Entrepreneur success - building scalable and effective business in the new economy

Two emergency measures to take if your cash runs out

If you have a handle on your business you will have seen it coming, the stomach churning meeting with your cash flow forecast that tells you if you do not hit your revenue targets in the next 30 days you are going to run out of cash.

Game over.

Over the years I along with many other CEO's , Entrepreneurs and Business Owners have been in  a financial Apocalypse at times in their business career.

At either the Board meeting or the one on one you have with your finance guy the data you get presented is the equivalent of a numerical drive by shooting .

It can scare the hell out of you.

Here are some thoughts on how you should deal with that situation as and if it arises.

First up and most importantly, are you out of money because  either your business model is flawed or you management is terrible or are you are simply not selling at the numbers you forecasted?

If its your business model then you really have to seriously consider getting out while you still can and ensuring everyone gets paid. The combination of no cash on hand and a failing business model is a serious situation. Knowing when to walk away is one of the traits of any good entrepreneur.

If you are financially devastated by something outside your control or you could not have foreseen then you do have a lot of options, but it’s very important you understand the financial, legal and emotional risk you are taking on.

Frankly the fastest way to raise cash for a business that you absolutely believe will make it is to share your equity.

I'm not talking of a lengthy fund raising process, its more a case of parcelling up shares to the three key foundations of your company.

Think staff, customers, and finally partners.

After all these people have already invested in you , whether that was by joining you, working alongside you or buying a product or service from you.

This is not the same as raising money from friends and family. Avoid at all costs.

This is one of the most critical rights of passage you will go through as an Entrepreneur, at this stage you have to stay true to 2 key principles.

First -Bind yourself to the mast.Ulysses had it right: in order to endure listening to the seductive-but-deadly sirens, not only did he have himself bound to the mast, but he ordered his crew to ignore his demands to set him free. The result: the venture survived Ulysses' passionate implorations which would have driven them to ruin. For the entrepreneur, that means surrounding yourself with people who will do what is right for the venture, not what your feelings dictate. It is very difficult for the strong-willed entrepreneur to really listen to critics; if you find people who will be painfully honest with you, get them on board.

Second -Know when to settle up and move on. One of the reasons qualified people don't make the entrepreneurial choice is that they don't trust themselves to know when or how to press the restart button. Although perseverance in the face of adversity is often ranked as the most important entrepreneurial characteristic, experienced entrepreneurs actually learn how to manage risk by failing fast and small, regrouping, and starting down a different path.

As Joseph Conrad wrote years ago, "Any fool can carry on, but only the wise man knows how to shorten sail".

Always do what is right, not just for but for everyone that has invested in your business.

Can you build profitable business relationships through social media?

I'm a bit of a Linked In nut.

Like any Entrepreneur I value quality connections highly and until social media sites started to take off I used to have to do regular seminar and exhibition shift work to uncover as many new business opportunities as I could.

Now I log on Linked In and Twitter, see which profiles of potential contacts have been recommended to me, check out who has recently joined my network groups, see who has viewed my profile, view industry updates that interest me, and yes connect with a whole new bunch of contacts.

In other words in one morning I get to digitally shake hands with contacts that are interest to me and I to them.

Social media has enabled a great potential to initiate relationships. Anyone who is from a sales background (or has heard the cliche) knows "it's all about who you know" And that is 100% true.

Since I've proactively developed relationships online I have created much more opportunities for myself and met more people that I may not have had direct access to before. You have to be smart and strategic about it (seek out who you *want* to know) but also do not become exclusive or 'too good' to talk to anyone. There's a potential mutual beneficial relationship with anyone you meet, but the important part is you actually have to go out and meet them to uncover said potential. Social media provides an unprecedented method to do so , use it wisely.

On the down side, there's the Dunbar Theory that says you can't maintain relationships with more than 150 people.

Within a short time its all too easy to find yourself following way more than that on Twitter and then start to multiply that through Facebook the inevitable is going to happen.

You are going to forget people (and I have) which can easily lead to low quality connections and unprofitable relationships.

The promise of the Internet wasn't merely to inflate relationships, without adding depth, resonance, and meaning. It was to fundamentally rewire people, communities, civil society, business, through thicker, stronger, more meaningful relationships.

Use it wisely , like any tool and it will serve you well.

How to lose your hard earned brand - in two easy clicks

There was a really interesting story last week regarding the threat of social media to a businesses brand .

Especially if your customer service isn't delivering at the levels you have promised.

As an Entrepreneur you work very hard to win those initial customers, keeping them whilst protecting your reputation is one of the most critical areas you should focus on.

Even more so with the ascent of Twitter, Facebook and Linked In where information about you and your company is traded in the most public way possible.

This is a perfect example of what can go wrong.

On March 13, a Virgin America flight from Los Angeles to New York was diverted from John F. Kennedy International Airport to Stewart airport in Newburgh, N.Y., due to severe weather, and the passengers and crew waited in the plane on the tarmac for over four hours. The crew was anxious, babies were crying, mothers were anxious, and the passengers were unruly — to the point that one woman was taken off the plane by police. The entire ordeal was documented by David Martin, the CEO of Kontain.com, on his company's iPhone social-media application.

Martin was called by someone in Virgin America's marketing department, who offered him a $100 voucher for his troubles. He said the passengers deserved more. He subsequently received a call from Virgin America CEO C. David Cush. During that conversation, according to Martin, he negotiated a full refund and a $100-per-person voucher for all passengers.

So what is the key lesson to learn?

You may own your brand but your customer controls it.

Rewarding failure sets a dangerous precedent

The last week has seen the the burning embers from the banking inferno well and truly ignited again.

Some of the stories coming out of Lehman Brothers is bewildering to most of us. Even more perplexing is the bankers bonus debacle, us Entrepreneurs cannot understand how Directors can be legally compensated obscene sums of money for incurring not just losses but insolvently .

After all Directors of private companies [ read Entrepreneurs] are subjected to the most draconian actions if we fail in our goal to build a successful Enterprise. Frankly its a minefield of regulation and accountability , ignorance of the rules is no excuse and there are many rules. As an Entrepreneur it is all too easy to fail, great ideas and innovation require superhuman effort to deliver against.

Not so in corporate world though where arguably as a business leader you have many more advantages.

It is here that the culture of rewarding failure is practically unlimited.

The US is particularly accomplished at rewarding abject failure. In fact virtually every senior corporate leader of a failed institution walks away with millions of dollars. Many move on to other senior corporate jobs or board positions. Take Robert Nardelli as an example. After not getting the top job at GE in 2001, Nardelli became the CEO of Home Depot where he made a series of strategic missteps and displayed an arrogance that alienated employees and customers. After being ousted from that job (with millions of dollars) he was hired by Cerberus to turn around Chrysler — another failure which ultimately resulted in its acquisition by Fiat. And while thousands of Chrysler employees and dealers lost their jobs and their incomes, again Nardelli walked away with his fortune intact and enhanced.

Have the courage to succeed as an Entrepreneur and do not fear failure. But also understand the privileges that come with the opportunity to build your own enterprise and respect them.

Turning your ideas into revenue.

I was with a lawyer recently and we were discussing the challenges of being an Entrepreneur.Despite the exorbitant fees he charges Entrepreneurs I'm not entirely sure he holds us in much esteem.

A case in point if you will was this from him : 'anyone can have an idea- that's the easy bit'.

Words of wisdom indeed. And worth every penny..

So what is the difference between an Entrepreneur with an idea and Entrepreneur with vision?

So many great ideas never see their market potential .

And that's because turning an idea into action necessitates you taking that idea then proceed to completely dismantle it and turning it into a valuable proposition to people that are going to buy.

Your toughest critic has to be you. Your next should be people whose opinion you respect. That means taking your idea, wrapping it up in a maximum 5 slide pitch, and then presenting it .

Here are some thoughts for you.

1. Your idea should be generated within a solid framework for decision. It should be developed as a solution to a problem or to exploit an opportunity and can make money.

2. If your idea doesn’t provide a unique competitive advantage then can it- now.

3. Your idea must require minimal funding- that  means less than K to market testing.

4. Your idea should have been tried at least twice before and preferably failed [ more on that later]

5. Your idea must easy to use and scalable. Usability drives adoptability, and therefore it pays to keep things simple.

6. Marketing makes it a good idea, once you start selling it  that makes it the right idea

7. Risk is good, riskier is better,but only with your own money and capped at 20K until first buyer.

8.  Be careful of high level, pie-in-the-sky projections. Whatever your financial costs are - double, and your revenue push back to a third.

9. Has to have some internet capability and capacity.

10. Finally - ' kill' your idea at least twice before resurrecting.

Another 10 reality check questions you should ask yourself before starting your own business

There is an argument that says wisdom is the scarcest rarest and most valuable resource in the world today.

You could also argue that experience comes a close second. When you have succeeded and failed a number of times you start to learn a lot about what it takes to be a successful Entrepreneur.

What many overlook is a third quality outside of wisdom and experience and that is courage. You will see from below the questions you really have to ask of  yourself before you  take  up the challenge of starting and running your own show.

1. I accept that not everyone likes my ideas and that it's quite likely that many of my ideas are garbage.
2. If I go into business with friends or family, I am okay with losing that relationship forever if things end badly.
3. I don't have existing anxiety issues and I handle stress with ease.
4. I am willing to fire or lay off anyone no matter what — how good of a friend they are, if they are my own sibling, if they just had a baby, if they have worked with me for 20 years, if their spouse also just lost their job, if I know they might end up homeless, if they have cancer but no outside medical insurance, or any other h scenario millions of bosses and HR people have faced countless times.
5. I am okay with being socially cut–off and walking away from my friends when work beckons.
6. I love naysayers and I won't explode or give up when a family member, friend, customer, business associate, partner, or anyone for that matter tells me my idea, product, or service is a terrible idea, a waste of time, will never work, or that I must be a moron.
7. I accept the fact that I can do everything right, can work 70 hours a week for years, can hire all the right people, can arrange amazing business deals, and still lose everything in a flash because of something out of my control.
8. I accept that I may hire people that are much better at my job than I am and I will get out of their way.
9. I realize and accept that I am wrong ten times more than I am right.
10. I am willing to walk away if it doesn't work out.

Welcome to your dreams.