Mentoring Entrepreneurs
Bill Warner Tuesday, June 09, 2009
Most of our communities, especially large metropolitan areas, have hundreds of seasoned business executives. It is also true that the heart of our economy is the small business owner. If you look at the statistics concerning annual business failure you will find that almost as many businesses fail each year as are started. Why?
The cause of business failure
Of course the reason businesses fail is because they run out of money to operate. What led up to that final event is:
- Lack of understanding of the market segment being pursued
- Not clearly understanding who the buyer is and how to reach them
- Flawed marketing and sales programs
- Mismanagement of customer relationships
- Insufficient financing
- Mismanagement of cash flow
- Poor management decisions on business operations
Business mentors can solve this
I assert that if more experienced business professionals would devote a little bit of their time to mentoring emerging businesses run by inexperienced entrepreneurs, the business failure rate would considerably decline.
Imagine simply taking five hours a month to help an entrepreneur. Just by being their frequent advisor would quickly identify the potential causes of failure and keep the entrepreneur on track to success. Fewer businesses would fail as a result.
This is happening throughout America. More and more organizations are getting involved in providing business advisory services. See this article from entrepreneur.com for a further perspective.
As one of the business leaders in your community, take the opportunity to contribute to the success of others. You will feel great about it and you will be helping America’s business.
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Hedging Your Answers
Bill Warner Tuesday, May 26, 2009
I just read another interesting observation about using words that end in “ish.” These ish-words provide a way for you to hedge your commitments and bound your answers when you don’t really know.
This habit can hurt you badly
Consistently hedging your answers will create an image of you that will undermine your credibility:
- You appear less than honest
- You give the impression that you don’t know what you should know
- Your answers and commitments are not going to be understood
What will happen
Your management or board of directors will not appreciate this habit at all. You will end up getting more questions from them to narrow your answers to something specific. This takes time and energy and will frustrate them greatly. This habit can become so irksome that you could lose your job over it. If you find yourself getting endless questions following your answers, you better take a look at yourself first as the cause of it.
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Saying No The Right Way
Bill Warner Tuesday, May 26, 2009
I just saw an interesting blog on Seth Goden’s Blog about saying no. This is all easier said then done, but should be practiced by all leaders and managers.
How to say no
You certainly need to play it straight with people and not sugar coat all your answers that might hurt someone or waffle so that people don’t really understand where you stand. The secret is to turn “no’s” into “what is possible” answers. Instead of just saying no to a request, respond with:
- The conditions under which you will satisfy the request. This often explains why “no for now” is really the answer and indicates the conditions under which the answer will be yes.
- The things that you need in order to be able to say yes. This puts the ball back in the court of the asker who needs to then think about the broader picture.
- An explanation of the assumptions that are the basis for your answer as to when you will satisfy a request. This helps everyone understand the conditions for the answer being yes.
Add value in your answer
The opportunity you have in saying no the right way is transforming your answer into a collaborative problem solving conversation. All said and done, say no with professional firmness, but with a broader perspective than the asker often has. That adds value to all your relationships.
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The Role of the Company Founder
Bill Warner Thursday, May 07, 2009
With the economic downturn and unemployment rising, many more people than ever are thinking about starting a company. As a company founder, you should know what you are getting into. The business and personal behavior of a company’s founder will, at any time in the history of the company, determine whether the company will succeed or fail. Venture firms know that. Banks know that. Public grant associations know that. Attorney and accounting firms know that. Most well informed private investors know that. As a company matures, there are many transition points that require the founder to make key decisions:
- Selecting the founding team
- Picking advisors
- Funding the company
- Selecting the management team
- Deciding when to step aside or give up ownership
- Selling the company
Founder block
If the founder handles these decisions intelligently, the chances for success are much higher. If not, the company will experience a quick demise. I call this ailment “Founder Block.” Major roadblocks to success occur when:
- Founders pick incompatible founding team members who don’t share the vision and buy into the business proposition
- Inexperienced and irrelevant advisors are picked to assist with the business
- Founders display inappropriate business behavior that shakes investor confidence that the founder has the required maturity
- The founder does not relinquish control to the management team
- They don’t step aside when more qualified people are needed to run the company
- Founders balk when share ownership changes occur and when the company is going to be sold
At the start-up of the company
Let’s start at the very beginning of a company’s life. The founder has a vision and an idea for a company. The founder does the research and creates a business plan to flesh out the idea and determine if a viable business can be created. Depending on the type of business, the founder may need other people of different skills to join in the early formation of the company to complete the business plan and actually get the company started. This founding team has to be put together considering the following essential principles:
- Every founder has the passion for the vision and is willing to make incredible personal sacrifices to accomplish it
- Everyone has skin in the game, in both time and money
- They all agree on the business plan
- The founders create the culture of the company and have compatible business and personal values
- Everyone is an “A” player, and their skills are complementary and necessary to create the company
- They work well together
Business advisors
Every successful company has had solid business and technical advice from a small group of highly qualified and relevant advisors. A board of advisors can help a struggling founder avoid a lot of early pitfalls. Considerable thought is required to pick them, making sure the advisor team consists of:
- Relevant technical expertise within the company’s selected industries
- Business development experience and a broad array of contacts in the company’s market segment
- People with a broad range of experiences in business, finance and management
- People with complementary product or services experiences that can assist with determining alliance partners
The first business transition point
The founder’s first jolt of harsh reality occurs at the time the company is financed. Whether it is a personal obligation to a family member who provides funding, debt that has to be personally guaranteed to a commercial bank, a grant requiring research results, or the obligation to shareholders taking private equity, the founder owes somebody something from the beginning. Successful founders will handle this set of transactions by:
- Treating the financing partners with business respect
- Managing the money with appropriate professional judgment
- Keeping them informed of progress
- Visibly, and with thoughtful action, committing to the fulfillment of the obligation
Finding the right management team
If financing isn’t enough pressure, adding to that pressure is the selection of the management team. For the first time, the founders have to decide where they really belong in the company, based on their personal skills and abilities. The new members of the management team have to fill the gaps that the founders cannot fill. Quite often, the founders need an experienced CEO to run the company. Experienced executives need to be brought into to accomplish the first set of milestones whether they are product research, product development, marketing introduction, early sales or manufacturing operations. Therefore, management team selection is not a one-time event. It has to be done throughout the life of the company. This is a difficult task for founders, and should be facilitated by experienced business executives. The keys to making the right selections are:
- Accurately and honestly assessing the skills and abilities of the current team; thereby determining what additional executive skills that are needed
- Openly admitting where help is needed by leaving no problem without thorough consideration
- Crisply defining the roles and responsibilities for the new members of the team
- Rigorously and intelligently selecting the people to fill the positions
Business growth and maturity
As a business matures, many things can happen to cause a founder to change their involvement in the company. Typical examples of this are: realizing the founder is not contributing or is a disruptive force, the founder in not required for future success when the company’s business direction changes, additional funding dilutes the founder to a minority shareholder, personnel conflicts occur that require the founder to leave the business, or the company is put up for sale. These are difficult times for the founder and have to be dealt with from the point of view of what is best for the shareholders of the company. When personal issues creep into the discussions, these situations can become very debilitating and actually destroy the company in its tracks. To successfully pull through these issues:
- The founder has to put the needs of the business ahead of personal issues; it’s all about business
- As when the founder had great business advice when starting the company, listen to trusted business advisors through these issues as well
- Be a constructive participant in doing what has to be done, embracing the change and making the transition successful
- Continue to support the vision of the business and be role model for the entire team by leading the way for necessary change
Business exit
Dealing with the sale or merger of the company is equally as difficult, and the founder has to be deal with it in the same manner. The sale is a final departing point and represents the day the founder’s company reaches adulthood. Lots of questions arise about selling or not selling the business: the right price, who stays, who goes, and many more gut wrenching questions. Getting cold feet is the last thing you want to have happen on either side of the transaction. Before a founder even entertains a sale or merger they must:
- Know what they want in the transaction and what the “walk away” terms are
- Think through and accept the implications of the transaction once the deal is signed
- Negotiate in good faith and from a clearly communicated set of deal principles
- Again, lead the way to making the transition successful
Exhibit mature business behavior
All potential alliance partners of a company, whether they provide funding, development, marketing, sales or operations, will want to see the right business and personal behavior of the founder before they proceed. If a founder shows inappropriate behavior, the best of deals will be cut off very quickly. If the founder exhibits mature behavior, in the most difficult of business situations, the partnership will benefit and the company will be on a path to success.
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The Structured Business Plan Presentation
Bill Warner Wednesday, May 06, 2009
With so many entrepreneurs trying to get their businesses launched, I thought it would be a good idea to remind them of what it takes to successfully present their businesses.
Whether you are approaching venture investors or simply trying to convince someone of the attractiveness of your company, you need to have a well thought out story that presents your business in a compelling and exciting way. Nobody is going to invest in or join your company if you cannot effectively explain why they should be spending their time and money to participate in it. The key in communicating your business plan story is to explain enough that your audience wants to spend time with you to learn more of the details about your business. There is some fundamental content your presentation should have, starting with a clear description of the opportunity you are going after and ending with why an investor, potential partner or prospective employee should join you.
There are ten major areas you need to cover in order to effectively communicate the fundamentals of your business.
The Opportunity
Every good business is founded in a compelling need that is currently not being successfully filled. Describe this need and the way you will solve it (problem or opportunity). Some business people call this the “pain” that your buyer feels, that you will cure. This part of your story validates the demand for your solution.
The Solution
Briefly explain your product or service, focusing on how it satisfies the buyer’s need, describing it from the perspective of the buyer. Highlight the benefits and value that the solution brings the buyer. Don’t dwell on “feeds and speeds,” but express your solution in results oriented language that relates to the buyer’s need.
These first two fundamental areas will make or break the interest of your audience. At this point, you will have essentially revealed what business you are in. If your audience is on the edge of their chairs wanting to hear more, you have really grabbed their interest. If not, you will probably not get any traction.
The Market
Now that you have grabbed the audience’s interest, you can start talking about the business in a little more depth. Explain some of the important aspects of the market segment that you will target, including information which profiles the characteristics and market opportunity size.
Competition
Every business has competitors. Keep in mind that it may be the status quo that you are up against or an internal solution that has its own sponsors. Typically, there will be many well entrenched competitors who address the buyer’s need in various ways. You need to portray how you are going to win.
Summarize the key competitors by portraying their strengths and weaknesses, and explain what differentiation you have that will beat them.
Product or Service Description
Briefly describe the product or service your sales team will sell to the buyer. Describe its salient features and the benefits they bring to the buyer; highlighting those that differentiate you from your competitors and sprinkle with examples.
In concluding your description, summarize the barriers to entry. There is no need to give away the intellectual property farm, but you need to explain the results of your “secret sauce” and show not everybody can easily get into your business.
Marketing Plan
Take some time to concisely explain the value your product or service brings to the buyer. This is a prelude to your marketing plan, showing that you know how to clearly explain the benefits you bring to the buyer and can quantify its value. In effect, you are explaining “why the buyer will buy.”
The Marketing Plan is all about generating sales leads. Don’t get hung up in brand management issues, corporate communications and public relations. Get right to the point about how you are specifically going to find your buyers and deliver your marketing messages. Describe your revenue model. Most companies fail because they don’t have an effective way to reach the market and close sales.
Sales Plan
Explain your sales model and process; for example, direct, indirect, OEM. Describe your near term sales objectives and status, including product readiness. If possible, explain what pipeline of customer prospects, demonstrating that you are getting market traction. The more you can demonstrate this with key account situations and next customers to close, the stronger your story will be.
Management Team
It’s important to show that the company is in the hands of a great management team that can be trusted to take it forward. This may be the most important confidence builder in your presentation, based on their credibility and experience.
Financials
You need to provide a forecast of key financial results: revenue, gross profit, net profit, cash flow and position, and significant capital needs. Explain your current financial status and show when you will be profitable and cash flow positive. Highlight the timeline for major business milestones. Many people believe this to be crystal ball kind of stuff. However, the important thing you are demonstrating is that you have a clear view of the dynamics of how revenue and profit will be made.
Investor Summary
Structure your summary to your audience and what they need to hear. Most people will want to know that this business will succeed because it satisfies compelling needs within the market. If you are looking for financing, you will also need to include the appropriate information. And last, explain the potential benefits for the investor when you achieve your objectives.
Summary
By covering these ten fundamental areas, you will provide a complete and concise view of your business that most people will understand. By focusing on the most important aspects of your business, and clearly netting it out, you will maximize your chances of your audience being interested in taking the next step with you.
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Businesses Learn About Leadership and Teamwork
Bill Warner Sunday, October 19, 2008
I had the privilege of attending this month’s Business Clubs America meeting at Brier Creek Country Club. This is a premier networking event with members representing all business disciplines and industries.
The event featured a panel discussion lead by the famous sports commentator Billy Packer. On the panel was Leroy Walker, past president of the US Olympic Committee who talked about the importance of sports and how the lessons learned can guide your life. Steve Wojciechowski, former Duke basketball star and now assistant coach talked about how the Olympics can shape your view of business. I thought the most riveting panel member was Tommy Burleson, former NC State basketball player, Olympic basketball team player and NBA star.
As you might recall, Tommy was on the the 1972 Olympic basketball team that lost a very controversial final game to the Russians, after which the entire team refused to accept the silver medal. It was also the Olympic games that were ravaged by a dreadful terrorist attack on the Israeli team, in which Tommy had a very visible and death defying experience. In a heartful and tearful delivery, Tommy said, “It is not about the Olympics. It is not about the medals. It is not about winning or losing. It is about the team!” While holding back his tears, while we held back ours, Tommy stressed that teamwork is what leads to success and lasting relationships. Every business person in the room paid attention and was caught up in Tommy’s passion for his message and his caring for people of the world. He is an example to all Americans, not just business people, who want to have leadership and teamwork put into perspective. To learn more about Tommy, go to his website at www.tommyburleson.com
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CEO Coach - Building An Ethical Culture
Bill Warner Tuesday, September 23, 2008
A distinction that is sometimes misunderstood is the difference between compliance issues and ethical issues. Compliance programs deal with external issues that have internal implications on a company (i.e. compliance with the SEC, IRS, Sarbanes-Oxley, and the law). Ethics programs deal with internal issues that have external implications (i.e. company values and codes of personal and business conduct). A frequently unrecognized challenge for CEOs and business owners is to fully understand how they are the symbol and the source of the culture of their organizations.
CEOs Set the Example
Close scrutiny of a CEO’s personal conduct occurs every day by employees, customers and business partners. Ethical behavior by the company’s leadership will establish respectful business relationships and solidify employee loyalty. Unethical behavior will undermine the integrity of the company. If there is a difference between what a leader says and what a leader does, everyone will see it, and employees and business partners will emulate the bad behavior.
Whether it is simply through ethical behavior or by instituting a full blown ethics program, the company’s leadership must fully stand behind their actions. Establishing an ethical culture is a process, not an end, requiring the company’s leaders to demonstrate the highest standards of integrity and accountability.
Types of leaders
- Ethical leaders are committed to acting ethically and insist upon that from their organization and from their business partners. Not only are they demonstrably accountable for their actions, they are perceived that way as well. They foster a culture that emulates their own dedication to ethical behavior.
- Ethically neutral leaders are inherently committed to ethical behavior, but no one knows it. They are perceived as leaders who have done nothing ethically wrong, but their decision making process has no context of values or code of conduct.
- Unethical leaders believe that ethics is not relevant to the business world. They make pragmatic decisions, without concern for their ethical implications, which sometimes don’t stand up as ethical behavior under external scrutiny.
Foundation for ethical behavior
Executives must establish the ethical foundation for their companies, which will serve as the cultural underpinnings that guide their leadership. Ethical behavior is founded in:
- A set of values that spell out the way employees will relate to each other and the company will relate to its customers and business partners.
- A framework of principles for personal and business conduct that is unambiguous and integral to everyone’s behavior; so that unethical behavior is not an option.
- Selling ethics to others so that ethical behavior is fostered by exemplary conduct by the company’s leadership, where decisions and actions send a clear message of what is tolerated and what is not.
- Standing for what is right in everyday actions by rewarding positive ethical behavior and counseling others when a breach in ethical behavior occurs.
There’s no way around it. Ethical behavior cannot be delegated and unethical behavior cannot be tolerated. Leaders have to be conscious of what is right and what is wrong, and set the example for others by asserting their integrity and honesty. As their reputation grows, so will the respect and dedication of others.
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CEO Coach - Improving Communications
Bill Warner Monday, July 14, 2008
Getting your ideas across, helping your employees, and achieving your ambitions all come with effective communication. Even though you may already be a good communicator, everyone can improve on their current abilities and approaches to communications.
Network With Other Executives
One way to improve your communications skills is to take advantage of local business organizations. Many business communities have organizations like the Council for Entrepreneurial Development (CED) which is housed here in Research Triangle Park, North Carolina. The CED is a place where entrepreneurs can gather to share ideas and gain training on business related topics. Take advantage of CEO gatherings, industry networking events, business seminars and communications coaching opportunities.
Get Out and Meet People
Other ways to improve company communications include implementing an aggressive program of Managing By Walking Around (MBWA). CEOs can’t communicate if they are stuck in their offices. Get out and walk the halls and visit the cubes of ALL your employees. Ask questions about how the employees are doing, what they are doing and how they are going it. Be interested or at least act interested in your employees and the teams they work within.
Regular Employee Communications
Share information about the company freely. If the CEO does not share the information, the employees will make up their own information. This is the dreaded rumor mill. Share information in person in company meetings on a monthly or quarterly basis. Implement a company newsletter/newspaper/e-letter and encourage every department and team contribute.
Be Consistent
Be consistent in your communications. Many CEOs complain that they have set the company vision and shared it with the employees, but “everyone is going in different directions?” What they don’t realize is that each time they share the vision they state it slightly differently and the employees hear a different vision.
Be brief and only communicate the minimum required to get the message across. To elaborate and elaborate slightly differently each time just breeds confusion and lack of focus.
Focus on Improvement
The most effective way of improving communications is to assess your situation, identify and improve on your areas of weakness, and capitalize on your strengths. Where do you start? Ask your employees.
Make communications a daily drum beat. Communications effectiveness starts in the CEOs office, continues with MBWA, and ends in the CEOs office. You can even get a coach, who can impartially discuss your communications needs and strategies.
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CEO Coach - What’s Your Value Proposition
Bill Warner Monday, June 30, 2008
I attended a very enlightening meeting last week of an organization called Men of Significance. It is led, along with others, by Fate Thompson, the CEO of iAdvantage Software in Cary, NC.
They bring to life another aspect of business vision and value proposition. When thinking about these two subjects, most of us think of the obvious observations about market size, customer value, revenue growth, profitability, marketing messages and sales traction. But, we don’t often think about our own fulfillment. That is, what of your own needs have been fulfilled by your business vision and value proposition. Often, the need is really not money or fame. Searching deeply into your own purpose in life, you perhaps will find a more fundemental and significant need that drives you. Entrepreneurs and business executives start businesses for many reasons. When you discuss with them why they are taking this risk, you will often find a deeply seeded and thoughtful reason that really represents their view of their purpose in life. Men of Significance is all about helping business people find that deeper need and to guide them to their significance in life.
This organization adds another dimension to the way we should think about our role in a business endeavor. I invite you to go to their website at www.men-of-significance.org and learn about their organization and the many resources they have available.
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CEO Coach - Effective Communications
Bill Warner Wednesday, June 25, 2008
Over 80 percent of our waking life is spent either sending or receiving information. The ability to communicate effectively at work and in our personal lives is perhaps the most critical skill for everyone, especially the CEO. Poor communication leads to poor performance, yet it is common in the workplace. Luckily, communication skills can be improved and the more effective the communication, the better the overall performance and therefore the greater the level of business success.
Some CEOs don’t realize that communication is a two-way process. In addition to getting your own message across, it is also important to listen to and understand what others have to say, a technique known as “active listening.”
But an even more important communication skill that is often overlooked by CEOs was expressed best by Peter Drucker, “The most important thing in communications is to hear what isn’t being said.” Effective communication allows CEOs to use all the other skills they have to their fullest. The ability to motivate, delegate, organize, solve problems, and obtain information all rely on the ability to communicate effectively with others.
Effective Communications Brings Business Results
Evidence suggests that bad communication is probably the cause of most of the problems people encounter at work. It starts with an unclear company vision, gets worse because of ambiguous personal objectives, and is exacerbated by a company culture that evolves rather than being set by the clear communications of the chief executive. Jack Welch, the past CEO of GE said it best, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”
Effective communication can transform how well people work. Imagine an organization in which everyone is kept informed, knows exactly what to do, and has all the information necessary to do their job. The effective CEO fosters teamwork, empowers key employees with responsibility and authority, and communicates key information to the organization. These CEOs not only use effective communication, but they also gain employee buy-in to the vision and objectives, build employee confidence in the company and create respect for the management team.
Setting a culture of sharing knowledge is critical to business success. If, rather than keeping quiet, people shared their knowledge with others, and problems were solved using everyone’s knowledge, skill development of less experienced people would dramatically increase. It would also allow more delegation and facilitate problem solving. The CEO who operates this way creates cohesive teams and builds uniqueness of purpose
Think of the effect it would have on the performance of your organization if culture drove everyone to feel motivated and empowered.
