In my years of mentoring entrepreneurs, a problem I have seen too often is low self-esteem, and over-compensating through arrogance and ego. These entrepreneurs find it hard to respect customers or team members, and their ventures usually fail. As a team member, low self-esteem leads to low confidence, poor productivity, and no job satisfaction. Fortunately, both can be fixed.
Organizational change expert Paul Meshanko, in his classic book “The Respect Effect,” explores the human science behind these issues, confirming that people with a healthy self-esteem perform at their best and treat others with respect, getting their best. All of us shut down when disrespected. He assures us that anyone can train themselves to get on track to stay on track.
With my updates to focus on entrepreneurs, I like Meshanko’s eight steps to help build business self-esteem and avoid the ego trap, which support a broad range of attitudes and behaviors that are individually and organizationally beneficial to startups as well as mature companies:
Identify the qualities and skills most closely linked to your idea of success. Current research is conclusive that self-esteem is linked to our sense of competence in the areas that are important to us. As you look at your entrepreneur goals, make sure you are following your own definition of success that gives you pride and passion in its pursuit.
Identify your current strengths and establish plans for improving. Once you have clarified your personal definition of startup success, examine where you currently are relative to where you want to be Whatever your goals, there are few things more esteeming than knowing you’re making progress toward your picture of success.
Be on the lookout for new opportunities to grow your talents and experiences. Part of our sense of self-worth comes from the belief and confidence that we have the ability to grow the business both today and in the future. Entrepreneurs have a natural base for adventure and curiosity, and should relish trying new things each day to stretch them.
Identify and redirect unhealthy competition and comparisons. Make you the base, not others. Your sense of worth should not be determined by other startups, or what you think peers expect of you. Competition sabotages teamwork and leaves feelings of isolation and alienation. Use others as a source of inspiration, rather than envy.
Forgive yourself for past mistakes and poor decisions. From a rational point of view, berating ourselves for past startup failures makes no sense. Free up your energy to be spent on more productive activities, and learn from past efforts. The great entrepreneur Thomas Edison said that every wrong attempt discarded is another step forward.
Hold yourself completely accountable for your actions, decisions, and outcomes. The legitimate place for short-term guilt and remorse is making these lead to some type of behavior change. Failing to hold yourself accountable sends subtle messages that may damage others self-esteem, and it doesn’t promote lasting confidence or competence.
Develop a pattern of self-talk that validates your worth and abilities. Each of us has developed a way of interpreting and explaining the business world around us. It’s important that our stories neither damage us nor free us from blame. We should continue to feel worthy, accountable, and capable, with a mindset that allows us to continue to follow our entrepreneurial passion.
Focus on what you can control, not what you can’t. Our short-term destiny is not always in our control. What we can do is make a commitment to do our best in whatever entrepreneurial environment we find ourselves. We can also make sure we build strong relationships with successful business leaders in advance of our needing their wisdom.
For every entrepreneur, a healthy self-esteem, leading to self-confidence, is critical to a constrained ego and more success, since every startup is entering uncharted territory, and must take risks to seize a new opportunity. Not all entrepreneurs have a background to start from a position of strength in this area, but all have the ability to learn and the passion to succeed.
In my experience, the most common cause of entrepreneur failure is giving up too early, rather than running out of money. Are you selling yourself short on your own potential, and not working on your own self-esteem, thus jeopardizing your business success and job satisfaction?
Marty Zwilling
Every new business quickly realizes that revenue coming in every period on a committed basis is the Holy Grail to survival and growth. According to many experts, getting new customers is five to ten times harder than getting additional revenue from existing customers. Thus the subscription model (low fixed monthly payments), is rapidly becoming the norm for new products and services.
Subscription pricing has been around for a long time for magazines, cloud-based software, and gaming, but now I’m seeing it used for just about anything, including for more stylish clothes via Mr.Conection, gourmet foods via TryTheWorld, and toys for your kids via SparkBoxToys. If you are an entrepreneur not using this model, it may be time to consider a pivot.
In fact, I just finished a new book “The Automatic Customer,” by John Warrillow, who runs the successful subscription based research business SellabililityScore, outlining nine common variations on the subscription model. If you are looking to start a new business in any domain, it’s definitely worth your time to check your fit for one of these models:
Membership website model. With this model, you provide website access to insider information for a regular subscription payment. It works best in a tightly defined niche market, like antique car owners, or rare-coin junkies, or woodworking enthusiasts, where experts hare hard to find, and members can gain from interacting with each other.
All-you-can-eat content model. By providing access to a large variety of titles, like NetFlix with streaming movies, or Hulu for TV shows, with new content added regularly, there is always a reason to keep up your subscription. If you already have many followers for some limited free offerings, this also becomes a natural freemium upgrade.
Private club model. On the other end of the spectrum, if your service or experience is in limited supply, make it a status offering for the strivers out there who want to act and feel like affluent consumers. Here the key is to convince customers that you have something really rare, and maybe even entice them into a long-term but affordable relationship.
Front-of-the-line model. If you can help with a relatively complex product or service, this one is especially appealing to customers who are not overly price sensitive, or ones for whom waiting in line can have catastrophic consequences. It works for the need to resolve IT issues in a small business, to avoiding long lines at popular clubs and hotels.
Consumables model. You should consider this subscription model if you sell things that naturally run out, like Diapers.com or Birchbox for cosmetics. People are willing to pay for convenience today, but don’t underestimate the logistical challenges involved in fulfilling orders and providing services to thousands of subscribers in out-of-the-way places.
Surprise box model. This model involves shipping a curated package of goodies to your subscribers each period. It may have started with wine club memberships, but has now been extended to include BarkBox for family dog treats, Standard Cocoa for those who love chocolates, and SpicySubscriptions for lovemaking paraphernalia.
Simplifier model. Everyone these days wants to simplify their life, so this subscription model works well for personal service businesses, like pet grooming, tutoring, window cleaning, and even bookkeeping. The key is making sure the customer doesn’t have to remember the scheduling, deal with immediate variable payments, or worry about quality.
Network model. This model works best where your product or service utility improves as increasing numbers of people join in. It was popularized with dating sites and LinkedIn, but now is popping up with many services, like Zipcar for car-sharing, BeatsMusic for music sharing, and WhatsApp for international messaging for a low predictable fee.
Peace-of-mind model. This one is an extension of the insurance model into new domains. For example, Amber Alert GPS will make sure your kids don’t wander outside of safe zones, Site24x7 will let you know if your web site is down, and Radian6 monitors social networks so you know what people are saying about your brand.
If your startup is in the Business-to-Business (B2B) world, you need to realize that the subscription model has evolved considerably since SalesForce.com introduced Software as a Service (SaaS) way back in 1999. Popular variations of cloud subscription services now include offerings billed as Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).
So now may be the time to start or transform your business into a recurring revenue engine with subscriptions, or just add an option to get some extra sales growth. But be aware, these models bring with them a whole new psychology of selling, supporting, and measuring your success with customers. Do your homework before jumping in with both feet.
Marty Zwilling
Deciding to be an entrepreneur is a lifestyle move, and should be part of a long-term strategic plan. You shouldn’t be making this decision just because you are mad at your boss, you would like to be rich, or someone else thinks it’s a good idea. In these changing times, if you already have a startup, with no plan, maybe it’s time to think ahead for a change.
Formally, that’s called developing and maintaining a strategic plan. Usually that means writing something down, since it’s hard to maintain something, or track yourself against it, if it’s not written down. From my experience, and the experience of other entrepreneurs, here are the key elements you should think about as part of the process:
Personal interests and aspirations. Do you love managing your own schedule, overcoming obstacles, starting a new adventure, facing financial risk, and relish the opportunity to change the world? Money should not be the big driver here.
Right idea at the right time. Do you believe that you have an idea for a company that you can implement better than anyone, and maintain a competitive advantage? If you are thinking non-profit (social entrepreneur), can you rally the world around your cause?
Take inventory of what you have. Look critically at yourself and your existing organization for strengths, weaknesses, opportunities, and threats (SWOT). What resources do you have, skills and functions, and what do you do best?
Assess customer demand. Do customers really need what you want to do, or might they see it as “nice to have?” In the relevant market large enough, and growing fast enough, to make it a profitable opportunity?
Providing minimal resources. One of the biggest stumbling blocks for all entrepreneurs is time and money for the ramp-up period. Do you have money saved, or available from friends, or current employment to support the transition?
Visualize the future. What do you envision your business looking like in five to ten years? Is your mind full of ideas for repeating the experience, or are you looking to build a family business that you make your legacy?
Manage existing relationships. How important to you is the balance between family, outside relationships, and work? Do you have dependents that must be factored into every career and lifestyle equation? What personal support resources are available?
Education and training roadblocks. Does your dream require additional time and money for training or academic credentials? If so, can these be done concurrently with an entrepreneurial rollout plan? What other roadblocks exist?
Location, location, location. Most entrepreneurial efforts can best be done, or can only be done, in a specific geography or country. Are you willing to relocate as part of your strategic plan? Can you start where you are and relocate later?
Willing and able to measure. Can you define measurable milestones to help you track progress and provide feedback? Strategic plans that cannot be measured will never be accomplished. Are you committed to achieving milestones and measuring progress?
I’m not suggesting here that a strategic plan is a one-time set-in-stone effort. In fact, quite the opposite, every plan must be improved and adapted as you learn more and the world changes around you.
On the other hand, if your way of doing business might be described as fire first and aim later, to seize today’s opportunity, you are charging into the future on only a wish and a prayer. The crash landings can be tough, and definitely won’t feel good as a long-term strategy.
Marty Zwilling
If you think that financial modeling for a new business is arcane magic, limited in value to financial wizards and professional investors, then you have been listening to the wrong advisors. In reality, a simple Excel spreadsheet model customized around your assumptions can save you hours and avoid a wasted expense in validating alternative vendor and marketing decisions.
The way to start is with a sample financial model, freely available from many sources on the Internet, such as this one from Entrepreneur. Another alternative is to build one yourself, starting with a few formulas to extrapolate early revenues and expenses into the five-year projections normally requested by banks and investors.
Don’t try to build the “ultimate” business model, for all possible alternatives, in multiple business domains. For maximum value with the least effort, focus on only the “what ifs” that are the highest priority in your mind for your own startup. In my experience, the top candidates will include the following:
What if you have to cut your targeted price? Pricing is always a tricky issue. Vendor costs are subject to change, customers are fickle, competitors come out of the woodwork and the economy can take a downturn. You need to quickly calculate the long-term impact on profitability of pricing and business model changes.
What if you need to change your market size and volume projections? The manual calculations to translate market assumptions into costs, volumes, expenses and net return are massive. Yet they can be done by a simple financial model in a few milliseconds. Investors will test your savvy by asking where your business breaks.
What if your growth and scaling projections are too aggressive? Most entrepreneurs realize that doubling their revenue each year puts them in a premium category with investors, so that may be your first target. But targets need to be adjusted as the reality of early returns sets in. Projections you know to be wrong won’t help you.
What if investors offer you only half, or double, what you ask for? With a financial model, it’s relatively easy to apply these amounts to your marketing, manufacturing and administrative costs, as well as business volumes, to predict the impact. Your credibility with investors, and your confidence in any request, depends on these answers.
What if your customer acquisition cost assumptions have to change? The cost to acquire a customer, or traffic to conversion ratios, are critical to the success of most startups. This can be projected top down from market share assumptions, or bottom up from actual costs and sales results.
The time to start building your model is even before you incorporate the business and spend real money on building products. Just like planning a long trip with your car, you need to know where you are going before your start, or you probably won’t get there. If you are not computer literate, it’s never too early to find a partner or learn tackle this critical element of every business.
The financial model obviously has to be built in concert that the overall business and pricing model that you are implementing. The most common business models these days include the subscription model, freemium model and ecommerce. Each has a different set of variables for sales, revenue flow, marketing costs and personnel.
Creating a financial model is perhaps the only way for you to see key areas of strength and weakness in your business, before the money is spent and it’s too late to recover. It’s a great learning experience and is not rocket science, so you can do it yourself. But don’t hesitate to ask for help from a professional if you need it.
You may be surprised how clear the relationship appears between product pricing, cost and customer count. You will quickly understand the old adage that if you lose money on every customer, it’s hard to make it up in volume.
Marty Zwilling
*** First published on Entrepreneur.com on 2/20/2015 ***
One of the most common complaints I hear from entrepreneurs is that they are overwhelmed by the workload and stress of starting their company. Then there are the additional challenges of balancing the demands of family and friends. Having too much on your plate can turn your dream into a nightmare.
Some people will tell you to just get a bigger plate, meaning hire some help. But with the pressures of the economy, and limited access to outside funding, we all know this isn’t always possible or appropriate. I recommend the opposite, or getting things off your plate that shouldn’t be there in the first place.
In reality, many entrepreneurs are their own worst enemy, trying to do everything, working inefficiently, and imagining things that need doing which will never happen. Here are some tips on how to look at work, make some hard decisions, and keep your health and sanity:
Maintain a big picture perspective. It’s easy to be overwhelmed by day-to-day details, to the degree that they all seem like big items, driving up your imagined workload. Take a few minutes each day to reflect on your real goals, and eliminate items which don’t relate.
Set realistic deadlines. The more your workload grows, the greater is your temptation to set unrealistic deadlines for yourself. This results in poor quality work, which generates more work to fix previous efforts. Allow some buffer on every item.
Prioritize the work items. Relentlessly reprioritize your list and complete them in order, resisting the urge to skip over the tough ones. The longer that high-priority items stay on your list, the more stress you will feel, and consequences will add new items.
Keep a written to-do list. Most people can’t manage more than five items in their head, and when your list gets longer, it seems infinite. Write it down, but even then, keep it to the top ten priority items or less. Multiple pages of work items won’t get done anyway.
Block out time for priority work items. Don’t allow your day to be monopolized by distractions and the crisis of the moment. Close your door, or move to another location where you will not be interrupted so that you will complete the top item on your list today.
Count the completions. At the end of each day, check off, count, and celebrate your positives. A sense of progress is important here. Look positively at your progress as a glass half full, rather than half empty.
Take a break to recharge. Even a few minutes each hour to relax will re-energize you. Regular non-work breaks, like a trip to the gym, or time with family will be ultimately more productive than slugging it out all night on a given problem. Get a good night’s sleep.
Discuss the tough ones with a mentor. Don’t be afraid to discuss your challenges with a trusted friend, or business advisor. This will clarify the issue in your own mind, and let you see it from other angles. You need to stop and regroup when you hit a brick wall.
Stay in control of your emotions. Stress is a normal part of life. Don’t let it lead to anger and frustration, or loss of productivity. We can choose how we handle tough situations, and the best approach is always to stay calm and in control.
Eliminate phantom work items. These are items that you never intend to do, and probably don’t need, but you carry them on your list because of guilt or direction from someone else. You can’t complete an item that you don’t understand.
Wearing all the hats required to initiate a startup is tough in the best of situations. Then your business really starts to take off, and it gets even more challenging. As an entrepreneur, you need to seriously apply the discipline of these principles early and always to survive, and hopefully even enjoy the journey.
Marty Zwilling
Why do a few entrepreneurs, like Steve Jobs and Elon Musk, seem to come up with all the real innovations, while the majority of business leaders seem stuck in the rut of linear thinking? I have always wondered if innovation required some rare gene mutation, or whether I might be missing a simple formula for unlocking the ability in any intelligent business person to innovate.
While searching for an answer, I was excited by a new book, “The 4 Lenses of Innovation,” from Rowan Gibson, one of the most recognized thought leaders in business innovation. According to Gibson, you don’t have to be born with magic insights to be innovative. He connects breakthrough thinking to four initiatives, which I believe every entrepreneur should practice:
Questioning deeply-held beliefs and assumptions. The willingness to challenge accepted approaches and propose non-obvious alternatives is one of the fundamental driving forces for innovation. This is a thinking pattern and a culture which all entrepreneurs needs to instill and nurture in every startup team member.
Spotting and exploiting emerging trends. Innovative entrepreneurs have to start with a mindset of welcoming change, rather than trying to resist it. They don’t have to be futurists, they just have to be in the current time, not behind the times. Then they have to look for change, and continually hone their skills to turn discontinuity into opportunity.
Redeploying skills and assets in new ways. Innovators leverage existing skills and assets in new ways, new contexts, and new combinations, rather than assuming that new resources are needed for new opportunities. Strategic partnerships with other companies are a good way to extend the boundaries of your business and recombine resources.
Paying attention to unmet needs and frustrations. It all starts with a customer perspective to uncover problems and frustrations, and then design solutions from the customer backward. But customers also tend to think linearly, so they don’t always know what they want. It’s up to you to match what is possible with what is needed.
The next step to breakthroughs for entrepreneurs is to take advantage of the powerful digital tools available to foster innovation and ideas, like Innocentive and BrightIdea. There is also the wealth of social media digital tools, like Facebook, Twitter, and Yelp, which allow feedback, engagement, and collaboration with customers like never before.
Other smart entrepreneurs are building digital feedback loops directly into their products to understand exactly how customers use the products, as well as solicit real-time improvement feedback. Today entrepreneurs are already implementing the Internet of Things (IoT), where every device can be connected to the Internet, to provide insight and feedback to your company.
Finally, even with the right mindset and digital tools, creative ideas for entrepreneurs still don’t usually occur spontaneously, or come in a flash of inspiration. Every entrepreneur needs to adopt a more rigorous process, like this eight-step one developed and tested by Thomas Edison and many others to accelerate the production of big breakthrough ideas:
Select a specific challenge and focus on solving it.
Research the subject to learn from the work of others.
Immerse yourself in the problem, to explore possible solutions.
Recognize when you reach a deadlock, and capitalize on the creative frustration.
Back away for a while to let the problem incubate in the unconscious mind.
Be sensitive to any insights which might shift your perspective.
Extrapolate the insight into a new idea or solution.
Test and validate the new solution to make it work.
With the right mindset, tools, process, and a little practice, any entrepreneur can lead their startup to new levels of innovation, competitiveness, and success. So don’t wait for the next Einstein, or a magic Eureka moment, to get you into the game. You too can make business innovation look easy.
Marty Zwilling
I’m sure that every one of us who has been out in the business world for a few years can look back with perfect hindsight and name a few college courses that we should have taken. What’s more disconcerting to me is that I can name a few that aren’t usually even offered, resulting in more than a few students graduating ill-prepared for the real business world!
I won’t even try to cover here the ones you didn’t find for your personal life, like managing personal finances and credit. But on the business side, here is my list of useful courses that we wish existed, but as far as I know, still aren’t generally available:
Basic Office Politics. Office politics involves the complex network of power and status that exists within every business, large and small. Don’t you wish that someone had prepped you on how to read the body language, interpret office gossip, and when to hit the delete key on your email rather than the send key?
Business Email and Texting. Writing in business is not the same as in an academic environment. In school, you’re taught to stretch weak ideas to reach your document page limit. The business world expects exactly the opposite. The challenge is to communicate your idea in one page, and close the deal quickly. As for business texting – don’t do it.
Touch-Typing for Business. How many hours a day does the average professional and executive today spend hunched over a computer keyboard “hunting and pecking”? Throughout a career lifetime, just think of the return on that investment. Any symbols you can’t find on a typewriter, like smiley faces, should never be used in business.
Business Dress for Success. “You are what you wear” works in business, just like it did in high school. But no one tells you the business norms, so some continue to come to work in jeans, baseball caps, tattoos, flip-flops and expect to be treated as executives. A basic benchmark is to dress better than the executives who hold the positions you want.
Demystifying Employee Logic. Another term for this is how to be a skeptic. Understand the ways people can mislead deliberately or accidentally with numbers, bad logic and rhetoric. There’s some untruth hidden in 99% of everything you’re told. Can you find it, and do you know how to respond?
Business Budgets and Benefits. The focus here would be on the actual nuts and bolts of how things get budgeted and financed in business. This will pay big dividends in getting your favorite project funded, or justifying your own salary, or negotiating a bonus. The tenets of entitlement do not apply.
The Art of Selling and Closing Business. We can find tons of “marketing’ courses in colleges and universities but everyone must think that “selling” is intuitively obvious. The art of selling is complex blend of relationships, persuasion techniques, negotiation, and knowledge. Follow-up and persistence are a rare natural phenomenon.
Root-Cause Problem Analysis. Business professionals need to analyze problems from a big picture perspective. Most classes in college focus on a narrow area of interest, which just teach students to focus on problems through one lens. That’s how unforeseen consequences stay unforeseen, and happen repeatedly in business.
Maximizing Business Productivity. In the office world there is always far more work than there is time to do it. You need to be able to figure out what not to do, and how to not do it, by organizing and prioritizing, and still impress your boss with your thoroughness. Productivity is much more than doing everything faster.
Job Hunting Basics. People need realistic expectations about how much effort and time it takes to get just about any job. Atrocious resumes and social network antics will kill your career. The difference between job descriptions and accomplishments seems to elude most business professionals.
The real problem for many of these, I suspect, is finding qualified instructors to teach. Until then, the best alternative I can recommend is to sign up for job internships at every opportunity, while still in school. You might find on-the-job experiences more valuable than all your other courses, or you might change your major.
Amazingly, it seems that people in business are more highly educated these days, but less well prepared than ever before. What’s another course that you wish you had taken in school, but didn’t realize was missing until too late? There’s another generation right behind us that needs to know.
Marty Zwilling