Journey of a Serial Entrepreneur

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

5 Steps to Navigate through Difficult Times

There is little difference in people, but that little difference makes a big difference. The little difference is attitude. The big difference is whether it is positive or negative. W. Clement Stone

The global economy these days is not in the best of shapes. There are endless stories circulating about how the world as we know it is about to come to an end. I was at a workshop last week and someone was talking about the alarming rate at which Chinese factories were closing down. An older gentlemen who had recently set up his first business turned to me and said “Doesn’t all of this affect you as an entrepreneur?”. I explained to him how the businesses I was involved would not be directly affected and in the end it was up to me to allow such news to affect me or not. Later on I decided to write a series about the question to articulate my thoughts on the matter. Listed below are five steps that every business owner should take to re-evaluate their business during these difficult times.

1. Reality Check: A reality check comprises of taking into account the performance of each one of your businesses major components. These include, sales & marketing, operations, human resources and finances. Each division needs be re-evaluated and adjustments need to be made to cater for the changed external environment. Adjustments can include adjusting your pricing models, laying off staff who are not performing, cutting back on unnecessary perks for executives etc. The primary objective of this exercise is to break each division down and build it back up to cater to the changes. To read the adjustments that need to be made to each division in detail please click here.

2. Communication Channels: Without clear channels of communication a business is in a constant state of flux. During turbulent times communication between management, employees and investors needs to be done at regular intervals. This is vital to diffuse the anxiety, frustration and stress that everyone may be feeling due to the current state of affairs. Mechanisms need to be developed to allow management to talk regularly to their star performers, group sessions need to carried out to get everyone on the same page and most importantly, senior management needs to continuously update the team. To learn more on improving your communication channels please click here.

3. Getting an Outsider’s Perspective: When things are difficult and we are busy putting off all the small fires in the business we tend to forget the bigger picture. An outsider in the form of a mentor or a business coach can assist in making sense of things when everything is in a mess. By leveraging on their experience and rolodex, a business has the capability to dodge pitfalls and possibly make some large sales. Also, having someone from the outside affirm the direction that has been selected and the tactics  being used can greatly enhance the confidence level of a team. To learn more about the benefits of an outsider’s opinion please click here.

4. Focus: As a small business we have to realize from the very beginning that we cannot provide every service under the sun. We need to find a niche where we can develop a competitive advantage that will differentiate us from the rest. During difficult times it is paramount that we focus our resources on our core product/services to achieve optimal results. During these times we cannot afford to experiment and lose sight of our regular clients. All efforts need to be geared to ensure that we provide as much value as possible to our existing clientele. To read more about the importance of focus please click here.

5. Positive Outlook: Our attitude towards the changes taking place externally or internally will decide how we navigate our way through these difficult times. We have a choice of either allowing the negativity to get to us and plague the workplace, or to put a positive spin on things. It is critical that the leader’s attitude be one of positivity and optimism. His/Her attitude is very important to the business as a whole and is used as a gauge by everyone else. To read more about the importance of having a positive outlook please click here.

The primary objective of the steps outlined above is to get everyone to think about their business and how the changes in the external or internal environment are going to affect them. I have relied heavily on these steps to help me navigate through difficult times. On the surface they appear to be relatively straightforward, however, I find that when we are down, our thought processes do not function optimally. Negativity seems to penetrate our thoughts and obvious answers elude us. I hope these steps will help you get started on your journey through the tough times ahead. I look forward to your comments and feedback.

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Positive Outlook

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Winston Churchill

When I selected this step I thought to myself, it is such a ‘cliche’ to tell people to remain positive during tough times. It is something which is repeated day in and day out and is, common sense. When things look bad hope for the best and things should get better. Sure, now tell that to someone who lost a fortune in the recent stock market crash or someone who was forced to shut his/her business down. When someone is hit with such a harsh blow and someone comes up to them and tells them everything is going to be alright, one can understand the frustration that he/she may feel with such a comment. Due to this reason I think it is necessary to provide enough space and time to digest what has happened. It is only through reflection that we can understand what went wrong and what we should avoid in the future. At this moment though, we have a choice to make. We could either remain depressed and frustrated or pick ourselves up and get back into the ring.

Along this journey, as entrepreneurs we are bound to fall many times. Some falls will hurt a lot more than others. However we need to learn to pick ourselves up and keep going. When you start your own business there is no longer just yourself to worry about. There will be partners, employees and possibly investors. Our attitude, whether we are the leader or someone who works at the business is very important. As a leader everyone looks up to you to determine how things are going. If we have a negative outlook our attitude would be a direct reflection of our mental state. This will in turn spread negativity through the organization and essentially bring it to a standstill. Therefore, it is essential that correct vibes are dessimated from the top down. It is also equally important to talk to your partners and employees during this difficult period and see if there is any way you could help them out if needed.

As mentioned in the first post of this series, our attitude towards the challenge will decide how we deal with it. Without a positive outlook our problems appear bigger than they are, things move a lot slower and people generally are a lot of less productive. Therefore it is critical that we ensure that our organization deals with the challenge in a healthy manner by talking things through, evaluating their current standing and then selecting the path to reach end goals.

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Communicating Effectively

“The difference between a smart man and a wise man is that a smart man knows what to say, a wise man knows whether or not to say it.” Frank M. Garafola

Will the business survive this downturn? Will I be able to hang on to my job?  Common questions on the mind of all business owners and employees alike in these difficult times. It is only natural to have an heightened level of anxiety during stressful periods. However, if we were to hold all of that stress within ourselves and not have an outlet to release it, things could become ugly very fast. People begin to talk, rumors about layoffs begin to circulate, productivity levels fall, anxiety increases and just about any call from senior management begins to imply that you are about to be fired. All of this can be dealt with reasonably through effective communication. Senior management needs to provide all stakeholders with a clear and candid message about the health of the business and where it is headed. If a culture of candor has not been created in the organization this can lead to uncomfortable and awkward situations. Such an environment needs to be created.

Listed below are some ways to communicate effectively during such periods:

1. One on one sessions: Ensure that you have individual sessions with key players on the team, assess their current needs and answer any concerns they may have. I have found this to be a most effective strategy as it gives the person concerned a platform and ability to speak his mind, at the same time enjoy privacy about his concerns.

2. Group information sessions: Individuals who are responsible for broader functions like operations, marketing, finance and human resources should give talks on how the current situation is likely to impact the business and strategies that can be used to get through this period. Once again this provides the ability for individuals to get an idea of the company from different angles and provides valuable feedback.

3. Layoffs: Firing people is never easy and is something I really do not like doing at all (I don’t think anyone really enjoys it). However, when it needs to be done it should be done swiftly and as soon as possible. Delaying the inevitable is not a smart strategy and only compounds the problem.

4. Updates from senior management: I usually send companies I am involved with updates after every quarter. When times get tough I increase the updates to a monthly or even bi-weekly schedule depending on the situation. This keeps everyone focused on what is important and on the same page.

Depending on the structure of your business I recommend doing whatever is necessary to ensure that everyone is able to bring their concerns forward. Whether it is through group meetings, online forums or one on one sessions. Mechanisms need to be in place so that communication is made feasible as easily as possible. Failure to do so will further deteriorate the business and one could end up losing a lot of key players.

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Focus

One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular. Anthony Robbins

During boom periods we tend to spread ourselves thinly over too many projects. This places a great strain on the business and dilutes the focus away from core business units. When times get tough I like to sit down with the team and map out priorities. What has been working? What has not been working? What do we want to achieve? When do we want to achieve it by? and, How will we achieve it? These are some questions I use to start up discussions and get everyone involved in the future direction of the business. As a small business we have to realize from the very get go that we cannot be everything to everyone. We have to pick our spots wisely and make sure we can cater to that one segment really well.

In the past I have made the mistake of drifting away from core business units one to many a time. It may be due to the fact that settling into a routine is something I do not like particularly. I need something different or exciting to be happening. Well after a couple of years as an entrepreneur I can attest to the fact if you keep changing the color of your business whenever you get ‘bored’ very little progress is going to be made. When you look at small businesses which succeed there is always a laser like focus on doing something much better than anyone else doing it. Also there is constant improvement on the product/service. One service which comes to mind is 37signals. They have a bunch of productivity apps which I highly recommend such as Highrise and Basecamp. 37signals has developed for itself a highly profitable niche. It keeps its products as simple as possible and has managed to amass a legion of fans.

Whether a business is experiencing a huge upturn or is stuck in a downward spiral, it is essential they maintain focus on what they set out to do. Select your niche carefully, build a product or deliver a service that brings value to your customers and do not lose sight of your end goals. The future of your business could depend on it.

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Get a Fresh Perspective

A coach is someone who can give correction without causing resentment. John Wooden

During difficult times we tend to get so caught up in our problems that we begin to lose sight of the bigger picture. We keep putting out multiple small fires without really finding their root cause. This leads to feelings of frustration and helplessness. Whenever I have been through times like these, I have found getting a fresh perspective from an outsider very helpful. This could come from a mentor, a business coach or even from individuals whom you hold in high regard in your network. They are able to provide you with advice and feedback on your current situation by looking at the bigger picture. What has always been most helpful for me during these sessions was the ability to put things back into perspective. We often tend to make situations appear a lot worse than they actually are.

Some major advantages you can enjoy with a business coach or mentor are:

1. Experience: Being relatively new to business, there are many things I am not fully aware of. My mentors have always been a source of wealth and information regarding difficult situations. This also has the ability to help you avoid making the costly errors they may have made in the past.

2. Accountability: A leader/coach helps creates an entity you have to be accountable to. They are there to push you on when you become complacent and quick to tell you what you may be doing right or wrong. This has often provided me  with the motivation to push myself harder and achieve results that I may not have without them.

3. Networking: Lastly if your mentor or coach is well connected they instantly become a channel for quality referrals which can boost revenues during slow times. I have repeatedly tapped into this network to generate leads and business when other avenues were not performing up to mark.

Where does one find these coaches and mentors? Well I did it through networking when I was at university, through events, workshops and seminars. I also researched individuals who had excelled in the same industry and dropped them an email. You will be surprised how many people are willing to help if we just care to ask nicely. Use platforms such as Linkedin and tools such as twitter to connect with individuals with more ease. Getting a coach or mentor’s perspective during difficult times may be just what your business needs.

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Getting a Reality Check

“We don’t see things as they are, we see them as we are.” Anaïs Nin

I hear it everyday from someone or the other. “Things are so bad right now, I don’t know how we are going to make it through next year.” One of my usual follow up questions is how the current downswing affected their business? There is a usually a pause for a while and then I get generic answers such as, “no one will buy our product/service”. All this talk of negativity has become viral to the extent that just about everyone is telling you how bad things have become without really rationalizing to themselves what this means to them and their respective businesses.  I do also come across individuals who are aware of the implication of the current downswing on their business, but have shut out the possibility of looking for ways to navigate themselves through this time.

Every business owner needs to give his/her business a reality check during these turbulent times as soon as possible. During the good times we become complacent, inefficiencies tend to set in, payroll gets inflated and expenses hit the roof. When all of a sudden things go from one extreme to the other, we begin to panic and do not know where to start from. There are four main business areas one needs to look into when assessing their business:

1. Customers & Sales: A common first reaction to the recession seems to be that suddenly their customers are going to stop buying. There needs to be a thorough analysis here. Start with understanding your customer’s needs and requirements. How has this changed due to the current climate? What can you offer them which suits their needs at the moment? It could be a longer payment plan, a scaled down version of your product/service or a completely new product line altogether. Other steps could include shifting more business online where you have lower overheads and increased margins. Steps need to be taken to get closer to your loyal customers and to do whatever it takes to ensure that their business remains with you.

2. Human Resources: Take a closer look at your current talent pool. Use performance benchmarks to analyze which employees are making the cut and those who are not. Low performers need to be weeded out and one needs to get closer to your stars. Your stars are critical to your future business success. Provide opportunities for your staff to train themselves with new skills. Adjust your recruitment practices and utilize tools such as linkedin to help identify talent in your network.

3. Operations: During boom times a business tends to add extra expenses. These may be in the form of increased perks, higher head counts and fancy offices. All these expenses need to be analyzed carefully and cuts need to be made wherever possible. Google which is well known for such perks, was forced to cut quite a few of them in the past couple of months due to financial pressure from shareholders. In other sectors, identify ways to move inventory faster. Also look into outsourcing non core functions which could be done at a fraction of the cost by a third party vendor.

4. Finances: I recently wrote a series on financial metrics. I would recommend paying attention to the ones mentioned in my series along with others which are reliable measures for your business. Redo your sales forecast and projections and set realistic goals in accordance to industry averages. Avoid any large outlays which do not justify a reasonable ROI. At times like this, cash is king, and one should do whatever one can to remain liquid. Increase credit terms with suppliers and vendors, ensure customers are preferably paying  a large amount upfront or soon after purchase. Subscription models are a good and stable form of revenue and should be looked into.

Most of the things I have written about above should be done on a regular basis whether we are in a boom or a bust cycle. However research shows, on average the pain of a loss is about twice as much as the joy of a gain. I know I can identify with that. In good times it is easy to take for granted all the things which are working out right. The true test of a business owner comes during nasty downturns like the ones we are in, and the ability to deal with them effectively.

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5 Steps to Writing a Marketing Plan

“As real estate is location location location, marketing is frequency frequency frequency.” Jay Conrad Levinson

Marketing is a critical component of any business strategy. Unfortunately, it is not often given the importance it deserves. This is due to a multitude of misconceptions. For starters, it is treated as a cost instead of an investment. Using this stance, it is often one of the first things to take a cost cut when controls becomes tighter. Secondly, younger organizations hardly ever commit to long term campaigns with consistency, primarily because of lack of instant results. Along with a few other misconceptions involving lack of expertise and experience, marketing is often left on the back burner. If you are a startup or an upcoming organization, please bring this component to the fore.  Listed below are five steps to get your marketing strategy in place, with a plan.

1. Situational Analysis: Prior to starting any marketing campaign, it is essential you do a thorough analysis on the industry you want to operate in. Facts such as market share, growth, trends and economic policies are critical pieces of information. Next, find out about the entrenched competitors. Who are they ? What is their market share ? How fast have they been growing? Find out about major distributors in the industry, discounting policies, strategic alliances and any other information that may help you get a better understanding of where you may want to take a stance. To read more about doing a thorough situational analysis please click here.

2. Marketing Objectives: Every plan needs to have specific goals and targets that it wants to achieve. Use this section to plan what your organization’s major marketing objectives need to be. This could include market share, customer acquisition, customer retention, website traffic or expected ROI on certain marketing tactics. These need to be thought through, and be strongly linked to major objectives set out in your business plan. To read more about setting marketing objectives please click here.

3. Marketing Strategies: This section is a major component of the entire plan. The marketing objectives outlined in the previous section, need to be translated into strategies now. This is best done by segmenting the market, and identifying areas that can be most effectively targeted.  Correctly positioning yourself in the market place, and ensuring a differentiation strategy to the entrenched competition will be an added help. To read more about correctly formulating marketing strategies please click here.

4. Marketing Tactics: After formulating broad strategies regarding marketing stance and positioning, we need to convert them into executable actions. These can be done effectively using the 4P’s structure, which helps identify executable strategies for the product, price, placement and promotion. Each section can have specific strategies to help market the product/service and reach designated targets. To read more about specific marketing tactics please click here.

5. Marketing Budgets & Controls: The last section requires the marketing budget to be structured. This budget must be strongly correlated to marketing objectives and be allocated accordingly. There needs to be a strong focus on controlling costs and creating feedback loops to ensure that relevant information is being gathered, to help identify the most effective tactics. This budget must be treated as an investment and should therefore be pegged to ROI figures. To read more about marketing budgets and controls please click here.

These five steps constitute a simple marketing plan. The entire objective of this exercise is to bring structure to marketing activities, as well as to have clearly defined goals for what we expect it to do for our organization. Marketing is not limited to super bowl ads or billboards in Time Square. It requires you to be creative with the limited budget allocated. It must be used in such a way that activities are continuously monitored and tracked, and at year end, provide a significant ROI. Just make sure you stick with the marketing plan and do not bail out halfway through. Two things your plan should incorporate, consistency and SMART objectives. Best of luck!

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Marketing Budgets and Controls

“An important and often overlooked aspect of operational excellence is regularly comparing actual costs to budget assumptions – not just the numbers in the plan. Understanding assumption deviations will help improve the accuracy of future forecasting.” Bob Prosen

Budgets are a necessary evil, they draw boundaries to ensure we know how far to go with the marketing plan. With entrepreneurs , the boundary perimeter is often small and limited. This calls for ingenious tactics to make full use of creative and deal making mindsets. The budget of a marketing plan is directly correlated with objectives set by the team. The progress towards those objectives, must be monitored constantly by using control measures. These measures act as feedback mechanisms to help identify each tactic’s input. There are a few things I like to keep in mind when in the midst of setting budget and control measures:

1. Are our objectives and marketing budget in sync?: For a new business, it is important to outline realistic and attainable marketing objectives. I am all for optimistic and large goals, however, often these objectives are set without necessary resources allocated for realistic follow throughs. When discussing numbers, this is a good time to go back to objectives, and see whether attaining a 3% market share with your marketing budget, is a realistic target.

2. Have we committed more than 35% of our budget to one particular tactic, if so, is it justified?: I once had the misfortune of committing a large part of my marketing budget to running print ads in a particular magazine, specific to my target market. Unfortunately it didn’t go as well as planned, since then, I have made sure that committing a large part of the budget to one tactic or promotional activity is based on substantial research.

3. Have we established tactic specific controls?: As entrepreneurs we do not often have access to a lot of funds in our marketing budgets. It is hence essential, to ensure that control measures are established for every tactic, to maintain monthly or quarterly monitoring. If you notice the tactic is consistently not delivering as planned , adjust the plan accordingly. Having control measures in place also forces the responsible individuals to provide constructive feedback.

4. What is our expected return on investment (ROI) on our marketing budget?: This is a complex topic, and has been written about widely. To keep it simple, we have to look at our marketing budget as an investment rather than a cost. Whenever we make an investment, we look for a certain ROI to justify it. We must do the same for our marketing budget. Keep tracking your investments meticulously, and see how to improve on your investment to ensure your expected ROI. This must be discussed with the finance people at the company. I have found, they remain impartial and are able to see the forest from trees.

A well defined marketing budget can be the difference between, a good and a great result. If you have not developed one for your company, there is no better time than, now. It is important to keep in mind, that funds are wisely invested, and that you have the ability to adapt to feedback along the way.

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Business Plan Development

“Without goals, and plans to reach them, you are like a ship that has set sail with no destination.” Fitzhugh Dodson

Everyone talks about it and knows about them, yet I know so many businesses among friends, which just started over a cup of coffee when they thought they had that ‘Aha’ moment. Don’t get me wrong I am all for the level of enthusiasm which is so infectious at the beginning that it lifts the spirits of the team to stratospheric levels. However, you need to harness all that energy in a focused manner. That focus is best brought about when you actually sit down and identify the idea in a structured manner through a business plan. A good business plan helps you plan your product/service in great detail . The key sections that you need to pay attention to when developing one are:

  • Market Need & Potential: What is the need that you are wanting to fill? How big is the market that you are going to operate in? Are there a lot of players currently in the space that you are about to enter? At what rate is your target market growing? Are you limited geographically? Use this section to identify the market need that you are wanting to cater to and the size of the market.
  • Product/Service: In this section you break down the product/service that you are going to be offering into components if possible. You have to identify the key benefits that it is going to provide to the market. What are it’s features or unique components? How is it going to be rolled out? What are future developments that you want to incorporate into the product/service. Does your product have any sustainable competitive advantages? Is it protected by any patents or copyrights? By clearly defining your offering you will get a better idea of just how scalable it is and what its unique functionalities or features are.
  • Marketing Strategy: In this section you will break down how you are going to market your product/service. Outlining specific strategies and mediums will enable you to gauge how long and how much it is going to cost to get your product to market. This is a section where a lot of brainstorming needs to be done to make sure your approach will be unique if there are current competitors in the market. It should also focus on your value proposition and the most effective way of getting it across to your target market.
  • Operational Strategy: Product development, marketing, logistics, human resources, technology all need to be managed. Use this section to outline how you are going to go about achieving your objectives. All partners should look at this section to see how and where they can contribute. Once decided, a process flow can be developed to ensure that things work out in a smooth and efficient manner.
  • Financial: If you are pitching your plan to a VC or an angel this is the section where you will need to add detailed financial forecasts for the next 5 years. This will help you gauge facts like your pre-money valuation, ROI, IRR and other key indicators which investors are looking for. However if you are using this as a guide for yourself I would stick to simpler financial documents where you identify your expenses, forecasted revenues and a simple balance sheet so you get a clearer picture of how much it is actually going to cost you to setup and run the business.

Once done you will have a document which puts on paper what was just another ‘idea’. The whole process of putting it on paper helps to look at the idea from all angles and forces you to look deeper into it than the initial concept. It is also the initial project in which to see how your partners work, discuss concepts and contribute.

So next time you think you have the next big idea, put it down on paper before going full steam ahead into the unknown.

*I will have a dedicated week to business plan development in the coming weeks to provide greater insights on all the aspects of a good business plan.

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