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17 Mistakes Start-ups Made by John Osher

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Jon Gillespie-Brown in 17 Mistakes Start-ups Make by John Osher points us to this hard won advice by successful entrepreneur Job Osher who decided the best advice for the rest of us would not be tales of his successes but indelible memories of his biggest mistakes so other entrepreneurs can long to avoid them.

“John Osher has developed hundreds of consumer products, including an electric toothbrush that became America’s best-selling toothbrush in just 15 months. He also started several successful companies, including Cap Toys. He built sales to $125 million per year and then sold the company to Hasbro Inc. in 1997 ( I have just heard from Joe Kling: Osher sold Cap Toys to Russ Berrie & Co. which sold it 3 years later to Hasbro for a major profit. Kling says he was a board member of Russ at the time and acted on behalf of both parties in his sale to Russ ). But his most lasting contribution to the business world just may be a list of screw-ups he jotted on the back of a piece of paper.

He came up with an informal list of “16 Mistakes Start-Ups Make”-since expanded to 17-that has been used in a Harvard Business School case study, has been cited in many publications, and has become a part of what he teaches budding entrepreneurs in his frequent university lectures. He also used the list in 1999 when he started Dr. John’s SpinBrush to sell a $5 electric toothbrush that quickly became America’s best-selling toothbrush. In 2001, Procter & Gamble purchased the company from him for $475 million.

Here’s a quick summary if you’re time pressed, or you want to bookmark this and come back to read the whole post later:

The first 6 mistakes deal with projecting you will make more money than you do, at least in the beginning. Entrepreneurs, like marketers, are optimists. They’re imagining the future. Accountants are realists. They’re adding up the past.

The 7th is about not having a contingency plan. Duh. Entrepreneurs need Plan B,C, D & F, maybe more. That’s like the advice about travel. Pack 1/2 the clothes and twice the money.

Mistakes 14 – 16 all deal with maintaining focus: don’t get scattered or chase too many opportunities at once. Do one thing well.

Mistakes 8-13 are pretty rooky mistakes: bringing in unnecessary partners, not knowing how to hire or manage your company, not getting that success is about persistence.

Mistake 17 is about not having an exit strategy, but yours may be a lot simpler than his ie. don’t forget to sell the sucker ( unless you have children you want to give it to, then be sure a.) they want it & b.) they would have clue how to run it.)

Or you can read the 100 word version:

17 mistakes startups make — the 100-word version [Silicon Valley Users Guide]

Here are all 17 mistakes in detail

Mistake 1: Failing to spend enough time researching the business idea to see if it’s viable. “This is really the most important mistake of all. They say 9 [out] of 10 entrepreneurs fail because they’re undercapitalized or have the wrong people. I say 9 [out] of 10 people fail because their original concept is not viable. They want to be in business so much that they often don’t do the work they need to do ahead of time, so everything they do is doomed. They can be very talented, do everything else right, and fail because they have ideas that are flawed.” ( This has never been my problem: I’m a demon on research.)

Mistake 2: Miscalculating market size, timing, ease of entry and potential market share. “Most new entrepreneurs get very excited over an idea and don’t look for the truth about how many people will want to buy it. They put together financial projections as part of a presentation to pump up their investors. They say, ‘The market size is 50 million people that could use this product, and if I could only sell to 2 percent of them, I’d be selling a million pieces.’ But 2 percent of a market is a lot. Most products sell way less than 1 percent.” ( From what I see, most people wildly overestimate what their market share might be. For small entrepreneurs I’m not sure you really can estimate it up front. Personally, I’m into low cost testing. Test it. Then you have reality instead of estimates. If it works, go with it and keep expanding it. If it doesn’t, drop it. Same principle as Feed the Opportunities, Starve the Problems.)

Mistake 3: Underestimating financial requirements and timing. “They set their financial requirements based on Mistake 1, and they go ahead and make a commitment to this much office space and this many computers, and hire a vice president of sales, and so on. Before they know it, based on sales projections that were wrong to start with, they have created costs that require those projections to be met. So they run out of money.” ( #1 Rule: Never run out of cash. See Start Your Own Small Business Using More Ingenuity, Less Cash)

Mistake 4: Overprojecting sales volume and timing. “They have already miscalculated the size of the market. Now they overproject their portion of it. They often say ‘There are 200 million homes, and I need to sell [to] x number of them.’ When you break it down, though, a much smaller number of those are really sales prospects. That makes it impossible to make their sales projections.” ( Again, I don’t project, I test. See Mistake # 2 above. It quickly becomes apparent that these projections, which I think are next to impossible for a small business to make…. and lots of big ones too ..remember the Edsel and New Coke fiascos…. can have a snowball effect and that’s a snowball going downhill, picking up speed.)

Mistake 5: Making cost projections that are too low. “Their cost projections are always too low. Part of the reason is that they project much higher sales. There are also unknown reasons that always come out that usually make costs higher than planned. So on top of everything, their margins are now lower.” Snowball effect. As is the following.

Mistake 6: Hiring too many people and spending too much on offices and facilities. “Now you have lower sales, higher costs and too much overhead. These are the things that you see every day in companies that fail. And they all grow out of that first mistake: failing to research the size and viability of the opportunity.”

Mistake 7: Lacking a contingency plan for a shortfall in expectations. “Even if you’re realistic in your estimates to start, there are things that happen when you start a new business. Your sales ideas may be no good; bank rates may go up; there may be a shipping strike. These aren’t the result of poor planning, but they happen. More often than not, entrepreneurs just feel that something will come along when they need it. They don’t have contingency plans for it not working out at the size and time they want.”

Mistake 8: Bringing in unnecessary partners. “There are certain partners you need. For instance, you often need money, so you’re going to need money partners. But too many times, the guy with the idea takes on all his friends as partners. Many people don’t provide strategic advantages and don’t warrant ownership. But they’re all going to get 25 percent of the company. It’s totally unnecessary, and it’s a mistake. Before people are made partners, they have to earn it.” My father used to say, just like no witnesses, “No partners”. But, learn for yourself what’s right for you.

Mistake 9: Hiring for convenience rather than skill requirements. “In my first business or two, I hired relatives. It was easy to do, but in many cases, they were the wrong people [for the job]. And it’s hard to fire people, especially if they’re relatives or friends. More time needs to be spent handpicking people based on skill requirements. You really need super-skilled people who can wear more than one hat. It just bogs you down when you hire people who can’t do the job.” You’re kidding, right? Hiring is the time to be ruthless.

Mistake 10: Neglecting to manage the entire company as a whole. “You see this happen all the time. They’ll spend half their time doing something that represents 5 percent of their business. You have to have a view of your whole company. But too often, the person running it loses that view. They get involved in a part, and they don’t manage the whole. Whether I do this product or that product, whether I hire somebody, [I consider] how they [will] fit long term and short term in the big picture. Constantly try to see your big picture.” If you have a small company, it’s pretty easy to see the whole picture. Just follow your numbers. Every day. The big numbers are where to focus your attention.

Mistake 11: Accepting that it’s “not possible” too easily rather than finding a way. “I had an engineer who was a very good engineer, but with every toy we developed, he would say, ‘You can’t do it that way.’ I had to be careful not to accept this too easily. I had to look further. If you’re an entrepreneur, you’re going to break new ground. A lot of people are going to say it’s not possible. You can’t accept that too easily. A good entrepreneur is going to find a way.” Harold Geneen, the great manager of ITT’s then 250 some odd international companies in varied industries used to repeat: ” Management must manage. If you’ve tried 23 times and failed, you must try the 24th time. You must keep searching for a solution that is not just for the moment, but which is strategic and generic and forms a permanent solution to the problem.”

Mistake 12: Focusing too much on sales volume and company size rather than profit. “Too much of your management is often based on volume and size. So many entrepreneurs want to say ‘I have a company that’s this big, with this many people, this many square feet of space, and this much sales.’ It’s too much [emphasis] on how fast and big you can build a business rather than how much profit it can make. Bankers and investors don’t like this. Entrepreneurs are so into creating and building, but they also have to learn to become good [businesspeople].” This is another duh. When I was starting out in my twenties and my family was in the cattle business one of the top people from the King Ranch group told me: ” If it costs you 40 cents to put a pound of beef on a cow and you sell it for 30 cents a pound, that’s not something you can make up with volume.” I get it. And most of the profit from ranching comes from land appreciation. But that’s another post.

Mistake 13: Seeking confirmation of your actions rather than seeking the truth. “This often happens: You want to do something, so you talk about it with people who work for you. You talk to [your] family and friends. But you’re only looking for confirmation; you’re not looking for the truth. You’re looking for somebody to tell you you’re right. But the truth always comes out. So we [test] our products, and we listen to what [the testers] say. We give much more value to the truth than to people saying what we’re doing is great.” Duh….no one likes criticism, but that’s what testing is all about.

Mistake 14: Lacking simplicity in your vision. “Many entrepreneurs go in too many directions at once and do not execute anything well. Rather than focusing on doing everything right to sell to their biggest markets, they divide the attention of their people and their time, trying to do too many things at [one time]. Then their main product isn’t done properly because they’re doing so many different things. They have an idea and say they’re going to sell it to Wal-Mart. Then they say they’re going to sell to [the] Home Shopping Network. And then the gift market looks good. And so on.”

Mistake 15: Lacking clarity of your long-term aim and business purpose. “You should have an idea of what your long-term aim is. It doesn’t mean that won’t change, but when you aim an arrow, you have to be aiming at a target. This [concept will] often come up when people ask ‘How do I pick a product?’ The answer depends on what you’re trying to do. If you’re trying to [create] a billion-dollar company with this product, it may not have a chance. But if you’re trying to make a $5 million company, it can work. Or if you’re trying to create a company [in which] family members can be employed, it can work. Clarity of your business purpose is very important [but] is often not really part of the thought process.”

Mistake 16: Lacking focus and identity. “This was written from the viewpoint of building the company as a valuable entity. The company itself is also a product. Too many companies try to go after too many targets at once and end up with a potpourri rather than a focused business entity with an identity. When you try to make a business, it’s very important to maintain a focus and an identity. Don’t let it become a potpourri, or it loses its power. For instance, you say, ‘We’re already selling to Kmart, so we might as well make a toy because Kmart buys toys.’ If you do that, the company becomes weaker. A company needs to be focused on what it is. Then its power builds from that.”

Mistake 17: Lacking an exit strategy. “Have an exit plan, and create your business to satisfy that plan. For instance, I am thinking I might run my new business for two years and then get out of it. I think it’s an opportunity to make a tremendous amount of money for two years, but I’m not sure [whether] it’s proprietary enough to stop the competition from getting in. So I’m in with an exit strategy of doing it for two years and then winding down. I won’t commit to long-term leases, and after the first year, we’ll start watching the marketplace very closely and start watching inventories.

Simultaneously, I will keep the option open to sell it in case I can’t get something more proprietary. That means I won’t sign international agreements that would kill any opportunity to sell it to a multinational. I will make sure that the patent work is done properly. And I’ll try to make sure manufacturing is up to the standards of any multinational company that I might try to sell it to. Pretty high level stuff you probably won’t need to focus on starting off.

Another exit strategy can be to hand the company to [your] kids someday. The most important thing to do is to build a company with value and profits so you have all the options: Keep the company, sell the company, go public, raise private money [and so on]. A business can be a product, too.”

Network To Promote Yourself, Your Product Or Service To “The Hidden Job Market”

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Yes, Virginia, there is a “hidden job market”. Reports estimate that as many as 85% of jobs aren’t advertised. Networking is one way to get at the “hidden job market” , those unadvertised jobs.

First, understand there are all levels of networking.

Level 1. As Joan Runnheim recommends: Tell everyone you know that you are looking for a job. They just may know of someone who is hiring. Develop a contact list including: family, friends, friends of friends, acquaintances, co-workers, former co-workers, neighbors, doctors, dentists, and lawyers. If you live in a large city, chances are you can find a job search support/networking group to attend. Remember, more contacts equals more job opportunities.

Level 2. Get involved with organizations and non-profits where you can be helpful and highlight your skills at the same time. Listen carefully to others’ needs. “Try to understand what others see as your value proposition. Take the initiative and volunteer advice, knowledge or other valuable information first, without being asked to do so. Once you have demonstrated that you can provide value, “says Executive recruiter William Werksman, ears will perk up. You will begin to be on people’s radar. You never know who in that group might need someone with your demonstrated skills, either now or sometime in the future. Once you make a contact, nurture it. Stay in contact. Try to be helpful when called upon. The more you can demonstrate your ability, the more likely someone will recognize it as a “must have” for their organization.

Level 3. To ratchet the game up a notch, more power comes when you tap into an existing network. As you know there are all kinds of existing networks, and by now you should have tapped into many of them: your own professional network, all varieties of business networks, leadership networks such as those run by United Way or your Chamber of Commerce or high profile non-profits which call on movers and shakers in a community.

Joan Runnheim, M.S., founder of Pathways Career Success Strategies, a career consultant, gives her views on networking and marketing yourself in Career Success Through Self-Marketing – AdvancingWomen.com

“Marketing shouldn’t be limited to advertising companies. Finding a job or enhancing your current position requires good self-marketing skills. What is self-marketing? Basically, self-marketing is communicating your benefits to potential or current employers. Think of yourself as a “product” and explain to employers what differentiates you from other “products.”

Why is self-marketing important? Landing a job or improving your current position requires effectively selling your skills, abilities, and knowledge to employers. You can’t sell yourself if you don’t get out there and meet people or tap into much larger networks which will get the word out about your value.

Today is a good time to start.

To read this entire article go to Career Success Through Self-Marketing – AdvancingWomen.com – Careers-Employment.

Business Planning: An Exercise In Revisions

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Here we are, caught in a recession, so what can we do about it? The first thing we should all do is sharpen our past business planning and take into account the facts on the ground. A “plan” exists in a vacuum until that little hatchling bursts out of its shell and steps into the barnyard which is miles and miles of vast, uncharted territory with many, sometimes scary, things happening at once, all of which have an impact on you in one way or another. We all have to remember that a business plan is never done, it’s always a work in progress and revisions are never needed more than in tough times.

Here’s what Tim Berry has to say in 7 Business Planning Fundamentals | Small Business Trends.

” Specifically, what do we as business owners, managers, and entrepreneurs, do about it? I see this question and good and bad answers everywhere, so for this post I’ll stick to my expertise, which is business planning.

Let’s review how we go back to the fundamentals of business planning. What exactly are the fundamentals?

It’s the planning, not just the plan. That’s critical and we all see it now as sudden unexpected changes — the black swan — blow our plans up. No worry, business plans are always wrong, so it’s always been the planning process that makes them worthwhile. Planning means plan and review, revise, and correct, and review and revise and correct again. Watch how the assumptions change. This is absolutely fundamental to planning.
Shorten the cycle. You’re using planning to steer your business now, and the road is curvy and bumpy and unpredictable, so you pay closer attention and concentrate more carefully. Review your numbers frequently. Watch for changes, surprises, and the unexpected. It’s about early warnings. Watch the short-term closely. Use your planning as an early warning system.
Sharpen the focus. Narrow it down. Make sure you’re close to your best customers. Sharpen the marketing message, and review where it’s going and how. Avoid wasted resources.
Watch the cash flow. As the kids would say, “no duh.” But even if it’s obvious, I can’t leave it out of the fundamentals. Please remember that profits aren’t cash, and watch for changes in the cash cycle, like your business customers waiting longer to pay their bills. A business-to-business company needs extra financing worth a month of sales for every 30 days longer that customers hold off their payments.
Watch the metrics. Remember, you’re looking for early warning systems. Obviously sales, costs, and expenses are metrics, but measure wherever you can, and watch for changes. Phone calls in and out? Time per call? Presentations? Inquiries? Metrics work for early warning.
Your business plan is always wrong, but vital. See point number 1.
Your business plan is never done. See point number 1.

My conclusion? Now, as 13 months ago. This is from that economic dark clouds post (sorry to quote myself, but hey, at least I’m consistent), but I think it holds up now more than ever. Stick to fundamentals, and get back to work:

Thoughtful economic analysis is readily available, fascinating, and scary. I don’t know about you, but for me some measure of future fear is a good thing. As president of a small company, being fearful is part of my job. Then I finish my coffee, go to my email, and get back to work.”

* * * * *

Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His blog hub is at timberry.com.
The Cold, Hard Facts About Business Plans, Elevator Pitches And VC Presentations

Finding A Product To Sell Online – Don’t Marry It, Test It

The :en:headquarters of :en:eBay in :en:San Jo...

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Just because a product sells like gangbusters on someone else’s site, don’t assume it will sell on yours. Your product has to fit in with your overall expertise and what your site is about in order for people to go there and look for it, much less buy it.

Even if a product fits your site and its personality like a hand in a glove, don’t assume it will sell. The pricing may not be right, the market may be saturated, the stars may not line up right. Who knows why some things sell on any particular site and others don’t? You can’t be clairvoyant: you’re not a mind reader, you’re a web marketer. Everyone has 20/20 hind sight. That’s why the best plan is to just put up a product and test it out. It either sells or it doesn’t. Sometimes you can tweak it…tweak the price, tweak the offer. But often people just aren’t interested in buying that product from your site and that’s all you really need to know. And there’s a very simple way to figure this out.
Whether you wish to sell ads related to your content, or join an affiliate marketing program or sell your own products on your site or on Amazon or eBay, there are a lot of moving parts to get right on a website and you will need to make a lot of right choices along the way. The way to do this is by testing: testing ad placement and color, testing content, testing product categories, testing various suppliers and vendors, testing affiliate marketing programs to see which ones work for you.

Those who take the time to test everything they are doing are the ones who eventually become successful in whichever field they choose.

I can’t begin to tell you how many things I’ve tested. I’ve tested travel, which I thought might be convenient for business customers: zero. I’ve tested business ebooks: nothing. I’ve tested many, many products, all of which came to nada, nothing. Even in the two core revenue producers on the AdvancingWomen.com site, advertising and employment recruiting, I’ve been through a dozen morphing and transfiguration experiments, starting with Doubleclick Ads, from the day they were born, to some new European ad company which sweet talked me into believing they were going to take the Net by storm, but all they did was truly anemic revenues and give me one more learning experience. All this was before I morphed my way into a successful combination of Google ads, text ads sold from my site, and some proprietary ad networks. It just took time and testing.

Same with a Job Board or employment recruiting facet of our site at Careers.AdvancingWomen.com. I was a part of every one of what seemed like a half dozen permutations of what eventually became CareerBuilder.com. That was ok for pocket change. What I began to realize was that big job boards who wanted you as an affiliate wanted the demograhic you had captured but in no way wanted to promote your site, and why should they, as they would be creating their own competition? Basically they were getting the benefit of your traffic and assuring that you didn’t compete with them or join another competing job board like Monster.com. It worked pretty well for them, but not necessarily so well for you. Ultimately, I was able to start Careers.AdvancingWomen.com , our own job board which guaranteed a.) I would be building my own brand and therefore an asset I could invest in and b.) I would not be giving up 50% of the revenue up front. It just took a lot of testing to arrive at a successsful combination of revenue streams to support the business.

There are many product testing examples as well. Mom-and-pop team Cheryl and Gary Casper started small, like many do on eBay, first looting their own garage, even snatching up VHS copies of their daughter’s Cinderella and Sleeping beauty then moving on to sell their neighbor’s cast offs.

As they learned about online auctions and particularly the eBay environment, the Caspers moved on up the selling food chain. They now sell $15,000 to $20,000 a month in goods on eBay.

How did they do it? Trial and error.

After their home started overflowing with neighbor’s cast off products, the Caspers turned to drop-shippers–companies that charge others to sell their products then ship directly to buyers. Although this looked good at first – removing the risk of buying the merchandise, the inconvenience of storing it and the hassle of shipping it—there were definite drawbacks. The Caspers were selling about 40 TVs a week but about half of those arrived damaged at the customer’s home. The Caspers needed more control over the quality of the product which was shipped to the customer. They also set out to identify a product category which was less crowded and more profitable than electronics on eBay.

The couple used eBay itself as a research tool, and began going to Chamber of Commerce meetings to find people or companies with products to sell. They discarded many possible products including Star Wars light sabers and gumball machines.

Ultimately the Caspers decided on auto floor mats, an item with as much as 75 percent profit margins, even after paying the dealer. The Caspers put as many as 50 mats up on eBay, at $16 to $125 each. Once or twice a week, They buy the mats they’ve sold from a Houston-based auto surplus company.

“If I only wanted to make a few hundred dollars a day, I’d be done by noon,” says Cheryl.

So, the best advice is probably to use your common sense to figure out what would be a good product or service for your site to offer. Don’t spend an excessive amount of time trying to ponder all the variables. Just put it up. If it makes money, keep it, if it doesn’t drop it. That’s the benefit of testing. Oh, and if it makes money, expand it. That’s the road to success.

Biz On The Net: Find Your Passion & Sell That

Selling on the Internet definitely is a growth trend. The key is simply finding something you like to do – preferably something you have a passion for – that is suitable for an online business, and then transfer all your skills and industry contacts to the net.

Many women and men as well have found their passion selling what they love on the Net.

In 1999, Sarah Davis started selling women’s consignment designer clothing and purses on the Internet while attending law school. Today, she works out of her house in San Antonio selling more than $25,000 worth of Louis Vuitton handbags each month as a platinum seller on auction site eBay.

In August of 2000, In Pittsburgh, Pennsylvania, Lynne Bingham, who owned a children’s clothing story called Lullaby Landing decided she wanted to reach more customers. So, Lynne sold her brick and mortar store, and built a web site with the assistance of Yahoo! Small Business. In January 2001, she launched The Stork Delivers — an online boutique specializing in chic baby gift baskets and other baby accessories.

Her web site’s sales tripled in just over two years, and she received several prestigious awards, including Yahoo! Top Merchant Award, Forbes Magazine Award, and the Golden Web Award. She quickly built up an impressive corporate client list, comprised of numerous Fortune 500 companies. Lynne is now able to work entirely from home. “Being able to have a career/profession from home gives me even more of a chance to successfully tackle the juggling act,” says Lynne, who has a son and daughter.

Joan Shelley, founder of the Oconomowoc, Wisconsin-based Knob Gallery — an online retailer of kitchen cabinet hardware, door hardware, and bathroom accessories is the mother of 8 children, ages 9 to 23, all of whom play an integral role in the business which features over 150,000 unique knobs, drawer pulls and other decorative hardware items. Knob Gallery’s sales grew by over 600 percent in the three years to about $1.5 million and have continued to soar.

You don’t even have to have a business or an area of expertise if you have a passion for something or someplace and want to share it with others.

Nori Evoy, at the age of 15 tapped into her love of Aruba to create Anguilla Beaches, a site she uses to generate substantial referral and finder’s fees by steering visitors to favorite spots or books to tell them more about this island. Now almost 19, Nori has generated more than her college tuition in income from the site. And Nori, incidentally, is not a techie. She relied on a pre- designed program to create her site and monetize it.

Patience and attention to detail are definitely part of this game. The good news is that if there are chores you don’t like and just don’t want to do – like managing your mailing list – you can hire a college student or even a high school student to do it for you once a month. At some point you may be able to get an intern to do it for nothing, just to learn the business.

Be prepared to take some time to develop a following of people who are attracted to what you are offering. To do this and to develop an income stream from your own business you may have to test many tools and products for your site and gradually build on your base. This could take six months to a year or more, depending on your energy and focus, the state of the economy and your specific industry and some other variables. In the end, however, if you stick with it, you can create your own successful personal business which can support you and your family. It will be an asset you own and someday can sell if you choose, although, as a steady source of income, it certainly might beat a rent house, in that it won’t need plumbing or repairs and you don’t have to get up in the middle of the night to take care of a tenant whose water line has broken or heat has gone off in the middle of a January snow storm.

Perks – You get to work from the comfort of your home, be your own boss and decide when you need to take off to put family first. The asset you are building will work for you, even when you’re sleeping, taking your kids to school, running errands or on vacation. In fact, you can work from anywhere. You can decide to winter in the sun and summer in the mountains if you want. More important, you are building your nest egg for a secure future

Potential – Like the global growth of the Internet the potential for growing your online business is huge.

How about you? Ever sold on the Net? Would you like to? Tell us about it. We’d like to hear from you.

Art Of The Incremental: Start With Your Core Competency

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I’m all about the art of the incremental. For one thing, that’s what bootstrapping is and I am inveterate bootstrapper. I recommend it to you as well.

Entrepreneurs have been doing this for centuries: starting from where they are with what they’ve got and seeing what works. This is a time- tested process: if you want to start a business you do two things:

1. Analyze the true nature of your unique assets and core competencies to figure out how they can become a basis for a business.

2. Try small, low stakes testing in the actual marketplace to determine what actually works. Do more of what works and cut the losers. Keep doing low stakes testing and raise the ante on the winners. ( Didn’t I tell you my very successful father insisted I learn to play poker because it was like the game of business? It’s not about the cards you are dealt but how you place your bets. You fold on bad cards and quietly build the pot on the sure winning hands.)

As you practice the art of the incremental , you will be learning your business from the ground up and you will soon learn when to hold ‘em and when to fold ‘em. But, my advice, is to start small and build gradually

Author Diane Helbig has some helpful thoughts on this as well in Keep Your Message Simple | Small Business Trends. She says:

“No doubt you’ve heard the term ‘core competency.’ It refers to that which a company or person does best.

The best way to build a business is to start out offering only what you do best.

Why? For a couple of reasons:

It gives you one thing to focus on; to build a marketing message around.
It helps you define your target market – those people who need that thing.
It helps others land on who you are and what you offer.

In short, it provides clarity. It keeps you and your prospects from getting confused.

Too often small business owners try to offer everything under the sun. They think there’s value in being a one-stop shop and they’re afraid that if they don’t offer more things they’ll miss out on business.

Set yourself up for success by starting out simply. Focus on the thing you do best and market that product or service to that target market. Build your business from the foundation of your core competency.

Once you’ve established your company as a solid entity, you can add products or services and develop a menu of offerings. Be sure to add things that make sense – things that go along with your core product or service.”

How will you know what products or services to offer? Unless your customers have been asking for a particular product or service from you, you probably won’t know. You will have to rely on small scale testing. As someone once put it, “Starve the problems; feed the opportunities.” Or, take a close look, then, as my father would say, “Know when to hold ‘em and when to fold ‘em.”

Let us hear from you. Tell us your start up experiences. Have you learned “the art of the incremental”? How did you do it?”

Biz Ingenuity In Tough Times: 10 Ways to Delegate Without Hiring Staff

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Small Biz Survival: Presenting 11 ways to do more from OpenBeta OKC.

Last night, Becky McCray presented at OpenBeta event in Oklahoma City‘s for Internet professionals, entrepreneurs and enthusiasts. Becky’s topic, in her words: “Every growing small business runs into a crunch time, that time when the work is pouring in faster than you can afford to hire help to do it. How do you get out of a crunch without hiring?”

I’d like to share some of Becky’s ideas with you because, in these tough times, I think it helps to brainstorm about how a small business can cut back and still make it through to the end of the tunnel. Also, to ward off panic and possible discouragement, I think it helps to remember that all of us small business owners are in the same boat, battling the giant waves that are trying to wash over us. And, it is reassuring, I think, to be reminded that there is a support system out there, if we just focus on who they might be and call on each for help.

Becky’s was a lightning talk, of 20 slides, intended to be shown for only 15 seconds each. To see them go here. Her ideas were drawn from several of her previous blog posts, including 10 Ways to Delegate Without Hiring Staff which I’m sharing with you below:

Becky says :”If you are “it” in the business, who can you delegate to?

Family. This is where we all seem to start. Let the kids do age-appropriate tasks. Recruit extra family members to contribute. With family, it is especially important to match the person to the task, give extra support, and check back often. In other words, follow the rules for effective delegating.
Local professionals. Give up the bookkeeping, ad design, collections, and photocopying. Turn to your local accountant, printer, attorney, or office supply store. Look around your town for more resources. Ask them what else they can do for you.
Delivery. This is an advantage of being in a small town. Many businesses still deliver, cutting down your errand list. Also, in a small town, there’s probably “a guy with a truck” who can do some delivery driving at a low cost. Can’t get it delivered locally? Go online and let them ship direct to you.
Suppliers. Ask them to do more, like pre-cut materials, suggest items that require less prep work, or even loan you experts or temporary staff.
Nonprofit services. Check with your Small Business Development Center, Chamber of Commerce, economic developer, technology center, college, vo-tech, and public schools for free or low cost services. You might be surprised what you find.
Utility Companies and Cooperatives. Many offer special services for businesses and individuals, but you have to ask to find out.
Online service providers. You can arrange for almost every business service online. Make a special effort to find fellow small-town pros.
Interns. Allow students to help out for low pay or no pay. Start with your local college, high school and vo-tech, but don’t overlook the big state universities. Even if they are far away, they place students all over.
The Computer. Automate as many tasks as possible. If you answer customers emails, become an expert in cut and paste. Ask the nearest 14 year old expert for more ideas.
Customers. You probably have some raving fans out there who would love to be actively involved in the business, even for a short time. Match their skills against your list of tasks. Phone calls, deliveries, office work, prep work or even clean up may appeal to them.

That’s the first ten ideas from Becky. Now it’s up to you to share your ideas and your stories.

Reprinted with permission from Small Biz Survival, www.BeckyMcCray.com.

Top 8 “Daily Dose” Blogs for Entrepreneurs

: Image by vaXzine via Flickr

Like most bloggers, I have what Chris Brogan calls “listening posts”. I read dozens of entrepreneur and business blogs daily. And although I don’t think I’m any slouch when it comes to following blogs I have to admit some of the top bloggers “listen to” or scan hundreds, some even thousands of blogs. (No, I don’t know how they do it and maintain a normal life on the side, but if I ever make it to that point, I’ll share the secret with you.)

For now I want to share with you what I think are some of the best or most valuable blogs for an entrepreneur or small business person or blogger to read. I mention “daily” because business feedback on the daily state of things… the economy, the business climate… is a bit like Vitamin C: it can’t be stored up, you have to have a dose every day. And I wanted to create the traditional top 10 list, but, many blogs I read I think only occasionally deserve to be top ranked and others aren’t always as completely on topic.

As Scott Allen in Scott’s Entrepreneurs Blog points out in blogs by famous entrepreneurs: “Entertaining and informative though they are, they tend to be mostly about that entrepreneur’s business and whatever other topics they find interesting. His Top 10 Most Practical Blogs For Entrepreneurs list sticks to blogs that are more generally relevant and practical for entrepreneurs.”
Allen and I share one favorite among favorite blogs by famous entreprenurs and that is Seth Godin. I would also include Guy Kawazaki’s How To Change The World. I am a huge fan of Kawazaki and Seth Godin as well. But they are not always totally relevant for a daily dose so I reluctantly left them out.

Small Business Trends – Anita Campbell looks at the latest trends affecting small businesses and entrepreneurs. Always valuable information.
Duct Tape Marketing – John Jantsch is a pro, delivering excellent small business marketing tips.
The Entrepreneurial Mind – Jeff Cornwall, Director of the Belmont University Center for Entrepreneurship, discusses trends and their impact on small business owners and entrepreneurs.
Bootstrap Me – is by Shawn A. Hessinger. Anita Campbell, Small Business Trends former Executive Editor, Creative Weblogging Inc. says “Shawn’s a great blogger. He provides timely, useful and actionable advice. He’s honest, and wears his experiences on his sleeves. Bootstrapping is hard for any entrepreneur – but Shawn’s there to help.”
Chris Brogan – Chris deals with social media business strategy and more. Does this blog belong in an entrepreneur blog list? I think so. As Chris himself says: “There are more and more people feeling pressure from the economic downturn who are turning their web design shops, their writing consultancies, and their extra agency cycles into a social media practice.”
KD Paine’s Pr Measurement Blog – news, techniqes and development in measuring social media, public relations, public affaiars, media relations, blogs. You don’t know how well you’re doing unless your measuring it.
Up and Running:Tim Berry, one of the most savvy business advisors around with a long, successful record to prove it.
Ladies Who Launch - Victoria Colligan,founder of Ladies Who Launch offers tips, strategies and tactics to reach your goals. These stories usually hit home and some are by guys as well. Phil Ives, chief technology officer of the site discusses websites, social networking and other tech topics.
All of these would be helpful websites to put in your Google or other reader so you can just glance at the topics and get an idea whether you’d like to explore them further or not. Developing a system to check your “listening” posts and making it a habit will help you not only have “grist for the mill” for further thought, to comment on in a blog, but to manage you own business as well.

Bootstrapping – What’s That?

Image by Angela Radulescu via Flickr

Starting Your Business: It All Boils Down To Making Money and Saving Money – Entrepreneurialism - AdvancingWomen.com

Bootstrapping in the context of business start-ups refers to the use of creative financing approaches such as leveraging personal savings, credit-card debt, loans from friends and family, bartering, and other means to launch a business. Some business founders use bootstrapping because they have no other choice. Just about anyone who has approached a bank has learned that “only established businesses need apply.” Bankers typically look for cash flow, assets, an established customer base, and a successful track record on the part of the business that is seeking a start-up loan. Obviously, this is a short list that is impossible to fulfill when you are just getting started.

Bootstrappers develop their knowledge and personal skill-sets and use their abilities as a substitute for cash. There’s also a certain satisfaction that comes from becoming more self-sufficient. After being confronted with a contractor’s very expensive building renovation estimate to convert a retail space and make it suitable for a bookstore, one start-up entrepreneur and her husband reacted by visiting a local home improvement store. A few home improvement books, a sledge hammer, and a reciprocating saw allowed these nascent entrepreneurs to save thousands, and she said it was actually fun knocking down walls! “It’s a great stress reducer.”

The entrepreneurial couple also acquired a set of simple plans for bookcases, courtesy of the book distributor who would become the store’s supplier, and built 100 bookcases themselves in production-line fashion for $40.00 each, as compared to an original estimate of over $200.00 each. Then the book distributor stocked their store and provided generous repayment terms. The savings the couple amassed through techniques such as those above allowed them to whittle down what had been a two hundred thousand dollar start-up estimate to the cost of a typical mid-priced car, an amount they could afford as a result of several years of saving to start their business.

Simply put, there are only two basic methods employed by bootstrappers: 1) finding ways to gain control of resources, and 2) using what they can get their hands on effectively. In other words, it all boils down to making money and saving money (inflows and outflows). There are some important considerations in choosing a business model that is amenable to bootstrapping. Start-up entrepreneurs without capital should think seriously about selecting a business that entails compensation prior to the delivery of a product or service. For example, consulting, mail order, or a niche oriented Internet business; all of these examples do not require a significant infrastructure or capital outlay. Other options could be an agency or brokerage-type business: if you can connect a party who needs to sell, with a party who needs to buy, with a profit margin for you as a go-between, you just might have a viable business model.

By trading on skills, bootstrappers can also band together to stretch limited dollars. For example, cohabitation could create a very logical arrangement: a desktop publisher, a photographer, a publicist, and a small ad agency might do well by sharing an office space. The possibilities are virtually endless for a creative thinker.

Author, Dr. Robert Lahm is the founder of several businesses and Web sites, an entrepreneurship professor, a public speaker, and a writer EntrepreneurshipClearinghouse.com.

Don’t Raise Money – Bootstrap A Niche Market Online

This is the third in a series on financing your business. But this time we’ll discuss starting small, counting your pennies, inching your way up, (commonly called “boot strapping”, pulling yourself up by your boot straps) until you are making a profit.

Entrepreneur Martha Stewart Image via Wikipedia

One way to do this, with low barriers to entry, ie. not much money to start, is to launch an online business in a niche market. Many entrepreneurs are willing to risk their careers and their homes and work until they drop in order to own their own business. The problem is there are a lot of really big players with billion dollar pocket books chasing the same markets. What to do? One answer is to think small, or at least smaller. Consider a “niche” market.

Defining Your Niche

First you have to discover what your niche should be. One way to approach this is to zero in on what niche you would excel in, which would make the most of your own special knowledge and talents. Just as Martha Stewart started by baking and catering out of her home kitchen and with a flair for elegant living, not to mention superhuman drive and perfectionism, and Debra Fields’ had her cookie recipe, you probably have your own unique talents, interests and aptitudes,if you look deep enough. It may be found in your ability with graphics, or your talent for getting an office organized or inspiring people to join your project. Being smart about specific,marketable things has value; it is “the raw material from which financial results are produced”. Taking a hard,objective look at yourself, assembling a knowledge and skills inventory, allows you to find your particular niche, something you do better even than others in your same field. It is a way of narrowing and refining your niche so you can focus on only those things you do best and know more about than those around you. This should tell you also what niche market you should target.

Sometimes this happens in a more evolutionary way. You set up a dot com on the Net to sell books and the next thing you know, Amazon.com turns into Godzilla, about to stamp you under his giant foot. Do you stand there, stare Amazon.com in the eye and go head to head in combat? You do no such thing. You think through your best niche and move a step in that direction. Let’s say you start marketing rare old books. If Amazon.com moves in that direction, you start marketing rare old books on Texana, a quite profitable business, believe it or not. In other words, you keep moving another step away from the center of the market. And eventually you’ll find a niche which is too small for Amazon.com but may be specialized enough so that it requires considerable expertise for entry. And that’s what you have to dig deep into yourself to find… the area you can execute better than most people, a market too small for the giants, but extremely profitable, perhaps because you have the field almost to yourself.

Using the niche concept, you have positioned yourself for success. Build a reputation and the giants may even send people your way for products they don’t stock.

And there are other benefits in a niche market business model:

Financing

You won”t need as much money.

After you’ve exhausted the savings you’ve set aside to sustain you in the beginning, hit on your family and friends first, just not too much. You want to be able to look your mother or your sister in th eye when you go other to holiday dinners.

Don’t try to play with the big boys too soon. Prove up one part of your plan at a time. Start small, keep building, look good before you go to your bank or your first real investor.

(See
Start Your Own Small Business Using More Ingenuity, Less Cash

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Tag Archives: small business

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Top 8 “Daily Dose” Blogs for Entrepreneurs

Bootstrapping – What’s That?

Don’t Raise Money – Bootstrap A Niche Market Online

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