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What to do when your business is running out of money.

  • January 21, 2010 12:46 am

Excerpted from www.unchained-entrepreneur.com

We spend a lot of time here at the Unchained Entrepreneur focusing on how to start and grow companies, as well as strategies for achieving person success. There is a dark underbelly to growing a company, however. The life of an entrepreneur is not always one of joy and unbounded enthusiasm. Today let’s examine what to do about one of the most dreadful entrepreneurial situations – burning through cash reserves.

One of the most stressful times in the life of an entrepreneur is when your company begins to run out of funds. Perhaps you overestimated how quickly your product would come to market? Or maybe a key supplier/manufacturer overpromised on delivery times? Perhaps the general economic malaise played havoc with your plans? Whatever the reason, many of us have been in the circumstances where our business was threatened due to the steady drain of capital.

There’s no magic bullet for this situation, and I’m not going to pretend that a blog can possibly solve your particular circumstances. Instead, I want to focus on strategies that you can employ that can keep your emotional state healthy and may also keep your business afloat. If stress becomes overwhelming, you won’t be in any shape to search for solutions. Thus, you can use some or all of the following tips to keep yourself on an even keel, allowing you to continue the battle for business survival and success.

Don’t Lose Track of Success

Just because your business has run into difficulties doesn’t mean it’s a failure. Take some time and review all the successes that you and the company have achieved since startup. Actually sit down and make a list of these accomplishments. Have you launched a product? Garnered any awards? Raised initial angel or VC funds? The list of milestones could be much larger than you think.

About ten years ago, a company I co-founded (Sneakers.com) ran into some financing difficulties. I sat down and made a list of milestones that had been achieved – securing the Vice Chairman of the North Face for our Board of Directors, hiring the former Chief Merchandising Officer of the Sports Authority as President of the company, raising several million dollars of initial angel funding and launching a super designed and functional website were on that list. As I reviewed these, I realized how much the company had already accomplished. Lack of financing was just another obstacle – and we’d already overcome a number of obstacles to get to where we were.

By the way, this list can prove to be an effective tool beyond your own state of mind. Share this with employees, vendors or suppliers that express concern about your circumstances (see below). You may find that it gives them comfort. Additionally, you should be using this as a tool in any attempt to raise additional capital.

Control what you can.

Read the rest at Unchained-Entrepreneur.com

Entrepreneurs, to Build a Successful Start-up Company You Must Create Value Everyday

  • January 15, 2010 7:16 pm

Entrepreneurs need to necessarily focus on creating value for their start-up company.  From an initial “idea” or “concept”, entrepreneurs need to continually focus on moving their start-up company forward to the next step in its development. This is accomplished by creating value for your start-up company and focusing on those items that necessarily make a difference to both your targeted customers and to your investors.  As an entrepreneur, you are not in the business of developing technology for technology sake or the “cool” factor.  You are in business to acquire paying customers.  To do this, you must create attractive value that facilities customers’ desire to buy your technology, product or service offering.  From the initial concept, to identifying your business proposition, to developing and delivering your first prototype, to acquiring your first paying customers, entrepreneurs need to focus on value added activities that move their start-up company forward from inception, through funding, to a functional, cash flow positive functioning entity.  This article focuses on the necessity to create value everyday to facilitate both the short term and long term success of your start-up company.

Think About Your Start-up Company 24/7

As the entrepreneur of a start-up company you will have a lot of challenges along the way.  With both short term problems to address, as well as long term corporate objectives, you need to focus on your start-up company 24/7.  Why is this focus necessary?  Because as you try to successfully guide your start-up company through the maze of daily problems and opportunities, you are trying to identify the proper and best path forward that servers your near term objectives and at the same time does not necessarily cause issues that may hurt your start-up company in the long run.  Near term problems may turn out to be significant long term opportunities, and your initial long term objectives may not necessarily be right for your start-up company as it evolves and develops from instantiation to a functioning and profitable company. In addition, what was an obvious decision yesterday may be a total miss-step tomorrow.  Therefore, you need to constantly think about your start-up company from bottom to top, 24/7.  This type focus will allow you to mull over changes in the market and at the same time provide you with the necessary insight to continually create the value that moves your start-up company successfully forward not only addressing day-to-day activities, but over the long term.  So, as a budding entrepreneur, you need to think about your start-up company 24/7.  This will provide you with the necessary focus to guide your company through the trials of a successful start-up company.

Identify Your Start-up Company’s Value Proposition

One of the key items that differentiates a successful start-up company is the ability to succinctly define its underlying value proposition that targets the needs of its customer base.  By identifying a significant value added proposition for your target customer base, you are in essence solving an unmet need or problem in the market.  In addition, by identifying your value proposition early, this will allow your start-up company to create and develop a differentiated product offering in the market.  It will also allow you as an entrepreneur to succinctly define your start-up company and its technology, product or service offering to your potential investors.  This is necessary, as investors need to quickly discern how what problem or need you are solving in the market and how you are differentiated, long term from your competitors’ product offerings.  In addition, by identifying your value proposition early, you will necessarily provide a path forward for your start-up company.  This does not mean that your value proposition will not evolve or change as you engage with your customers and continue to define your technology, product or service offering.  It is okay to refine and enhance your value proposition as you engage your customers and the market. This will necessarily allow you to create additional value to your targeted customers and enhance your long-term success in the market.

Focus on Significant Value Added Activities

As an entrepreneur of a start-up company you need to focus on significant value added activities to constantly move your company forward.  This is very important, as it is often too easy to get caught up in insignificant day-to-day activities that do not add value to your start-up company.  Significant value added activities can include:

  • Calling your customers to validate the necessary features, functions and capabilities or your initial product offering and your long term product roadmap,
  • Focusing on securing the necessary strategic partners to complete your product offering,
  • Streamlining your business and financial models to ensure success in the market,
  • Minimizing time-to-money and focusing on early revenue sources, and
  • Securing initial customer commitments.

By focusing on significant value added activities, you are creating the necessary value that will get investors attention and at the same time raise your start-up company’s valuation.  It addition, you are creating a path to success in the market.  Therefore, as an entrepreneur, you need to focus on value added activities that are significant and will create long term success for your start-up company.  By doing so, you will help create a smooth path forward and at the same time enhance your probability of securing funding and success in the market. 

As an entrepreneur, to create a successful start-up company, you need to focus on creating value every day. This is necessary, as the road from inception to funding, and ultimately a successful functioning and profitable company is often difficult and treacherous.  Bad near term decisions, can often have significant consequences on the long-term success of your start-up company.  To continually add value every day, as an entrepreneur, you need to think about your start-up 24/7, identify your start-up company’s value added proposition, and continually focus on significant value added activities.   By doing so, you will enhance your ability to create and fund your start-up company and ultimately be successful in the market.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at http://www.amazon.com/.  For more information on the book go to www.carlsbadpublishing.com.

View Robert Ochtel’s Blog

Start-up Triplets from OnStartups.com

  • January 9, 2010 5:20 pm

Startup Triplets:  Startup Advice In Exactly Three Words

1.  Watch your cash. [tweet]

2.  Pick founders carefully. [tweet]

3.  Hire generalists early. [tweet]

4.  Hire specialists later. [tweet]

5. Invest in culture. [tweet]

6. Avoid tempting distractions. [tweet]

7.  Support customers maniacally. [tweet]

8.  Avoid business plans. [tweet]

9.  Write a blog. [tweet]

10. Never fudge numbers. [tweet]

11. Encourage diverse thinking. [tweet]

12. Guard your time. [tweet]

13.  Defer renting space. [tweet]

14. Get enough sleep. [tweet]

15.  Delay raising capital. [tweet]

16.  Persist through downturns. [tweet]

17.  Decide with data. [tweet]

18.  Improve product daily. [tweet]

19. Recognize revenue consistently. [tweet]

20. Start charging early. [tweet]

21. Reward early adopters. [tweet]

22. Sell something today. [tweet]

23. Say “NO” often. [tweet]

24. Accept imperfect data. [tweet]

25.  Recruit with zest. [tweet]

26. Nurture your best. [tweet]

27.  Treat vendors well. [tweet]

28. Believe in yourself. [tweet]

29. Respect your competitors. [tweet]

30. Try something new. [tweet]

31. Build a brand. [tweet]

32. Focus, focus, focus. [tweet]

33. Iterate more often. [tweet]

34. Use your product. [tweet]

35. Live your vision. [tweet]

36. Encourage rational debate. [tweet]

37. Make decisions swiftly. [tweet]

38. Face harsh realities. [tweet]

39. Don’t break laws. [tweet]

40. Protect your health. [tweet]

41. Celebrate your successes. [tweet]

42. Cancel unnecessary meetings. [tweet]

43. Improve emloyee’s resumes. [tweet]

44. Beware big bullies. [tweet]

45. Share the experience. [tweet]

46. Maintain your relationships. [tweet]

47. Keep it fun. [tweet]

Update:  Guy Kawasaki (yes, the Guy Kawasaki) was kind enough to post some of his own triplets. Here are some:

48. Sales fixes everything.

49. Ship then test.

50. Do not partner.

You can see his full list here: Guy Kawasaki’s Startup Triplets.

 

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  • January 1, 2010 6:15 pm

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7 Decisions That Can Change Your Life

  • December 29, 2009 8:57 pm

Its all about little decisions.

1. Specific training will never create the results you are seeking. You need to dig way down and gather the nuts and bolts for your journey to success. The secret does not lie within one talk or one speach or training session, it lies deep within you. You have the gifts and talents, now you need to recognize the potential and release it.

2. The Buck Stops here. Take ownership of you. Accept the responsibility of your past. Understand that the beginning of responsibility is accepting it. It’s not about blame, its about hope and control of your situations.

3. Always seek wisdom. Plug into a system and you plug into your future. Rely on systems to take you to your destiny. If your the system, you will always be working it. Make your system go to work for you.

4. I am a person of action. You and you alone are going to change your future with the cooperation of others who buy into your dream. Grasp it with both hands and tell your feet to run with it. Do that and you will start to attract others to your dream and they will let you lead them to the promised land.

5. I have a decided heart. You have already decided that your going to win. A wise man once said-”A journey of a thousand miles requires a first step.” Decide that no matter what the circumstances, you are going to GO FOR IT! Your thoughts and action are always towards the future.

6. Today I will choose to be happy and have a grateful spirit. If you are not happy, sit down and write down all the things you are grateful for. Doing this will ensure that you recognize just how blessed you are. To many of you concentrate on what you dont have. You have everything you need to succeed.

7. I am going to greet this day with a forgiving spirit. Forgive yourself folks. Decide that your going to let yourself off the hook for all the screw ups for the past. That includes other people that you have a grudge against. The past never predicts your future…You do!

Persist without exception. Failure is not an option. You decide whether your going to meander in the passing parade of humanity or whether your going to win at the game of LIFE!!