Advisory boards can be an invaluable source of insight. Think of an advisory board as a collection of mentors that can provide individual expertise, provide you a sounding board for ideas, give you advice, introduce you to valuable contacts, and tell you when you’re potentially making a mistake.
When your customer gives you the good news that they have decided to purchase your product or service, you usually have to then start the legal process of getting an legal contract signe with the customer. This can take from 30 to 120 days. Using a letter of intent (LOI) can get you a little money upfront while you and your customer work on the real agreement.
Good cash-flow management means understanding every inflow and outflow of cash. In principle, you must delay every outlay of cash as long as possible, while incenting everyone who owes you money to pay it as rapidly as possible. Also, its about being vigilant about limiting any surprises such as unanticipated payment lags and unplanned-cash outlays. So how do you be proactive in managing cash? Here are some basic disciplines that every entrepreneur must understand and practice to optimize their cash:
When you're running about your day with a mile long "to do" list, it's unlikely you have the extra time to figure out how everyone is feeling about everything. To you - you're building a company, developing a product, raising money, trying to find resources and so on. You don't have the time to focus on the emotional state of being of everyone around you. This is where we make mistakes that stunt the progress of our business.
Yet, there is a consistent disconnect between the entrepreneur’s understanding and explanation of an issue, plan or expectation and the interpretation of the customer, employee, investor, advisor or relationship on the other end. While we may think our constituents have a secret club where together they plan new ways to screw with us, in turns out we are the common denominator in this negative repetition. If, as entrepreneurs, we continue to stubbornly insist that we are the ones communicating clearly, our words eventually will fall on deaf ears. Because, in reality, we are likely the ones not making any sense.
Do not underestimate the negative impact poor communication can have if your company earns a reputation for being diffcult or complicated to work with. Even responding to questions with long, complicated answers wears down your constituents. I recently asked an entrepreneur, “What is the price for the product?” The answer was so long and complicated that I stopped listening. If this occurs on a regular basis, interacting with you and your company becomes a chore. Potential investors not only need to be able to grasp the value of your company, but they also need to feel what it would be like working with you as a leader. Will communication be a chore? Will it be helpful and informative or strain their patience and trust? If everything seems like you are talking nuclear physics, they will likely pass.
The resources that make your company grow and succeed are your people—especially your senior people. Hiring the right people is difficult to do in any business. In an entrepreneurial venture, it is even more challenging. But if you adopt the right perspective, it will become clear just how critically important hiring is. You’ll develop it as a specialized skill, and in doing so, approach building your team with the same purpose and care you devote to other key elements of your business. Every time I failed to prioritize this perspective, the mistake was obvious and far-reaching. But when I approached hiring and recruiting new team members with a deeper understanding of the purpose—and the painful consequences of getting it wrong—we advanced the business and strengthened our company culture. You can’t control everything, but this is one skill you can choose to improve and the results will be undeniable.
Take a look at this list of corporate values: Communication. Respect. Integrity. Excellence. They sound pretty good, don’t they? Strong, concise, meaningful. Maybe they even resemble your own company’s values, the ones you spent so much time writing, debating, and revising. If so, you should be nervous. These are the corporate values of Enron, as stated in the company’s 2000 annual report. And as events have shown, they’re not meaningful; they’re meaningless.
Certainly different investors look for different things when it comes to what they consider to be a good investment opportunity. Is is unlikely you will have all of these, but the more you have, the more likely you are to garner an investment. Here are a few things that most investors look for in any opportunities or pursuing:
Regardless of the type of investor or the stage you are at, the following process should serve you well. You may not need all of the steps, or you may want to add additional pieces over time, but this basic framework will help not only streamline the process but help you improve at how you and your team function in the process. Think of it this way - if you drive to work the same way each day, you get to know where all the potholes and traffic jams are.
But one thing they often forget is that decisions made on day one can have huge implications down the road. You see, it's not enough to build a business worth a fortune; you have to make sure you have an exit strategy, a way to get the money back out. This is for those of you who like to plan ahead and for those of you who don't but should.
When building a company, you don’t have the resources—financial or human—to do things the way you would like to. There will be times when your chance of success with a customer, vendor, investor or employee seem slim. Sometimes you lose opportunities simply because you aren’t established. There are often real reasons why you can’t achieve something. You don’t have the money, resources, experience, capital, partners, team mem- bers, investors, facilities, capacity, technology—the list goes on.
Humility is a trait of strong leaders—the type of leaders employees want to work for and investors want to fund. One of the most important days in the history of my company was when I realized being a CEO was a skill that needed to be developed with the same perseverance, ferocity and willingness to learn that athletes apply to their training.
When we become entrepreneurs, we are creating something we believe in. You hear many of us say, “There are so many customers that need our product or service.” In fact, sometimes we say, “I don’t know of anyone who wouldn’t want our product.” While this may be partly our excitement talking, or maybe just the influence of our pressure, passion pleasure or pain, it is also a dangerous path. Don’t get me wrong. Your market, product or service may be new or different. It would seem that the opportunity to attack broad markets, and to have no limits on what markets to chase, would be a good problem to have.
When we become entrepreneurs, we are creating something we believe in. You hear many of us say, “There are so many customers that need our product or service.” In fact, sometimes we say, “I don’t know of anyone who wouldn’t want our product.” While this may be partly our excitement talking, or maybe just the influence of our pressure, passion pleasure or pain, it is also a dangerous path. Don’t get me wrong. Your market, product or service may be new or different. It would seem that the opportunity to attack broad markets, and to have no limits on what markets to chase, would be a good problem to have.
Entrepreneurs are builders. When most entrepreneurs start, their default mentality is that they will start small and become their own “craftsman.” We remain fiercely committed to building from the ground up. Imagine the day we have two employees, ten employees. One hundred employees. Even the term “startup” embodies the notion of building something from the ground up.
Look at competition and success from a different perspective. Take some of the time, effort and resources normally devoted to your product, and direct them to finding the right “playground”—one where you can maneuver and gain visibility that cuts through the noise. Imagine if your effort was not spent on Release #10 of your software or your ninth perfume bottle design, but on the distribution channels that will value Release #5 or bottle design #8, and the niche markets where that value has room to be unique. What is often inferior on one playground is superior on another. The uniqueness of your solution is important. It might be even more important to go to playgrounds where no one else is playing.
Advertising and information overload is the norm. Whether you’re battling to reach consumers inundated with an endless set of choices for virtually each product or service, or corporate buyers overwhelmed by the number of potential solutions they review, it is almost impossible to cut through the noise. Cutting through this clutter, even with something head-turning and new, can be difficult.
Whether it is bourbon, working out, yoga, meditation, spending time with your family or going to the movies alone, you need your release. When we are wrapped up in our own world, it is difficult to see beyond our four walls. When you break a sweat, or think about the sacrifice of others, or see a child smile, your brain takes a break. It stops focusing on all of the things on your plate (and all the things you are not getting to). Give your brain a well-deserved time out and it will really clear your head. This leads to new ideas, new ways of thinking and new, often more creative solutions to problems. Find your release and make it a part of your week.
You will be evaluating a consultant who seems to have a lot of experience and isn’t that expensive. He can also start right away. Our first thought is, “Wow, someone who we can afford and who is available?” Do you ask yourself, “If he is good, why is he cheap and why is he not working?” Of course not. We want to believe.
Think of yourself as part of the product or service you are delivering. If the diamond in your jewelry wasn’t holding, wouldn’t you change the setting? If your consulting services were too expensive, wouldn’t you change the price? If your wearable device didn’t transmit the right data, wouldn’t you change the technology? It is no different with you. Especially with the strain you are under and the constant presence of pressure, passion, pleasure and pain, you need to be better, faster and stronger. These rules will help you build a better product to serve customers, employees, investors and you.
Hitting the Pillow Means Sleep. When you put your head on the pillow at night, don’t waste time thinking about problems you can’t fix at that moment. When you are lying in bed, there is nothing you can do about your company’s issues. Once you decide to sleep, don’t think about the business. Find your version of counting sheep. I used to let my mind wander to a college baseball game or to a childhood memory. Regardless of your version of the strategy, make the commitment that once you put your head on the pillow, you are not going to waste time on things you can’t impact.
Identifying where your skills can be supplemented or complemented can quickly accelerate your company’s growth. Once you recognize these areas, you can plan accordingly. Look for a variety of resources whose experience balances yours. Find support from specialists or those with extensive experience in an area you are lacking. Their ease and efficiency will translate into your own effectiveness. Identifying where you need help; being candid with yourself and your constituents is not a weakness, it is a strength. Leaders who recognize their deficiencies and encourage others to do the same, gain respect, solve business issues more efficiently and set the foundation for well-run companies. There’s also a good chance your day will be much more enjoyable.
There are areas of the business that we could work at endlessly and never get tired - these parts of the business bring genuine enjoyment, fulfillment and your best ideas. There are other parts of the business that you dislike or even dread. These areas can be as draining and debilitating as others are energizing and enjoyable. Finally, there are parts of the business that need to be done, and while you are capable of the work, you’re just not cut out for it. Unfortunately, entrepreneurs often don’t realize their deficiencies in this area. If the company needs someone to set priorities, develop a sales plan, create an investment package or determine a sales approach, and you have little experience or capability in these areas, your insistence that you take the lead can set the company back. If the bottom line is seeing results, applying a good “college try” can actually hamper the ability of the business to get the resources it needs.
While each day can be different, the fundamental elements of any business are the same—sales, marketing, operations, finance, people, etc. Establishing processes to deal with the common issues of a business seems like a waste of time to most entrepreneurs. Process is the fuel that energizes progress, yet many entrepreneurs view process as a dirty word reserved for General Electric and Six Sigma classes.
