting those to work in improving the odds of success in the risk-taking we encounter as entrepreneurs!

 

Paul Morin

paul@companyfounder.com

www.companyfounder.com

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May 232017
 
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Confidence Is Vital To Be An Outstanding Entrepreneur

In my experience and observation, confidence is an important characteristic of almost every successful entrepreneur.

Think about the entrepreneurs you know. I’m sure you know some who are successful and achieve or exceed the results they seek on a consistent basis. I’m sure you also know some who rarely if ever achieve their desired results. How many of the ‘successful’ entrepreneurs you know exhibit a high level of confidence? I’m willing to bet that it’s most, if not all of them.

I’ve had the good fortune of interacting with a large number of successful entrepreneurs over the years. Almost to a person, the successful entrepreneurs with whom I’ve interacted are very confident people! What do I mean by confident? I don’t mean that they’re arrogant or braggarts, though some certainly are. I don’t mean that they flaunt their wealth or success, though some certainly do. I don’t mean that they live in a la-la-land of irrational positivity. And I definitely don’t mean that they’re overconfident, such that they’re unwilling to learn from their mistakes, blindly believing that they’re always right.

I also don’t mean that they’ve always been very confident. Many of them I’ve known for a large number of years, long before they became successful entrepreneurs. They didn’t always exude this confidence that I now see in them as successful entrepreneurs.

What I do mean is that they have a belief in their ideas and in their ability to execute on their vision for their businesses. They have a strong belief in the importance of their mission as entrepreneurs, a level of belief so strong that many would describe it as a conviction. This conviction gives them confidence that is communicated both verbally and non-verbally in all their actions related to their businesses. They exude confidence and belief that their businesses will be successful and they will reach their goals in life.

Why is this confidence so important?

First, this confidence and belief are contagious. Anyone with whom these entrepreneurs interact can feel their confidence, which tends to help make them believers as well. It makes them believers in the entrepreneur, in the business, and in the products and services it provides. An entrepreneur who doesn’t project such confidence doesn’t enjoy this same highly paved path to engendering belief in others. It’s a sort of belief facilitator.

Second, given the confidence these entrepreneurs have, they do not hesitate to talk to others and tell them all about their business and the great products and services it has to offer. In most, there is quite literally zero hesitation.

Third, with such confidence, these entrepreneurs don’t hesitate to go after opportunities that come across their desks or they observe in the marketplace. There are no thoughts such as “can we do that” or “will others do it better”. Rather, given their confidence, these entrepreneurs know that they can provide a better solution than their competitors (even if this is stretch sometimes…) and they happily will tell their prospects so.

Fourth, possessing such confidence, these entrepreneurs typically approach opportunities, challenges and all interactions with a high level of energy. This energy is also infectious and helps them to persuade others, including members of their teams, that now is the time to take initiative and accomplish whatever goal they have in their sights. Thus, they are able to project their confidence and energy on others, further increasing their odds of success in any particular initiative or challenge.

So, are you ready to increase your level of confidence and start approaching your business and your life with this newfound confidence?

How do you gain more confidence? Well, some people are born with it. Some have it cultivated in them from a young age by parents and others who tell them they believe in them and that they can accomplish anything they set their minds to. For most people, though, confidence develops over a period of time, based on a series of small successes that when taken together, cause the person to think, “hey, I may not be so bad at this after all”.

You need to give yourself opportunities to succeed, and rather than always being your own biggest critic, acknowledge, even if just in your own mind at the beginning, that you can and do add a lot of value in your business and elsewhere. You need to become your own biggest fan. Also, equally important, if not more important, you need to surround yourself with people who are there to help you accomplish your goals, rather than with people who constantly look for ways to tear you down.

This way, little by little, you will develop all the confidence you need to be successful as an entrepreneur and in whatever other endeavors you pursue. I guarantee you that once you gain and exude this confidence, you will be amazed by the outstanding results it typically brings you as an entrepreneur. Again, we’re not talking about being over-confident and arrogant – humility is always important – we’re talking about a belief in yourself and what you’re doing that is contagious and infects those with whom you come in contact.

 

Paul Morin

paul@companyfounder.com

www.companyfounder.com

 

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Apr 062014
 
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What Boomer Businesses Have Going for Them

By Lynne Strang

John Olson was 40 years old when he founded Graystone Industries, a Georgia-based pond and fountain supplies business. Today, Olson’s company is among the leaders in its industry. But what if he had started it ten years earlier?

“It would not have been successful,” he says. “I could not have run a company as a younger man.”

Olson isn’t the only 40-and-older business owner who feels this way. Between 2011 and 2013, I interviewed dozens of late-blooming entrepreneurs to write a book about the success principles they used to start and operate their businesses. Most said they could not have started a business in their 20s or 30s — or if they had, it wouldn’t have turned out as well.

That revelation is noteworthy for those who dream of owning a business but wonder if they’re “too old.” If you count yourself in this group, you can stop wondering. For some people, a later start may increase the odds for entrepreneurial success because it allows time to develop certain characteristics and assets. Among them:

A bigger and better network. In entrepreneurship, the “It’s not what you know, it’s who you know” adage matters. The longer you’re around, the more people you know – and the more likely it is that you’ll have the connections needed to open doors, obtain technical advice, market products or services and find the right help.

A stronger financial position. A later start can provide an opportunity for entrepreneurs to accumulate personal savings — the most significant source of funding for startups, found a 2009 survey of entrepreneurial company founders funded by the Ewing Marion Kauffman Foundation. And while banks usually don’t lend to a first-time entrepreneur, an older one may have a chance. That’s because he or she has had time to build financial assets, establish a credit history and cultivate relationships with lenders.  

A commitment to customer service. Many 40-and-older entrepreneurs are passionate about great service for customers because they’ve been one for so long. They understand the frustrations of long waits, unanswered phones, unreliable quality and indifferent salespeople. As entrepreneurs, they tend to be patient when resolving service issues and practice the Golden Rule. This wins customers’ loyalty and keeps them returning for more.   

More resilience. Older entrepreneurs have lived through peaks and valleys – an inevitable part of starting and operating a company. For younger business owners who haven’t endured as many life events, lean times and dips in business may cause more angst. When you’ve weathered a lot of storms, you know the sun will emerge again eventually.

A grip on reality. People who start businesses after age 40 tend to be more practical about timelines, resources and expectations, which helps them set attainable goals. Among those who concur with this idea is Ken Yancey of SCORE, a nonprofit that provides free support for aspiring and new business owners. At a recent Senate hearing, Yancey pointed out that “encore entrepreneurs” have sensible financial expectations and are “realistic in their scope and projections.” 

Self-knowledge. Older entrepreneurs know who they are and what matters to them. With this self-awareness, they can build profitable businesses that also reflect their core values and provide personal gratification. Julie Savitt, owner of Chicago-based AMS Earth Movers, is a prime example. “It took the first 40 years of experiences to identify the strengths and weaknesses that define who I am today,” she said.

Not every boomer who wants to start a business is cut out for it, of course. If you haven’t followed through on your entrepreneurial idea, it’s critical to evaluate why. Inaction may indicate habitual procrastination, a lack of commitment or motivation, poor time management skills, inadequate resources or an inability to focus. Each of these could doom a company before it gets off the ground.

On the other hand, an unborn business could be the result of a timing issue. For a variety of reasons, such as young children who needed full-time care or a spouse’s demanding career, the earlier years may not have been conducive for a startup. In addition, student loans, car payments and/or other typical bills for younger families may have required a steady income and made it difficult to set aside seed money. The passage of time can remove or ease these obstacles, clearing the way for a successful business undertaking.

The bottom line? If you possess the drive – as well as a viable business idea and sound financial footing – an ideal time to act is when you have gray hair. The second half of life brings wisdom and other benefits that weren’t available earlier. By applying this life experience to your business, you just might take it to another level

Lynne Strang is a writer and communications consultant based in Northern Virginia. She is the author of “Late-Blooming Entrepreneurs: Eight Principles for Starting a Business After Age 40.” Her email address is lbstrang@gmail.com..

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Oct 042011
 
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Entrepreneur? Why Did You Do It?

Entrepreneur? Why Did You Do It?

Those who choose to become an entrepreneur do so for a wide variety of reasons.  When challenges arise in your entrepreneurial path, as they inevitably do, it’s useful to remember why you became an entrepreneur in the first place.  It can help you “maintain a level head,” tap your willpower and continue to fight to achieve your entrepreneurial goals and dreams.

So, what are some of the reasons we become entrepreneurs?  Here are some thoughts:

We want to change the world.

We’d like to become financially independent.

We get pushed into it.

We’re not good employees.

We want to work for our own bottom line.

We have a vision.

We like to start things.

We like to build things.

We think we can “do it better”.

We admire an entrepreneur (or several) and want to follow in their footsteps.

We believe entrepreneurship is the root cause of economic progress.

We’re looking for freedom.

We want to carry on a family business tradition.

We realize that being an entrepreneur is no less secure than “corporate America”.

We believe it allows us to express our individuality and creativity.

We want to leave our mark on the world.

These reasons for becoming an entrepreneur are not mutually exclusive, of course.  Most entrepreneurs I know, including myself, would count many, if not all, of these reasons among their motivators for taking the entrepreneurial path.

If we take a look at Maslow’s Hierarchy of Needs, we can get some interesting insights into some of the reasons we become entrepreneurs and how, depending on where we are in our lives, that may change over time.

Maslow’s Hierarchy Of Needs

Maslow Hierarchy of Needs

As you can see looking at the reasons above in light of Maslow’s Hierarchy, many of the reasons we choose to become entrepreneurs, particularly in the “developed world,” have to do with “self actualization”.  Granted, regardless of where in the world we may be talking about, there’s always a financial undercurrent to entrepreneurship.  It’s a basic reality, as illustrated by the lower levels of Maslow’s Hierarchy, that we all need to meet our basic needs for food, water, clothing, shelter, and physical safety.  To do so, in most settings, we need money, and becoming an entrepreneur is a way to earn money.

However, once we have those basic physical survival needs met, the reasons for becoming an entrepreneurial quickly move into the realm of the emotional, as do the layers of Maslow’s Hierarchy. From there, again tracking the Hierarchy, the reasons move into the realm of self-actualization and our existential search for meaning and contribution as human beings.

As such, entrepreneurship can become a vehicle for us to leave our mark and make a significant contribution to the world.  Our vision as entrepreneurs is limited only by our imaginations.

Why did you become an entrepreneur?  What is your entrepreneurial vision?  Is it big enough and worthy of all you have to offer and contribute, given your considerable talents and perseverance? Reignite your passion for entrepreneurship and make something special happen!  As Richard Branson said about becoming an entrepreneur (paraphrasing), “I wasn’t looking for the money and the fame.  I just wanted to change the world”.

I look forward to your thoughts and questions.  Please leave a comment (“response”) below or in the upper right corner of this post.

Paul Morin

paul@companyfounder.com

www.companyfounder.com

 

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Aug 242011
 
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Are Entrepreneurs Gamblers?

I often get asked the question, “Are entrepreneurs gamblers”?  I think how you answer this question has everything to do with how you define “entrepreneur” and how you define “gambler,” so let’s start there.

For me, an entrepreneur is someone who starts a business with the intention of growing it, in order to make a profit.  Further, an entrepreneur takes pleasure in creating something that previously didn’t exist and growing it into something that “matters”.  Clearly, it is possible to be “entrepreneurial” in non-profit organizations and in for-profit organizations that already existed before you showed up – there are various types of entrepreneurship.  The simplest definition of an entrepreneur is “someone who looks for business opportunities and invests time, money and/or other resources to take advantage of those opportunities”.  You most often hear the word “entrepreneur” used in the case of startup businesses, but that is not the only scenario where the term is applicable.

Now, a “gambler,” for me, is someone who places bets, hoping to win by chance, usually against the odds.  There are various types of gambling, not all of which happen in a casino, but even within a casino, there are many different forms of gambling.  If we look at a casino as the place we most often find “true gamblers,” we quickly realize that, usually at least, when they’re playing against the house (the casino), in such games as blackjack, craps, roulette, etc, they have to get quite lucky to win on any particular occasion.  Further, if instead we look not at a specific occasion, but over a period of time and several occasions, unless they are cheating or exploiting some other advantage that is against casino rules, their probability of winning is almost zero.  The games were created that way, by the casinos.  No wonder the odds are stacked in favor of the house.

Ok, so back to the question:  Are entrepreneurs gamblers?  Based on the definitions I laid out above, I think you’d have to say, no, entrepreneurs are not gamblers.  Entrepreneurs may count on luck just as gamblers do, but I don’t think we can say that over time entrepreneurs’ probability of succeeding is almost zero, as it is for gamblers as defined above.

So if entrepreneurs are not gamblers, what are they?  They are risk takers.  To be more specific, good entrepreneurs are calculated risk takers.  They see an opportunity and like gamblers, they place a bet.  They bet their capital, their time, and other resources that they will be able to exploit the identified opportunity and create a successful business based on it.  They do depend on luck to some extent, but if they are experienced and/or have good partners and advisors, they know how to “stack the deck” in their favor, so that they don’t have to depend on luck so much.  I guess if you wanted to compare them to gamblers, you could compare them to those gamblers I mentioned above who use “card counting” or other techniques that go against the house rules.  They do not enter the game, or in the case of entrepreneurs, the venture, without some advantage or set of advantages that they, and their investors if they have any, believe will allow them to succeed in that particular business.

Frankly, I don’t really like hearing entrepreneurs compared to gamblers, at least not given the definitions I provided above.  I don’t think such a comparison does the entrepreneur, at least not the “good” entrepreneur, justice, as it has too many connotations of “shooting from the hip” and just hoping to get lucky.

As one of my close entrepreneur friends says, “without risk, there is no reward”.  It is inevitable that anyone who dares to initiate anything, including a new business venture, is taking a risk.  They are “risk-takers,” by definition.  They’re not “gamblers” though, at least not per my definition of the word.

If you are just starting on the entrepreneurial path, or even if you’ve been on it for a while, make sure you’re a “good” entrepreneur – a calculated risk taker, not a gambler.

P.S. You may have seen me compare entrepreneurship to a poker tournament elsewhere.  This is because poker is not a game you play against the house.  It is played against other players.  It is still a form of gambling, but not the type of gambling I referenced above.  While it absolutely does involve some luck, it also involves strategy and allows you to be more of a “calculated risk taker” than games against the house.

I look forward to your thoughts and comments.  Please leave a comment below or in the top right corner of this post.

Paul Morin

paul@companyfounder.com

www.companyfounder.com.

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Aug 022011
 
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Five Common Mistakes To Avoid in Marketing Your Small Business

Is marketing your small business not going as well as you would like?  There is always room for improvement!  The following five common mistakes are fundamental to effective marketing and sales.  If you are committing these mistakes in marketing your products and/or service, correct your approach as soon as possible and you may be surprised how quickly your sales and profitability head in the right direction.

 

Common Marketing Mistake #1:  Not Focusing On The Prospect

 90+ percent of the marketing materials I see are focused on the many wonderful attributes of the SELLER!  Their marketing communications focus on them — where they went to school, how big their business is, their wonderful office location, the great technology they have, etc.

Is this what the prospective customer really cares about?  Or are they more concerned with hearing that you understand their problems and can help them with the challenges they are facing right now?

Rather than telling them that your company is such and such, tell them you and your company understand the issues they are facing.  Tell them you understand them and in fact, your whole focus is on helping people in their exact situation address those and similar problems.  You’d like them to know that you can’t get enough of helping people like them and you’ve done it effectively, over and over again.

You can and should, of course, let them know that you and your company have the necessary qualifications to get the job done and solve their problem.  But rather than just listing your credentials, get that message across by telling them the many stories of how you’ve successfully helped others with the same challenges they are facing.  Show them the knowledge and insights you’ve applied to help clients solve similar issues.


 Common Marketing Mistake #2:  Trying To Be Too Clever

If you read and study enough advertising and marketing pieces, you will realize that the vast majority are trying to be clever – too clever.

The point of marketing and advertising is not to show people how smart you are or how great a vocabulary you have.  The point is to get your prospects to take a specific action.  To call you.  To buy your product.  To join your email list.  The surest way to NOT make this happen is by using too many big words or fancy concepts and images, or by using subtle graphics that you think are cute or clever, but that leave the prospect wondering what you’re talking about.

Prospects are bombarded by advertising and marketing messages and images these days.  This constant bombardment has forced people to be even more selective regarding what they pay attention to.  Not surprisingly, what most often grab and hold prospects’ attention are messages that are clear and are clearly relevant to issues they facing right now.

Develop the habit of writing very directly in all your business writing, and particularly in your advertising and marketing materials.

 

Common Marketing Mistake #3:  Emphasizing Features Rather Than Benefits

The famous example goes, “People don’t buy a hole puncher (or drill), they buy the ability to make holes”.  Or people don’t buy a driver (golf), they buy the ability to hit the ball further and straighter off the tee and impress their friends.

When you are marketing your product or service, don’t expect that simply writing up a long list of incredible features will magically incentivize your prospect to take out their credit card (or check book, or purchase order) and buy what you have to offer.  It simply does not work that way for the vast majority of buyers.

Rather than tell them, “my product is all this,” or “I’m all that,” tell them, “You have this issue you are confronting and what I am offering is the best way to solve that problem, quickly and economically, as we have proven over and over, with challenges just like yours”.

 

Common Marketing Mistake #4:  Not Offering a Guarantee

Your prospects are worried that your product won’t work for them. So put their worries to bed by offering a risk-reversal – that is, a satisfaction guarantee. Unconditional, strong and long guarantees usually deliver the best conversion rates to you.

This may seem like big risk to you, but if it does, ask yourself this question: How good is my product/service?  If you believe in what you are offering, you are less likely to have a big concern about offering a satisfaction guarantee.  If you’re still concerned, offer the guarantee for a limited time and see how it goes.

If you look around, you will notice that most of the savviest marketers out there offer a no questions asked, unconditional money back 30-day (minimum) guarantee.  This is not easy to apply to certain products and services, of course, but for most, it works very well.

 

Common Marketing Mistake #5:  Not Creating a Sense of Urgency

You need to have a call to action at the end of your sales letter or other marketing piece that tells your prospects exactly what to do next (e.g., “get out your credit card and click here to get started now…”). But you also need to give your prospects a good reason to act NOW, otherwise they may become distracted and never come back to your marketing piece.  As discussed, prospects are bombarded with other offers and other sensory inputs on an almost constant basis these days.  We increasingly live in the “age of distraction”.

The solution? Create a sense of urgency by:

  • Reminding the prospect that her/his pain and problems will be over when he/she buys the product or service.
  • Offering a limited-time discount or bonus offer.
  • Offering a limited quantity of products.
  • Offering a bonus or discount to the first few hundred (or whatever number makes sense in the context of your offer) people who order.

You just learned about five common marketing mistakes that may be causing your marketing not to work as well as it could.  To the extent you haven’t already, get to work now on correcting these issues.  It will be some of the most productive and profitable time you ever invest.

Don’t just pick and choose the methods you like best. Instead, address all five mistakes … and enjoy the results!

I look forward to your thoughts and comments.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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Aug 012011
 
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Why Perfectionism Is The Enemy

In the early stages of starting a business, or starting anything, for that matter, almost nothing goes according to plan.  For those of you who’ve ever started anything even a little bit complex, you understand where I’m coming from.  You can plan and prepare to your heart’s content, but there are always glitches and stumbling blocks that you have to overcome.  As the saying goes, if it were easy, everyone would do it.

This is where perfectionism and perfectionist tendencies come in.  What does a perfectionist do when everything is not perfect?  Do they have a meltdown?  Do they get discouraged and quit?  Do they never start in the first place, fearing that something may go wrong?  Any of the above can be expected of a perfectionist, of someone who has a strong need to control everything and to have it come out “perfectly”.

You can see where I’m going with this.  If you are a perfectionist, you will have a hard time starting things.  You will have a hard time making them run and watching them go sideways from time to time.  You will have a hard time finishing things, as you know they will never come out as perfectly as you want them to.  You will probably also have ulcers and many other negative side effects of requiring perfection of yourself and likely, of those around you as well.

Here’s what I’m NOT saying:  you should have low standards, then you’ll never be disappointed.  That is not even close to the point I am making.  I think you should have extremely HIGH standards for yourself and those around you.  I think you should do everything in your power to live up to those high standards and achieve more than the vast majority of the population.  But I DON’T think you should be a perfectionist.  Life does not have to be binary.  It does not have to be black and white.  There is a middle ground.

It is also extremely important to pick your battles wisely.  If you are starting or growing a business, or trying to achieve greatness in sports or any other endeavor, it is likely that you’ll confront dozens of different decisions and challenges each day.   These decisions and challenges are not “one size fits all” – they do not have equal importance and implications.  It is extremely important to look at each decision and challenge you face in context.  You must consider its potential impact on a micro and macro level, before you react.

Some issues and challenges you face WILL be extremely important.  Depending what your area of endeavor is, it’s not likely that they’ll be “life or death”, but in some cases they may be.  Whatever the case, you need to learn to maintain your poise and stay calm.  That is the only way that you can perform at your best.  When you run into stressful situations or those that invoke fear, use the G.A.M.E.S. Approach, which I’ve covered elsewhere and is based on techniques taught to the Navy SEALs to master extraordinarily challenging and stress-inducing scenarios.  It focuses on effective Goal-setting, Arousal Control, Mental Rehearsal, Endurance, and Self-talk.

Whatever approach you employ to overcome perfectionism, the first step is to recognize that you have an issue. From there, you can take a deep breath and each successive step should get a little easier.  Fear of failure should be less of an issue for you going forward.  You should become better at managing difficult situations and finishing what you start.  You should be less likely to let your perfectionist tendencies keep you from achieving all you’re capable of and from leading the less-stressful, happier existence you deserve.

I look forward to your thoughts and comments.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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Jul 312011
 
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Why Goal Setting Is So Important

I finally figured out and understand at a visceral level why goal setting is so important.

As I’ve stated elsewhere, based on my extensive work and research with entrepreneurs and achievers of all types, the strength of your willpower is perhaps the most important differentiating characteristic for those who accomplish “great things” versus those who don’t.  My interaction with “super-achievers” has been even more intensive lately as I write and prepare to release my latest book, called 10 Steps to Greatness:  The Super-achievers’ Little Handbook.  This more intense interaction with those who’ve achieved “greatness” has convinced me more than ever that having an indomitable will to succeed is the single most important characteristic of those who most everyone would agree have achieved exceptional levels of accomplishment in their fields of endeavor.

Ok, so what does all this have to do with the importance of setting goals?  Well, today I experienced first-hand something that I’ve experienced many times before without a similar “a-ha moment”:  a simple goal can keep you on track and keep you from quitting, no matter how much you might like to do so.  Let me explain the circumstances of this “a-ha moment” and how it drove home the importance of short-term goal setting as it relates to the all-important matter of willpower.

Today I was going for a standard weekend workout, which consists of 2.5 hours of aerobic exercise of varying levels of intensity.  In this case, the workout was a combination of running and cycling.  As is customary these days, I do the running first, and then finish off the workout with cycling.  The difference today, which hit me in the face as I walked out the door to get started, was that although it was just 6:15am, the heat index was through the roof.  Although it was pretty early and the sun had not yet come out, the humidity made it feel like being in a sauna on full blast – not an ideal environment for an intense workout.  We decided to give it a go anyway.  My wife wanted to do just the first half of the workout with me and we decided to do it at a quick pace.  So by the time we finished the first half, I was already relatively spent, but I decided to take an energy gel and another electrolyte pill and push on through the rest of the workout.

When I arrived at the one mile circuit for cycling, which is about four miles from our house, I knew I was going to be in for a tough hour and roughly fifteen minutes.  The sun had come up and it felt like a sauna with no roof and a strong sun shining in.  That was the first point where I would have liked to have quit and said, “I’ve done enough already; there’s no need to push it,” however we’re preparing for a couple of upcoming races and I knew if I could just push through it, it would be excellent preparation for those races, which will take at least 2.5 hours and may be in relatively high heat conditions as well.

Even though I wanted to “soldier on,” I was feeling pretty lousy, so I knew I needed something to keep me going and not throw in the towel.  That’s when I remembered one of the articles I’d written relatively recently about the Navy SEALs Pool Competency Test and how short-term goal setting could get you through pretty much anything that’s very uncomfortable and challenging.  So I decided to give it a try in this pressure cooker heat environment.  I calculated exactly how many miles I needed to do to reach my overall goal for the day, taking into account that I’d also ride another four miles to get back to my house.  The calculation led me to realize that my cycle computer would read 202 when I reached that number.

So, from then on, whatever negative thoughts came into my mind were quickly replaced simply with “202”.  I would not allow myself a single negative thought.  Into my mind would pop, “man, this is ridiculous,” only quickly to be replaced with “202”.  Then would come up “who would ride this many miles in a sauna without a roof,” which would be quickly erased by “202”.  And so on.  I’m not sure how many times this happened, but it was a bunch.  And you know what?  It worked.  Before I knew it, I looked down at the cycle computer and it read 200.3.  I was virtually ecstatic.  I knew it was just a couple more miles and I could head for home.  Without this approach I’m pretty sure that all the suffering I was feeling would have caused me to head for home much earlier.  [Note:  I was sure that I had everything covered from a hydration and general fitness perspective, so I wasn’t worried about serious physical problems – this is obviously extremely important any time you’re “pushing the envelope,” especially in high heat conditions.]

Why did this work?  As I was going through this experience and coming up to my “a-ha moment,” and when I wasn’t saying “202” in my mind, I was asking myself that question:  “why does setting simple short-term goals and focusing on them help you get through tough challenges?”  At some point, it occurred to me that the effectiveness of this approach is strongly linked to the importance of willpower in success and extraordinary achievement.  The human will can be absolutely incredible, but we need a way and a reason to access it.  We need a simple and powerful “why” to keep pushing on through exceptionally difficult circumstances.  In the immediate- and short-term, that “why” is a simple, clear, easily understood goal (or goals).  For me in this case, it was “202,” which I knew would get me to my overall mileage goal for the day.  This only explains the immediate- and short-term, of course, but we must get through them before we can get to the medium- and long-term.  The graphic below shows how this “virtuous cycle” works.

Goal Setting - Willpower - Virtuous Cycle

So, how can you put this goal setting “virtuous cycle” approach to work for you?  First, you must decide what, if anything, that you are trying to accomplish at this moment would make it worth “turning yourself inside out” (to use an expression the Tour de France commentators love) in order to achieve.  Is there anything you care that much about achieving to put in a “superhuman” effort?  We’re not just talking about a sports or exercise setting here.  The reality is, no matter what your field of endeavor, if you want to accomplish extraordinary things, you will need to put in a “superhuman” effort sometimes, if not very often.  Second, you need to decide what you are willing to do to achieve something extraordinary.  How far are you willing to push yourself?  Third, you need to do it!

The key is that you know what “it” is.  Do you know what it takes to be great in your field of endeavor?  If not, find out.  Once you have discovered what it takes to achieve greatness in your endeavor, formulate your goals accordingly.  You’ll need short-term, medium-term and long-term goals to keep you on track, focused and interested.  Make sure the short-terms goals build toward the medium-term goals and that the medium-term goals put you on track to accomplish the long-term goals.  Once you’ve done this, make an agreement with yourself regarding what “price” (pain, sacrifice of other activities, etc.) you are willing to pay, then, to quote a famous shoe company, “Just Do It”.

Once you’ve used this technique of having simple, clear short-term goals to access your willpower and get through difficult challenges, let me know how it goes.  For my clients, we’ll be talking in any case.  For others, shoot me an email or, if you have comments to share with everyone, please leave them below.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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Jul 272011
 
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How To Sell A Business

How To Sell A Business:  The Reality

How to sell a business is not typically the first concern on the mind of company founders and senior managers.  Instead, they are confronted with a number of strategic and operational decisions each day that impact their businesses, the sum of which in the long-run, will have a significant impact on their lives.  Over time, a privately-held business is likely to become the largest financial asset of its owner.  Given the tremendous financial, labor, and time investments that owners make in their businesses, it is critical that the owner(s) take time to develop a strategy for achieving personal liquidity through the merger, sale, or recapitalization of their company.  This is an issue that many privately-held business owners are reluctant to discuss, or even consider at first, due to their emotional attachment to the businesses they have struggled to build over the years.  Many find it difficult to imagine not owning and running their company and initially refuse to recognize the importance of planning ahead for a potential liquidity event.  However, this issue typically becomes a major concern for privately-held business owners, particularly those who are nearing retirement age.

 

How To Sell A Business: The Process

The process of selling a privately-held business is generally more complex than most owners initially imagine.  Just as Rome was not built in a day, the merger or acquisition of a privately-held business is not accomplished overnight and requires significant efforts by the owners, their tax and financial planning, accounting, legal and transaction advisors.  To be successful in achieving maximum personal liquidity through a transaction, privately-held business owners should be cognizant of the many dynamic stages and issues associated with selling their business.  These stages and issues include the following:

  • Determining the Need to Sell the Company—There exists a wide range of reasons that a privately-held business owner may have for selling the company, including retirement, family succession issues, illness, unforeseen circumstances, loss of interest, financial distress, other investment options, etc.  Whatever may motivate the owner(s) of a privately-held business to pursue a sale of their company, the results of such a transaction generally include increased personal liquidity and diversification of their portfolio, resulting in a reduction in the overall risk of their personal portfolio.
  • Preparing the Company for the Sale—Once the decision is made to sell the business, the owners of a privately-held business typically are unprepared for the process of selling their company; they usually are not sure where to start.  In order to adequately prepare the privately-held company for sale, the owners typically must retain a competent transaction advisor to assist in the navigation of the process from start to finish.  In addition, the owners must ensure that preliminary legal work is in order and that the company’s most recent annual and interim financial statements are prepared (audited, if available) by their accounting firm.  In preparing the company for the sale, the owners must also adopt the appropriate mindset that provides a level of commitment to the process that is conducive to a successful and optimal transaction.
  • Understanding the Value of the Company—Most owners of privately-held businesses have preconceived notions regarding the value of their businesses.  The valuation process is crucial in estimating the fair market value of a privately-held company and in establishing a reasonable price expectation for the owners of the company and its team of advisors.  The valuation process involves extensive analysis of specific company, industry and macroeconomic factors that impact the value estimate.  Under the income, market, and asset approaches to valuing a privately-held business, there are numerous methods for estimating the fair market value.  Once the fair market value has been estimated, the transaction advisor then attempts to secure the highest price during negotiations in order to maximize value for the owners of the business.
  • Marketing the Company to Various Types of Potential Buyers—Once the valuation of the company is complete, the privately-held company’s transaction advisors typically begin marketing the company to potential acquirers via a non-confidential (and anonymized) one- or two-page summary of the company.  This summary is sent to potential buyers via fax or email.  Those potential acquirers who express an interest are then required to execute a Non-Disclosure Agreement (NDA).  Once the NDA is satisfactorily executed, the prospective buyer receives the confidential selling memorandum – an in-depth overview of the company and its merits, which has been prepared by the transaction advisor.  The transaction advisor utilizes a variety of resources to identify and contact potential buyers who are categorized into three broad categories—financial, strategic, and individual buyers.  Once the prospective acquirer receives and reviews the confidential selling memorandum, if there is further interest, the transaction advisor has more in-depth communication with them, to further qualify their level of seriousness and ability to do a deal.  Should all indications be positive, the transaction advisor coordinates a site visit(s) with the owners, respecting the confidentiality of the situation and their desire to spend time only with ‘qualified’ and genuinely interested potential acquirers.
  • Preliminary Due Diligence—Prior to providing a Letter of Intent (LOI), a potential acquirer (already under NDA), typically will want to perform “preliminary due diligence”, which is a “lite” form of the very extensive due diligence that most companies will perform after the execution of an LOI.  Preliminary due diligence is a basic analysis of the company, its financial position, operations, etc., to whatever extent permitted by time and the willingness of the owners to divulge information at this stage.  Typical basic issues considered/analyzed during preliminary due diligence include:
      • Capitalization table, detailing current ownership of company;
      • Most current three to five years of GAAP financial statements, audited if possible, as well as up-to-date interim statements;
      • Revenue breakdown and profitability by region, product line, customer, etc. to the extent tracked and based on management’s willingness to divulge – this can of course be a very sensitive area;
      • Any industry and market analysis seller is willing/able to make available, in order to help the prospective buyer understand the potential for growth and profitability of the business;
      • Discussions with senior management who are privy to the idea of a potential sale – conversations may be brief or extensive, based on the wishes/willingness of the owners;
      • Others as appropriate.
  • Letter of Intent (LOI)—After the site visit(s), the transaction advisor continues discussions with the prospective buyer(s) and facilitates further conversations with the owners and answers to questions, as reasonable and appropriate.  Should the potential buyer wish to proceed further, it is typically at this stage that they are expected to provide an LOI, explicitly stating their intent to proceed toward a possible transaction, and under what basic terms.  LOI’s typically are non-binding, but may include a “no-shop” clause, which does not allow the owners to “shop” for other buyers during a specific period of time.  It is therefore important that the owners consider the basics of the LOI to be reasonable before counter-signing it, particularly if there is a “no-shop” clause, as they will be effectively locked up from proceeding further with other prospective acquirers.  The typical LOI will address some or all of the following issues:
      • Stock purchase or asset purchase and amount/form of consideration;
      • Employment and other agreements that will need to be executed before closing;
      • Expected closing date;
      • Refundable deposit or “good faith money”;
      • Agreement of seller to grant full access to company records, data, and employees for due diligence process;
      • No material changes in operation of business;
      • No-shop provision;
      • Finder’s fee or advisors fee, if any – specifies which party will be responsible to pay;
      • Confidentiality – further iterates expectations for confidentiality as the process proceeds;
      • Break-up fee, if any, should the deal not be consummated;
      • Others as necessary.
  • Negotiating the Deal—It is rare that the owners of a closely-held business will accept the first offer and the conditions set forth in the initial LOI.  Rather, this is a starting point for further negotiations centered on the price, terms, closing date, etc.  The transaction advisor will discuss the initial LOI with the client and make recommendations regarding the future course of action based on the specifics set forth in the LOI.  Typically, at this point, the transaction advisor will discuss with the client their expectations and desire to continue discussions with the potential acquirer based on the terms and conditions in the LOI.  The range of the total expected consideration will largely be established now, with the lower limit the amount offered in the LOI and the upper bound being the owners’ previously established expectations.

It is not unusual for the owners to become very emotionally charged once the initial LOI is received and has been reviewed.  After all, the entire process of selling the business is very emotional for the owners.  Adding an offer that the owners may feel is insulting or at least, inadequate, only compounds the emotional aspect of this process.  Therefore, a seasoned transaction advisor will help the client understand that the price and terms of the LOI are not meant as an insult and that typically, this is merely a part of the strategy of the acquirer.  It is unlikely, after all, that the terms and conditions set forth in the initial LOI represent the absolute best offer of the acquirer.

Based on the discussions with the client, the transaction advisor may suggest that a counter-offer be presented to the potential acquirer.  If the owners are in agreement, the transaction advisor, as intermediary, delivers the next iteration of the potential transaction to the issuer of the LOI.  This process typically continues back and forth until the potential acquirer either agrees to revised terms and issues a new LOI or withdraws from the negotiations.  This phase of the process is one of the most crucial and is where the transaction advisor utilizes skill and judgment in facilitating this iterative process to a conclusion that serves the best interests of the client.

  • Due Diligence—Once an agreement has been reached, the acquirer then issues a revised LOI delineating the new terms.  At this point, recall, the potential acquirer has had limited access to the target company’s financial information, operations, legal documents, management, etc.  The due diligence phase is where the acquirer delves deeply into the financial information of the company and other aspects to ensure that the information presented thus far correctly and fairly represents the actual financial, competitive, and operational position of the company.  After all, the acquirer’s decision to issue the LOI has been based only on the information provided by the owners and transaction advisor.  To consummate a deal without further verification would be irresponsible on the part of the acquirer.

During the due diligence phase, it is typical to have an audit performed to ensure the financial position is accurately represented by the company’s financial statements.  In addition, the acquirer will likely examine the corporate legal documents to ensure there are no restrictions or irregularities.  Only if the acquirer determines that the company and all relevant information can withstand the intense scrutiny under due diligence will the acquisition process proceed.  In this phase, the transaction advisor remains as the intermediary in coordinating access to information and overseeing the collection and delivery of the requested data in a timely manner.  The transaction advisor plays a key role in attempting to keep the process moving forward at a reasonable pace.

  • Purchase Agreement—Once the acquirer has completed the due diligence phase, they will usually provide a purchase agreement (assuming the target company withstands due diligence).  The purchase agreement incorporates the terms and conditions provided in the previous LOI with any changes or modifications stemming from matters arising in due diligence.  The purchase agreement is divided into two main sections—structuring the deal and representations & warranties.  Structuring the deal addresses issues such as total consideration to be paid for the company, including cash, shares, debt assumption, earnouts or consulting agreements, whether the deal will be structured as an asset sale or a stock sale, timing of any compensation payments, real estate issues including any purchases, leases assumed or leasebacks, and other legal matters related to structuring the deal.  The representations and warranties outline the specific guarantees that the owners of the closely-held company make regarding the financials, operations, products, services, and business conditions.  The section also details the specific ramifications the acquirer has in the event that a representation is inaccurate.

The transaction advisor in this phase will typically review the purchase agreement and consult with the client’s accountants and attorneys to ensure that the purchase agreement is structured in accordance with the interests of the client.  Any recommended changes are conveyed to the acquirer by the transaction advisor and the client’s attorney.  Once the final purchase agreement has met the satisfaction of all parties, the final closing date is scheduled for the signing of the appropriate documents and disbursement of the necessary funds.

  •  Post-closing Issues—Once the final purchase has been signed, signifying the final consummation of the deal in a process that may have taken a few months to as long as two years, the owners of the privately-held business may confront many post-closing issues.  A good transaction advisor will maintain contact with the client even after the closing and their fee has been paid in order to be true to the relationship that has been fostered throughout the transaction process.  The transaction advisor will typically remain available to answer any questions as the owners execute their post-acquisition financial management plans with their tax, legal, accounting and investment advisors.  The transaction advisor also remains available as a confidant as some (very normal) psychological issues arise from the clients finding themselves with a new or changed lifestyle.

The transaction process is a complex and often difficult progression of clearly-defined events that seek to ultimately enable the owners of the privately-held company to achieve personal liquidity.  The process may take as little as a few months, up to several years from start to finish, depending on the size of the companies involved, the acquirer’s desire to consummate the transaction in a particular timeframe, obstacles arising from negotiating problems or differences, and the extent of the owners’ availability and cooperation in seeing the process through from beginning to end.  A typical timeframe for the transaction process is illustrated in the following chart.

Conclusion

The process of selling a company via a merger or acquisition is often more complex than business owners realize.  From the decision to sell the company to closing and transition, the path is often fraught with potential pitfalls that may derail the deal or create unnecessary and unwanted disruptions, which only serve to place additional stress on the company’s owners.  From the discussion above, the privately-held business owner should recognize the need for a strong team of advisors in order to successfully achieve the desired results throughout the merger or acquisition.  As such, privately-held business owners should carefully select qualified, competent advisors who will guide them through the difficult process of selling the company.

Note:  The article was written by Paul Morin and Robert Clinger and was originally published on www.HighlandGlobal.com.

I look forward to your comments and questions.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com

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Jul 242011
 
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How To Start A Business

Even though these days I often deal with entrepreneurs and senior-level managers who are much further along in their entrepreneurial careers, I still frequently get asked how to start a business.  Amazingly it’s often these further along and usually successful entrepreneurs or larger corporations who are asking me how to start a business correctly!  How can this be?!  Didn’t I just get done saying that they’re experienced and usually quite successful already?

As it turns out, many folks who have been in entrepreneurship their whole lives and have attained some significant success have never really thought through how to start a business.  Instead, they have subscribed to the “just do it” mentality.  In my experience, while this approach can frequently lead to success, it a can much more often lead to failure.  Granted, in any large group of people just “throwing it against the wall and seeing if it sticks,” there will be successes, some of them notable.  That said, just because there some successes with that approach doesn’t mean it is the way to go.

In my experience and observation, the best answer to “how to start a business” is carefully and deliberately, but with a great deal of confidence and belief.  Just because you take a meticulous, well-thought-out approach does not mean that you’re not an entrepreneur!  In fact, the best entrepreneurs do just that.  They take a measured, deliberate approach to assessing and starting up each business they get into.  They are willing to take risks, but they greatly prefer to take calculated risks and they are willing to constantly update their approach based on the ongoing feedback they receive from their target market(s).

These days, when I’m asked how to start a business, I provide the following steps.  While it is not intended to be an exhaustive list of what needs to be done, and the order of the steps may change slightly depending on the particular situation, I have used and seen this approach used successfully many times.  As one of my mentors told me early in my career, “you want have a powerful plan that can change”.  You must be willing to adapt to changing circumstances and feedback.  You must not be rigid in your behavior.  You must believe that you can succeed, but you must be flexible.

Here are the “how to start a business” steps.  Posts elsewhere on this blog go into greater detail on most, if not all of the steps.

1.)    Understand profitability and break-even analysis — too many people go into business not understanding these basic concepts.

2.)    Understand upside goals and potential — what kind of business are you trying to create? Does the business you are starting right now match your objectives?

3.)    Screen and sort your ideas/opportunities using criteria that make sense.

4.)    Understand the psychology of markets and niches.

5.)    Develop products and/or services that meet a true market need.

6.)    Understand and select appropriate marketing strategies.

7.)    Deploy appropriate marketing tactics.

8.)    Create a full, formal business plan.

9.)    Strive for operational excellence.

10.)  Replace yourself/sell your “baby”.

It should also be noted that you may choose to raise capital at any point along this process.  However, I would suggest that you should not seek to raise capital from angel investors or venture capitalists until you’ve at least reached Step 5, where you are developing products or services based on a true market need.  Depending on how well you know the angel investors and/or venture capitalists, and depending on how much capital you are seeking to raise, you will also likely need to have a formal business plan completed before it makes sense to approach them.  As discussed elsewhere, angel investment and venture capital don’t make sense for a large percentage of start-ups, so before investing a great deal of time in approaching them, be sure you have a business with characteristics that make sense for that type of equity investor.

I look forward to your questions and comments.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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