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

Good spreadsheets do not always make for good numbers

A quote by Albert Einstein should appear on the welcome screen of every Venture Capitalist's Blackberry and it is is this - 'Not everything that can be counted counts, and not everything that counts can be counted '

There is a dangerous obsession in analysing spread sheet data to the point when a business loses its soul and starts to show 'metric flu' symptoms.

And those symptoms manifest themselves if the worst way possible, where CEO's and the companies they head are slammed for getting their numbers wrong.

The biggest cardinal sin that a company can commit is to miss its numbers. Or that is how the analysts and economists would have you believe. Business is obsessed with control and quantification of the slightest 'blip' in a revenue forecast.

As an Entrepreneur I believe in 3 numbers only. I make no apologies for the simplicity of this conviction.

1.What our customers think of us . And not through a survey, my measurement is based on their repeated spend, the percentage of customers that are still customers, and finally and most importantly the percentage of customers that I have personally met or communicated with.

2.Turnover of employees. Critical, high turnover means either there is something seriously screwed in your hiring process, or there is something badly wrong with morale. Either way consistently measure, very few do.

3. Sales numbers. Not the top line revenue, that can often prove to be meaningless.You should look for the underlying numbers behind your sales results. For example number of new and existing customers measured against relevant periods, the number of web site hits, sales calls, marketing campaigns it took to win new revenue. A question I ask myself daily is how many dollars per customer did it cost us to secure one customer?

In the new age of innovation change is constant and you have to make decisions rapidly. Make those decisions knowing what makes anyone, whether customer, employee or partner buy from from you.

Wanted - a scalable business

The reward?  Get to do something world changing.

In my early Entrepreneur days I would get a little too fixated on the business rather than the idea. Of course it is critical to build a business that makes a profit and is not simply on an external fund raising contest, but you also have to keep your vision very firmly fixed on  being innovative and having ambition that wants to 'make a dent in the universe'.

After all that's the reason you started up in the first place- right?

And that is what made Apple re-invent music, as Google re-invented media.

The business I have founded aims to do just that. I am the poorest I have been since the age of 11, boot strapped and working the longest hours I have ever worked . But at the same time I am learning what it really takes to build a business that could change the world .

Here are 3 thoughts for you.

1. Start out with no corporate culture or plan, go with your ideas and work with people that are infinitely smarter than you at what they do. No hired guns please.

2. If your idea is good enough you can get by without funding. Find an incubator, like a big brother company that is prepared to back you because by travelling the same road you will be disruptors together

3. Build for  authentic prosperity where everyone wins. Your co stakeholders, your customers, and your partners should all work together with a common goal - to be the difference.

X Factor for businesses

You know where I'm going with this don't you?

Arguably we have the best 'X factor' contest in the world for up and coming businesses, its called the free market.

So why do so few great ideas get to centre stage in the global economy?

It starts with our education system. There are vast number of teachers who aren't teaching, policies that hold better students back so slower students can stay with them and a system that has created a huge illiteracy problem we're afraid to talk about. Our problem there isn't innovation, it's that it's controlled in such a way that positive results aren't rewarded and negative results don't have repercussions.

And it goes on. Because as a society we are more interested in Reality TV than we are in reality. Musical prowess for example amongst young people is held in much higher esteem than business prowess that is considered 'geeky' in comparison.

So the idea of a tournament funded by taxpayers, private enterprise and yes the banks in different industry categories and with the chance of securing some serious start up money coupled with a proven mentoring system would be a great way to start to rebuild our shattered economy.

From ground up.

C'mon on- its not that bad an idea

Is volunteering delivering what it is supposed to?

Volunteer Travel changes lives apparently. But whose lives are being impacted upon and can this impact possibly be of a positive and sustainable nature?

There is a world of difference, literally between what amounts to a cosy package holiday in a luxurious destination turtle watching and actually working in areas that are deprived of any economic stability [ not not the UK!] and ahve little or no means of building a self sustaining system to support the needs of people that live there. And we are talking of people that live on less than 10 cents per day.

Volunteer Travel is claimed to be of a life-changing nature for the individual traveller due to the volunteer pursuing work at the heart of a community, which is desired to help the latter reach an anticipated goal or support the locals in getting one step closer to it. A volunteer traveller could find him-/ herself teaching a language, caring for disadvantaged children, needy animals or the environment, while living the life of a local. Volunteers do not get paid for their work and thus are not and will not become a burden to the local economy. However many volunteer companies are making obscene profits from charging individuals to join their partner projects abroad and experience a culture from within for only a short period of time. Is this the flipside to the shiny volunteer travel coin or are such businesses and their volunteers responsible for gradual but sustainable change taking place in communities across the world?

Sustainability and responsibility are terms often coined when the value of volunteer travel is considered. But what does it mean to participate in a responsible and sustainable project? A volunteer project should not be about the nedds of the volunteer! A foreign country should not be seen a a training ground for gap year leavers to discover what they don't know .Volunteers that make a difference should be taken from a mature audience of individuals willing and driven to make a positive difference to others’ lives and surroundings while making good use of the opportunity of being part of a different culture and community rather than vice versa.

Businesses, as for instance i-to-i UK Ltd and Real Gap Experience for example who are clearly determined to make a profit should thus be obliged to make sure that they cooperate with local projects rather than imposing their own onto the community. This would encourage individuals to spend time abroad and help a local community. Volunteer travel should be about improving and opening horizons and done responsibly – in cooperation with the local community – and sustainably – on a regular basis with long term effects – it could, slowly but surely, help to make the world a better place and be a incredible life-changing experience for both the traveller and host community.

Bootstrapping your way to success

Okay so this is the deal, the real deal. I've been working on a business plan with my business partner for the past 6 weeks to launch the world's first social enterprise exchange that will bring together Entrepreneurs from all countries to deliver expertise and assistance to developing countries. Essentially this turns volunteering on its head as that has become an over used and frankly abused way of justifying what is in effect a glorified holiday in an exotic location. I generalise of course, but the idea of volunteering in developing countries has lost its way, and I want to do what I can to help get back on track.

It has always struck me that there is a huge amount of unreleased skill capital in the current workplace that can and should be leveraged more freely. You often hear the expression 'I wish I knew twenty years ago what I know now'. I want to harness the power and scope of the internet in the way that Kiva have done for Micro Financing to help alleviate poverty.

To do that I need [ in no particular order] one- a technology platform, two marketing resource, three a team, four some IT resource, and five a plan.

How are we/I going to do it? Bootstrapping is the only option, and I will be posting regular updates on my progress.

We reward allocation not innovation

There is a lot of talk about how the economy is starting to recover from its near fatal heart attack last year. What we have here is what is commonly referred to as the 'zombie economy', its an economy in a state of suspense neither living nor dead, no value is being created , debt is just passed from one bankrupt bank to another, we reward allocation not innovation.

That's why I've gotten involved with a number of social enterprises. This is one of the few market areas that positively encourages innovation to drive change in areas where it is most needed.

Yesterday I had the good fortune to meet a social entrepreneur who really is making a difference. Steve Sloan who is the CEO of Galvmed www.galvmed.org has earned an interesting reputation mainly because he secured a huge donation to his company through the Melissa and Bill Gates Foundation.

You want innovation? Think about this. Galvmed protects livestock and saves human lives by developing products and sustainable partnerships to help poor, rural farmers and livestock keepers around the world.

Animal agriculture is a considerable, but often overlooked, economic driver in the developing world. For nearly 700 million people living in poverty in sub-Saharan Africa, Latin America and Asia, livestock represent the most important source of physical, economic and social livelihood. Survival for these people depends on the health of their farm animals. Developing and ensuring access to vaccines and other animal health products is a key to increasing the productivity and value of livestock and improving the lives of farmers in the developing world

Animal-borne illnesses pose a significant threat to human lives in the developing world. Some diseases, such as porcine cysticercosis and tick-borne diseases, are zoonotic and can be passed from animals to humans.Farm animals represent a critical and often sole-source level of economic security for people in the developing world. People use their income from livestock to trade for food and basic health services. Successful livestock management forms a key stepping stone to sustainability and economic growth. Despite a clear link between livestock health and economic improvement among rural farmers, only 4 percent of official development assistance has been invested in agricultural development over the past 15 years.

This is where the so called brave new world we are headed towards has to focus. Helping to eradicate these issues will ripple throughout our entire economic structure , we must learn that the current imbalance of the world's wealth has been a major cause of the position we have found ourselves in.

Working for free

There's lots of noise coming out of BA at present. No,it's not the landing gear on the unlucky number 7 Airbus-  but it is the result of the BA employees being asked to work for free for a month.

Free? For a whole month? What outrage I hear you say. Now without wishing to beat an already [ very dead] horse like BA about their appalling customer service, lost luggage ,Terminal 5 Fiasco it does seem only fair to point out that the request from their CEO that the employees donate their time freely is not unreasonable?

Why. Well look at who is responsible for the mess that the company finds itself in. In fact it is is the collective responsibility not just of the Management team but of the entire workforce. And the price they pay? No pay. For a month. No big deal.

I've been working with a Not for Profit organisation , the only difference in their business model to BA's is that they are geared not to make profits for shareholders whereas clearly BA have managed that through incompetence rather than design.

And you know what? Almost all of the the Not for Profit organisation's employees work pro bono i.e. for free. And you know something else? It's a much more effectively run company.

I'm trying to figure out whether there's a lesson in there somewhere. Help me anyone..

Normal service has not been resumed

Economic spring time is in the air, or so the media would have you think.

The financial Apocalypse is no longer the threat to all Mankind, we can look forward to a new and improved world at stores everywhere whilst stocks last.

Welcome to Business 2.0, a leaner, hungrier, but more caring business where profits, and greed, and corporate social irresponsibility are all consigned to the past and ethically bankrupt companies have become just that.

Business leaders are going to create meaningful and authentic value for their customers and their employees. Governments will become the trusted leaders we elected them to be and countries will be at peace with one another.

All of this fantasy is being churned out from the same media that brought the Recession to a screen near you in the first place.

It's not as simple as that as there are many broken parts that should remain that way because they should not have been built in the first place.

And the most broken part of all ?

20th century business.

When you think about it in the last 30 years industry and business apart from a few notable exceptions has done nothing to innovate or evolve the human race.

Let's face it we haven't made any progress in flight, space travel, disease prevention, eradicating poverty, or the ecological mess that we have created. Sure we talk a good game, but any real progress made?

In fact 20th century business has been a bit of a failure, a let down in all respects. What 20th century business did do well is trivialise , debase, and enfeeble its target markets by producing crap products  alongside crap service which became the accepted.

Innovation, outside of Apple ,Nokia, Google and Dyson was a word not even recognised in the dictionary.

We have a chance now to change all that. If change in the way that we build businesses is to come out of the aftermath, then the internet is the most likely agent of that change.The most socially powerful business models that are already being spawned may mean that when we do get to look back on the real Business 2.0 we will see that innovation once more became the byword and standard that we all aspire to and live by

The Living Dead of the Venture Capital Industry

 

I could name names but I won't, until I've paid up some of my outstanding legal bills. But there is an increasing element of the Venture Industry that has forgotten its reason for existence.

I'm talking about the Living Dead, the what you might call sub prime VC market. And they in turn are affecting the entire industry and large parts of the growing economy.

So why is the Venture Capital Industry in such a state of crisis?

Because although when they like to think of themselves  as Entrepreneurs in their own right  they haven't managed to check the innovation box on the Entrepreneurial 'must have' list.

In fact when they invest in your company they terrifyingly transform from the angel investor to the devil incarnate replacement Chief Financial Officer with one remit- if it doesn't balance and if it doesn't make money almost instantly then it's a bad investment and not to be considered ever again.

Going to a Board Meeting with a sub prime VC is a revelation in that any expectancy you may have of figuring out strategy and getting some counsel is not even on the agenda. What you actually get  is similar to an audit meeting except its not that interesting and costs you a 1000 x as much.

You see Entrepreneurship and innovation are like new born twins, they both need oxygen in the new born days to flourish, turning the oxygen off whilst they are still incubatingting is worse than irresponsible, it's tantamount to murder

Here are the numerous mistakes I have seen made when sizing up whether you should take investment for your idea from a VC firm. How can you tell if they are sub prime ?

Ask yourself these questions before you sign your term sheet.

• What is the focus on the short term numbers and how important are they? If that is where their interest is and you are innovating in market that needs innovation walk away now. The I Pod would not have succeeded if you had judged its opportunity through an Excel spread sheet.

• Do they see your business in the right context? Example - in my last business the VC invested £ 3.5 million to help build a global financial services platform. That's less than Barclays weekly media advertising  budget. It's not about throwing good money after bad, but it is about understanding, appreciating, and accepting what needs to be done to build a market leader.

• Do they believe your business does things that count? Rather than count the things your business does. When you want to be the change, when you want to disrupt in a positive way, when you can be the difference the you need an investor who understands opportunity and strategy exist outside of a spread sheet, and that creativity has to be nurtured not crushed before it had a chance..

Entrepreneurs create value- not the VC's

Many people have contacted me over the last few weeks, some because they are curious, others because they want to understand why I want to 'become' a social Entrepreneur, most think I've completely lost it.

There has certainly been none too subtle shift in my lifestyle. I've never really been good with personal money, but have always ferociously guarded the company cash particularly when I've received it through investment.

I look back on the last 5 years when I have been at the forefront of raising funds for my businesses. I look at them now as my wilderness years, I was peddling harder and harder to grow bigger, faster, better than anyone else.

Was I happy? Not for one minute. What I am getting involved with now gives me an energy and a sense of purpose I have not had before. Maybe it's because I am working even longer hours, but I'm doing if for people who have had zero opportunities in life because they had nothing to start with.

Yet somehow they find the strength, the resolve, and deep inner strength to not accept the 'way it is' and are overcoming every obstacle to change their lives.

The contrast against SME's in the developing world could not be more obvious than when comparing with the hundreds of sub prime Venture Capital companies out there . Which brings the question what exactly is a sub prime venture capitalist and how do you know when either you are talking to them or even more unfortunately they have a stake in your business.

1. The appointed VC partner that sits on your Board thinks he know how to run a business better than you.  No question that some can, but you find those guys at the top of the food chain in the land of Google and Apple. They are the rock stars , the problem is that 98% of the VC community isn't in that pedestal so the rest of us have to put up with the sub prime brigade.And you will know when you have one because these guys play your company like its a game of chess, win or lose no matter with an abundance of unbelievably stupid ideas along the journey to oblivion. I have recently been on a Board with one of these, I was consistently amazed at the inane suggestions and [God forbid] advice that came along.

2. They don't treat you with respect. Whether that's failure to return your calls or a whilst you are pitching/having a Board Meeting they spend most of their time with eyebrows furrowed and intensely concentrating on the ' just need a minute you Guys carry on whilst I respond to this life defining message on my blackberry'. Enough said.

3. They claim to have the perfect Chairman for you. They don't.

4. They claim to have a great network of contacts. They don't

5.They claim they will back you when it gets difficult. They don't, they look after themselves.

6. If you didn't like your investor or his/her partners don't take the money.Walk away, you won't 'learn' to like them.

Back on what we can do to get Microfinance to SME's tomorrow.