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

What makes a great leader?

There is a strange kudos about leadership. Most people at sometime or another feel or believe that they have to be a leader. Take the salesman who covets the sales manager role, the book keeper who wants to be the CFO, the CFO who wants to be the CEO, the CEO wants to be Chairman and the Chairman wants to be be next President.

There is a lot of negative energy spent on the eternal power struggle associated with such ambition, especially in the corridors of power inside corporations.

Not so for the Entrepreneur. By definition you are the leader because in your world no one else wants the job.

New market opportunity? - yes you lead the way, and if it looks as if it may even  take off then we will follow.

In fact no one lives with the tension of leadership more than the Entrepreneur.

They are often up at night, with visions of bankruptcy and failing in a spectacularly public way dancing in their heads. The faith investors have put in them is a heavy weight most people will never experience. Entrepreneurs venture forth into the unknown, butterflies in the stomach, and wonder — for the sake of their reputation, their security, their children, and even their reputation in their children's eyes — if they might not have been smarter to have stuck with the bird they had in their hand.

As an Entrepreneur if you're regularly visited by apparitions of doom and are often overcome with the desire to quit and make your way to a safer, more peaceful haven, know that this just confirms that you're a leader. Situation normal. You're feeling exactly the way every entrepreneur who went before you has felt.

Entrepreneurs make some of the greatest leaders. Not because they are leaders of people but because they are leaders of thought and innovation, and daring and spirit.

A great leader is someone who creates a new market, a new and valued product, a new innovation. A great leader is not reserved exclusively for leaders of companies. Indeed may great leaders I know who are gifted with Entrepreneurial talent are rarely the leaders of their company as well.

As a thought and product leader if you're not creating the future, then someone else is, and that someone else will change the face of the world as you know it. But that's not the greatest danger. The greatest danger is arriving at the end of our lives and feeling like we haven't really lived. Risk is the currency of life. Without risk, there is no life. We have to be willing to risk failure in return for a sense that we are living. And it's when we're really living that we really have a shot at changing the world.

And that is the mark and the strength of a great leader.

The dark side of social media

It had to come eventually. Think flip side to the glowing recommendations you can get on Linked In and consider scathing criticism of you, your career , your personality, your trust rating.

Welcome to getunvarnished.com, thankfully still in beta.

This is what Leslie Gaines Ross a reputation specialist has to say about it.

'What are Unvarnished's creators thinking? How can this be good? With no accountability and no restraints, people will review and rate bosses who hired and fired them, Rumors, innuendo, and hearsay will be aired, regardless of whether even a scrap of truth lies beneath them.'

In my view she's right.

Ok- Unvarnished allows you to respond to reviews, and you can always invite friends to rate you more highly. But in the absence of credentialed, independent third-party reviews, that may not provide much counterweight. Unvarnished promises it will remove "abusive" reviews. But it also states that abuses of expression, such as libel, are "very specific, legally defined condition[s]." There need not be restraints, it says, on opinions. How this will work in practice remains to be seen, but I suspect that the company's view of what constitutes abusive may be different from yours.

One 'good' aspect of all this is that ordinary people may now begin to appreciate what companies have had to endure since social media tools first empowered one-off antagonists to blast them without warning. There may also be lessons to be learned from that quarter. The experience of companies who have successfully fought off reputation snipers suggest approaches that could work for individuals, too.

But from an earleir post I did around brand and personal reputation, and how as an Entrepreneur the highest asset value on your balance sheet is trust, this shows just how very careful you have to be when building your business.

This is the dark and I would argue destructive side of social media, it will be interesting to see how it plays out.

The asset value of trust to your business

There is a book written by Mike Wilson called 'The difference between God and Larry Ellison' which charts the meteoric rise of one of Silicon Valley's greatest showman, Larry Ellison of Oracle and how he clawed his way to the top of the mountain and has stayed there ever since.

Wilson recounts some incredible stories of both Ellison and Oracle and spares no one when relaying Oracle's sales practises.

One of the more interesting anecdotes is the description of how Ellison, when presenting the features of the Oracle product would get his 'tenses' mixed up, in other words selling features that were planned for the future as features that existed within the product today.

Its been a common problem in 'salesmanship' forever, and until recently has almost been accepted as a harmless part of the sales process.

But where is the line drawn between exaggeration and outright lying , whether that is to win a sale, close a deal, or secure investment?

I was therefore fascinated to read this recent Harvard Blog on this very subject, you can check it out here http://tiny.cc/q1xsp.

One final and important point I would make.

Integrity is everything.

Your reputation is the most important asset you will ever own. What balance sheer valuation would you put on companies that you trust?

Treat it with respect - the speed of trust takes a very long time to earn.

Three rules to help your business compete successfully

Apple wheeled out the iPad this weekend in the US , early reports suggest they sold around 700,000 units , not bad in 48 hours.

Apple have got what you might describe as a loyal customer base. And that is down to Steve Jobs vision of understanding some core principles in attracting and more importantly keeping customers.

Principle one-Products don't sell, the experience does. People buy an iPhone, iPod because of the ecosystem behind it. Additionally with the lifecycle of many technology products being so short - around 3 years - renewals by recurring customers are vital to sustain growth. That means as fast as you produce product in parallel you have to build even faster the eco system behind it.

Principle two- Invest heavily in customer service. The satisfactory customer experience is the real market differentiator of any product or service in a competitive industry, products with great service win over products with bad service anytime. Example- Starbucks, dreadful coffee , fanatical following

Principle three- Your customers love innovation, especially when they are involved in the design. One area Apple excels in is innovation , most of which is driven through its customers. Think about the genius bar in iTunes, that was a customer idea from one of Apple's online forums. Establish your own social network site through Twitter, Linked In and open up to your customers with ongoing dialogue, make them feel they are part of your business, because they are the most important part.

The one that pays.

How to use market advantage to build a successful business

Here's something you may not be aware of.

There is enough food in the world to feed everyone pretty much.

So why are 20% of the world's population either suffering from starvation or malnourished?

The answer - both in the past and in the future - is advantage.

I'm not about to go off onto an online podium for social change, but I want to highlight something I've talked about for some time which is how we as Entrepreneurs can build great businesses whilst at the same time helping to build a success path for aspiring Entrepreneurs who are just starting on their journey.

So how as Entrepreneurs do we deliver advantage to the markets and communities that we operate in?

If you think about it the future of advantage is radically different from the past for a simple reason: because it's economically better. 20th century advantage focused on firms who simply existed to extract as much revenue and resources from their people, their markets  and their society — and then creating the infamous 'barrier to market' against all competition.

21st century advantage focuses firms on creating new resources, and allocating them better. The former is useful only to shareholders and managers — but the latter is useful to people, communities, and society. For exampled the old Microsoft was useful to shareholders, but a lot less useful to society — and that's exactly how Google and Apple attacked it, and won.

We all now have a collective responsibility- no - duty- to share and extend both our knowledge and experiences as Entrepreneurs to others.

And that starts with Entrepreneurs in developing and emerging markets - all of us Business Leaders in countries that have much more economic advantage can help fuel a more authentic prosperity from the ground up.

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.