Journey of a Serial Entrepreneur

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How to get from where you are to where you want to be

The Gym

I recently started going back to a gym after a long break. Why is it that some of us get these spurts of energy to go to the gym which wears off soon enough after that initial boost of energy and enthusiasm? This is not an unusual trend for the gym, you set yourself enthusiastic new year resolutions to get into shape and 3 months down the road you quit for some reason or other. I did some research on this and found the following statistics:

  • “50 percent of all new health club members quit within the first six months of signing up, according to the International Health, Racquet & Sportsclub Association.” Source: Wayback Machine Archived Webpage
  • 1 in 5 club members use their club at least twice per week. 40% of those who join health clubs stop going soon afterwards. Source: Health and Fitness Website
  • In the article Time Management Facts and Figures by Dr. Donald E. Wetmore, it says that 90% of those who join health and fitness clubs will stop going within the first 90 days.
  • The first quarter of the calendar remains the key period in the year for new member acquisition for the club industry. Link

There is a lot of evidence supporting those claims. I then looked back at all the times I have joined a gym or a health club and actively used their services regularly for at least an year. The one common denominator for when I had gone regularly, was with a gym partner. It is strange but true how the dynamics change when you have someone to spot you, talk to and even benchmark yourself to.

This got me thinking of the posts I have written about teams and partnering, and how essential that aspect is, not only from a business point of view but overall in life. This applies to whether you are choosing a life partner, a gym buddy or a mentor to help you along the way. Through partnering we can achieve extraordinary goals and greatly impact productivity and morale. All you have to do is choose your partners carefully.

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Commitment Levels

“There’s a difference between interest and commitment. When you’re interested in doing something, you do it only when circumstance permit. When you’re committed to something, you accept no excuses, only results.” Anonymous

Once your business plan is done you should have outlined just how much work is going to be involved in it. This is when you need to get everyones commitment levels locked in. This is advice I would really liked to have got for a couple of my initial ventures. It is really easy for everyone to over commit initially when things are new, exciting and full of prospect. The fact of the matter is, that being part of a startup is hard. Trust me on that one.

There is no space for excuses, lethargy or complacency at a serious startup. If you require balance or clearly defined work, home and friends time, a startup may not be the best place for you. I think this point has to be driven in really well at the beginning, especially if you are going into business with friends and family. The reason for this is that later on it is much harder to tell someone off when they are not contributing enough or their productivity levels are not at par.

Maybe I am a little harder on this fact as compared to others. Having been in partnerships where your partners don’t perform is irritating. At the same time no clear commitments were set early on so you can’t say anything as well. Tackling this problem right from the start you should:

1. Set up areas a partner is responsible for.

2. Set clear goals and milestones to be achieved.

3. Set clear time requirements which need to be dedicated.

4. Set performance reviews on a regular basis to appraise performance.

When you have a system in place where everyone is accountable for certain actions you create an environment which is result oriented. If your division isn’t hitting its goals or milestones the responsibility falls on you.

Make sure everyone signs up for as much as they can handle. Don’t say stuff like I will handle Sales & Marketing for the company. Tell everyone what your plans are for the division, how they will executed, what is required from the rest of the team and how much time you are going to dedicate to the division. Now you have a clear and measurable commitment.

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Friends and Business

“A friendship founded on business is better than a business founded on friendship.” Anonymous

I firmly believe that partnering is one of the most effective ways of scaling your business. It is natural therefore to look within your network of friends/family and acquaintances to find potential partners. This is a strategy I have used, and even though a lot of people think that mixing friends/family and business is a bad idea, my experience has proved otherwise . Over the last couple of businesses I have been involved in, I have found that setting clear ground rules before starting a venture has been integral to their success.

One of the mistakes a lot of businesses are beset with when starting out with friends/family stem from there being so much left unsaid at the start. This is due to the fact that a mutual understanding is ‘thought’ to exist. The fact of the matter is, that unfortunately when money enters the picture a lot of these ‘understandings’ fall by the way side. Everyone wants to make money and start a successful business. The truth of the matter is that registering a business and starting one with no set plan is easy, making your business a success requires diligence, perseverance and structure.

Over the course of this week I will share with you certain ground rules to set when starting a venture or partnership. These rules have helped me tremendously in tempering expectations, getting ground realities realized and fostering an environment which promotes candour and honesty.

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5 steps to get better strategic partners

“If we are together nothing is impossible. If we are divided all will fail.” Winston Churchill

Strategic partnerships have been an integral part of all the business ventures I have been, and am part of. They can be made with suppliers, customers or distribution networks. What is essential when selecting them is to ensure that you put effort into the evaluation and selection process. Partnerships are very easy to get into but very sticky to get out of. The following 5 steps will allow you to minimize the number of unsuccessful partnerships considerably;

1. Value Creation: All partnerships begin with the premise that together they can create greater value for their clients, partners or suppliers. The impact of the value has a magnified effect which makes the companies involved stronger and more competitive in todays cut throat market place. To learn more about how to identify ways in value creation please click here.

2. Common Vision: Identifying a common vision requires you to answer three questions, “Why are we wanting to embark on this partnership?”, “What do we hope to achieve through the partnership?” and “What changes need to be made to the current business models to execute this venture?” Once you have got detailed answers to these question you can construct a concise and specific vision statement. To learn the answers to these questions please click here.

3. Common Trust: To grow, any partnership requires you to establish a strong level of trust between those involved. This requires you to be honest, open and reliable when dealing with your partners. Trust needs to be earned and once you have, it can be leveraged to become a very strong competitive advantage. To learn more please click here.

4. Common Value Systems: These are integral in creating long term partnerships. They provide a common thread which both sides can relate to and work towards. Finding out about a partners value system requires you to dedicate time and resources towards researching it diligently , this effort is worth every cent. To learn more about value systems please click here.

5. Clear Contracts: Contracts are a critical component in any business deal. It is the document which binds two or more parties to an agreement they have reached. these contracts have to be written clearly, concisely and in an unambiguous manner. To learn more about writing effective contracts please click here.

True partnership is a two sided relationship where both companies strive to create value rather than making a quick buck. It is a strategy which has a long term impact on the bottom line rather than a quick fix. To make them work requires hard work and a mind set which is very different from the traditional “what can I get out of this partnership?” view. Choose your partners carefully and build visions together on how you are going to help each other reach your goals.

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Clear Contracts

“A verbal contract isn’t worth the paper it’s written on.” Samuel Goldwyn

Contracts are a critical component in any business deal. It is the document which binds two or more parties to an agreement they have reached. In my first couple of startups we didn’t pay too much attention to the detail which goes into contract writing and suffered as a consequence. Ever since, I have always had a legal counsel advise the companies I work with on how the contract should be drafted. In essence the pattern I have seen is, that the most effective contracts are those which state clearly and concisely what has been agreed upon by both parties. If any level of ambiguity is left in this equation it could have serious ramifications in the future.

The question that arises is that since legal counsel is expensive, how is a startup supposed to pay for it on a limited budget? You should look into your network of friends and see whether anyone is studying or practicing company law and can help you out. If not then  look at the internet to find reliable sources where you can buy some ready made templates for specific deals. This website helped me when I was drafting  agreements and covered the things that need to be looked out for when writing contracts.

Whichever method you choose make sure that you research it well before signing any piece of paper. Signing is the easy part, it gets a lot more complicated when you want to exit the contract in a clean and quick fashion. In the near future I will have a couple of legal guests writers contribute some articles to help you out in writing  clear, concise and unambiguous contracts.

 

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Common Value Systems

 

Common Value Systems

Value systems are a key metric which should be carefully evaluated when selecting a strategic partner. These systems are not always clearly displayed or disclosed by either party. When talking about the core value systems of a company I do not mean the superficial coating. They are those values which are key drivers involved in decision making, product development, quality and customer service.

When evaluating a potential partner you first have to assess whether or not they have a win-win attitude. This is a critical requirement, without it the partnership is destined to be short lived or will not reach its potential. In my experience this is a mindset which is not present in a lot of organizations. They still use the traditional methodology of thinking which is to maximize their gain in any potential deal. The next time you are evaluating a potential strategic partner think win-win and see how a mutually beneficial solution can be found.

Secondly a partners view of product quality and cost is an important aspect to take into account. If you are a high quality producer and you are thinking about partnering with a low cost distributor who has national presence you will probably not be able to provide a win-win situation to your distributor, as the price of your products will be too high. The reverse scenario is where a high cost distributor will not want to distribute low cost products. Other key aspects such as aesthetics, customer service and human capital development should be some of the other indicators to be looked into before making a decision.

Common value systems are integral in creating long term partnerships. They provide a common thread which both sides can relate to and work towards. Finding out about a partners value system requires you to research diligently and needs you to dedicate time and resources towards it , however the effort is worth every cent.

 

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Trust

“To be successful, you have to be able to relate to people; they have to be satisfied with your personality to be able to do business with you and to build a relationship with mutual trust.” George Ross

Trust is the foundation for any successful partnership. Whenever we begin a relationship with a vendor, client or network partner, establishing trust must always be kept at the fore front. At Innovo we operate in a relatively sensitive area of human capital management for our clients. We do not begin pitching our services and products from the word go, understanding our clients needs is our primary concern. Once we establish what those needs are we evaluate if we can successfully provide them.

Taking on work which you do not have the expertise for delivering is a guaranteed way of eliminating any trust which you may have worked hard in establishing. Being a trusted and reliable partner requires you to work in the best interest of your client. That could mean referring your clients to a competitor if you believe they can do a better job than you can. These are the things which will be remembered. Once trust has been established it becomes your largest and strongest competitive advantage. Trust can be leveraged to gain valuable insight into your clients needs and processes. This in turn will help you to serve them better and build an even stronger relationship.

If there are three words which sum up developing trust they would be; honesty, reliability and openness. When evaluating your relationship with your partners or clients use that as indicators to gauge just how strong your partnership actually is.

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Common Vision

“You need to surround yourself with quality human beings that are intelligent and have a vision.” Vince McMahon

When two companies come together to bring about greater value they need to be guided with a purpose. This purpose outlines exactly why it is that they are going into this partnership, what they hope to achieve through it and what changes will have to be made to their current business model if they were to embark on this venture. A common vision embodies all these factors.

To reach this common vision requires each of the partners to answer the three questions outlined above. Firstly “why are we wanting to embark on this partnership?”. If both sides have done their preliminary research and believe that they could add substantial value together, that becomes a strong case as to why they should partner. At this stage you need to put in some serious thought about common value systems and how integration would have an impact on operations in the future. Once both sides have agreed that there is value in them partnering they can move onto the next question.

This is ,”What do they hope to achieve through this partnership?”. This is the stage where both sides have to develop key performance indicators which would measure the effectiveness of this partnership. For example by partnering they would be able to reduce their cost of market by 10% annually which could be re-invested into R&D. In other situations one partner could leverage off the others distribution network to reduce inventory by 2x. The important aspect when developing such a proposition will be to see that the value created is not channeled to one beneficiary only. It needs to be mutually beneficial to foster trust and future growth. Once this question is answered you can move to the last question.

This is, “What changes need to be made to their current business models to execute this venture?”. At this stage we need to balance the cost of this partnership and weigh it against the benefits. This is a tricky aspect since with partnerships there are a host of intangible factors such as staff integration, communication barriers or even different value systems which may affect the partnership. Either way the two partners must do their best to evaluate the costs so as to arrive at a realistic figure.

Once we have all the key factors, a common vision for the partnership can be developed. This will help guide the partnership and provide it with KPI’s and costs which can be constantly measured and kept track of. Partnering is a commitment and one must ensure to only make those commitments which are maintainable .

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Value Creation

“The true mission of a business is to create value. Any business muddled enough to believe that its real purpose is producing profit is probably not long for this world. Profit is absolutely essential, to be sure, but it is a downstream outcome of creating value, and so it functions very poorly as an objective in itself.” Frederick F. Reichheld

Partnering is all about creating value. Organizations have begun to recognize the fact that by strategically partnering with companies who complement their core focus results in achieving greater sustainable competitive advantages and higher levels of productivity. For example Intel’s partnership with Microsoft shows how two very different firms strategically partnered together to push each other’s products and services more effectively.

When two companies make a conscious decision to adjust their strategies to complement the partnership that is when true value is created.Both companies must have the mindset when they go into this agreement it should be with a win-win attitude. If only one partner is adding most of the value the imbalance will result in a rapid deterioration in the relationship. When negotiating successful partnerships analyze how both companies can add substantial value to each other. You have to enter the agreement with an objective of increasing the overall market size that you are operating in. In this way both you and your partner will get a large piece of the pie.

Partnerships are all about focusing on your core competencies and leveraging off your partners competencies to make your product or service offering more attractive. We have to constantly strive to achieve a level of relationship where tasks will not be duplicated in either organization and the focus will be on creating new opportunities and value for your customers or clients.Next time you are looking at adding a strategic, start with a win-win point of view. Think a lot less traditionally and focus on the bigger picture to achieve maximum impact.

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Strategic Partnerships

“Our success has really been based on partnerships from the very beginning.” Bill Gates

The world continues to become smaller as time goes by. As competition increases and products and services become commoditized, competing on price alone is a recipe for disaster. With the rampant use of the internet making an abundance of information available to customers and clients, competitive advantages become critical to a firms success. That is where strategic partnerships come into place, they enable you to create multiple barriers of entries which could be both, tangible and intangible. Usually they are developed outside your area of expertise to complement your current offerings.

However over the last 5 years of doing business I have discovered that creating these strategic partnerships succesfully is not an easy task. Having entered into such agreements without careful due diligence in the past has resulted in a fair share of frustration, brand and monetary loss. It has however now taught me some key lessons which I will share with you over the course of the next week. The process will show how to correctly identify, align and commence a successful strategic partnership.

A key factor to be kept in mind before entering into any such partnership should be, to look at the larger picture for your company or startup. Partnerships help you to scale your business effectively and efficiently if done correctly. They allow you to focus on your core expertise while you develop complementary assets around your service to give it competitive advantages. By not leveraging on them in this day and age is a mistake a lot of startup companies make. Keep your eyes peeled for any potential partners  in your segment or industry  and watch your business prosper.

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