Written by Dave Lavinsky on Saturday, March 3, 2012
If you're like most people, you put some things off until the last minute. Picture a wife needing to take the kids to a ballgame, and the husband is in the middle of changing the oil on the car. Not very good planning on their part, and the result is less than desirable.
With a little planning, the husband could have accomplished the oil change earlier and everyone would be happy.
All too often in business, we fail to plan effectively for ourselves and our companies.
The first step to effective planning is to set the right goals. This is a two-step process as it is necessary to 1) set goals for the business in general, and 2) set goals for ourselves in order to reach the business goals.
Here are some key tips to setting exciting business goals that yield results:
- Be specific. Don't use generic terms like "a few" or "run ads." If you mean 3, state 3. If you have to guess between a range of numbers, be conservative.
Don't say "We really want to see our sales grow exponentially in the market." This does not express what you really want to accomplish. State something like, "With the implementation of our new marketing brochure, we expect to see a 25% increase in sales. We also expect to see a 42% increase in inquiries about our products."
These are measurable goals to which everyone in the organization can relate. You will also know if you're on track or falling short by comparing what actually happens with what you planned.
- Make your goals realistic. If you or the team looks at a goal and rolls their eyes, your proposed goal may be in trouble from the start. For example, setting out to be the #1 Realtor in an area is a good goal, but realistically, how are you going to accomplish that if you are currently a 1 or 2-person show? In this instance, an attainable goal might be to become a Top 10 Realtor during the first year and go forward from there.
- Ensure your goals have meaning for the team to which you are presenting. Letting the sales department know you want the trash cleaned out on a daily basis is not going to help them increase sales by 25 percent. This is a maintenance department's goal and doesn't mean a thing to sales team. Make sure the goals you develop are aimed at the appropriate audience. Make it something they have control over, or why should they care?
- Set deadlines and timeframes to meet milestones. Simply stating, "Our goal is to increase our sales to $1 million," for example, is specific, but doesn't provide a sense of urgency. There's an old saying, "A goal without a deadline is just a wish." Set a specific date for completion and it becomes REAL. Then work backwards from there to plan the steps needed to get you there, and the order they fall in.
Setting goals gives you and your team a target. This ensures all of your efforts are focused in the same direction enabling you to have a better chance at success. And, by developing specific goals, your team will have a sense of direction. They no longer just show up at work.
With this newfound direction, your team will begin to assume more responsibility and ownership of the projects that need to be completed. The goals you all commit to will give you measurable milestones to ensure projects stay on track and within time frames established. And make sure to celebrate along the way!
By implementing proper procedures for creating goals, you will have set the basis for creating a successful plan. After all, if something is worth doing, isn't it worth doing well? Considering the quality of your goals is the first step to getting what you want from your business and your life. So make sure you take goal-setting seriously and follow these steps.
Create your goals in the usual way, and they often get forgotten and fall to the wayside. Make them clear, specific, attainable, and involve your team, and you've got a powerful motivating force for positive change on your hands!
Suggested Resource: Goal setting is one key to improving your productivity and results. But there are many other keys. Keys that can double or even triple your results. Click here to learn how to triple your productivity.
Written by Dave Lavinsky on Tuesday, February 28, 2012
Two weeks ago, I kept a simple journal to track how I was using every minute of my time throughout the space of one workweek, and I was able to identify over five hours of time spent doing something I could be easily delegating to someone else!
This may not sound like a big deal, but consider this:
- Five hours is a lot of time-especially if you only have 10-15 hours per week to run your business part-time. Or if you're full-time, it adds up to 20 hours per month...and 260 hours per year!
- What would you give for an extra MONTH of productive, money-generating 8-hour days each year? Or, if you prefer, a month off each year to spend golfing, taking a vacation, time off with family, or whatever it is you love to do?
- I thought I was delegating everything I should be. But here, even the Master of Management has been caught red-handed. This goes to show that EVERYONE could stand to analyze their time every so often.
- What is your time per hour worth? If your time is worth $50 per hour, then it's hard to justify continuing to do something that someone else could do for $10/hr. Or, as many virtual assistants charge overseas, $4-5 per hour.
The things I caught myself doing were repetitive business items that have to be done every week-but those types of tasks don't move my business forward.
I kind of rationalized for a while, but then I realized I had a few projects on the shelf that I could knock out myself in about 10-20 hours that could start generating more income immediately.
Remember: Your time is best spent starting and managing new projects that will generate more cash. Hire people to help you carry those out and get there faster. And by all means hire an assistant or someone to carry out the Operations and repetitive tasks that must go on every week and month.
Let someone else hold down the fort while you're out pioneering. Your job is to discover and create new ways to advertise, make sales, and add products and services to your lineup.
So let's say you set out to find a virtual assistant abroad that you could outsource these tasks to every week and thereby free up 5 more hours of precious time.
Total cost: $20/week
Time Savings: $250 (saving you 5 hours of your time, valued at $50/hour)
This ROI would be several times what you invested, as long as you spend the new time you save doing something that generates $50 per hour or more, like your new projects (new sales team, creating a new product, testing new advertising methods-anything to create or increase revenue).
So take me up on this...Find out how you could "trim the fat" next week by cutting off 5 more hours of your work week and assigning it to someone else.
Then ask yourself what new project you could start, using your newly-saved time, and do the math. See for yourself how much more you could make by investing a little in others!
Suggested Resource: Now that you've freed up an extra MONTH of working time per year, you need to leverage this time. How? By doing exactly what the top 1% of entrepreneurs do (those who now have a net worth of $5,000,000 or more). Learn more by watching this Growthink's Insider Circle video.
Written by Dave Lavinsky on Friday, February 24, 2012
I just finished reading through the 2011 M&A reports (the reports usually come out a month or two after the end of the year). It's something I do each year. To see exactly which companies were acquired during the past year. To understand trends. And to understand precisely the kinds of smaller companies that bigger companies are buying.
Fortunately, with regards to the last factor, the characteristics of a sell-able company don't change much. I'll get back to that in a minute.
But for now, I'd like to hand out the award to the company that acquired the most companies in 2011 - Google.
Google made 25 acquisitions in 2011; buying companies including Clever Sense, RightsFlow, Apture, Katango, SocialGrapple and more. In doing so, Google made the 25 founders of those companies VERY wealthy.
And rightfully so; any entrepreneur who starts, builds and sells a successful company SHOULD be paid handsomely.
But Google's acquisitions weren't even a blip on the entire radar screen of acquisitions. According to research firm Berkery Noyes, in the "information industry" alone, there were 3,098 acquisitions last year (up 17% vs. 2010).
And in the Online & Mobile market, there were 161 acquisitions (up 39%). In the Software Industry there were 1,450 acquisitions (up 10%).
In the Media & Marketing Industry there were 1,435 acquisitions (up 17%). In the Financial Technology and Information Industry there were 1,450 acquisitions (up 10%). In the Education Industry there were 229 acquisitions (up 10%).
And transaction volumes were up in the healthcare and many other industries too.
I tell you this, because even though you may be years away from selling your company to a larger company, you need to start thinking and planning for your exit NOW.
Why? As Yogi Berra once said, "if you don't know where you're going, you're probably not going to get there."
Building a sellable business takes time. You need the right systems. The right products. The right customers. Etc. And building these things doesn't happen overnight.
And it's not just the result of having a good product or service that customers want.
Rather, you need to plan for it. You need to identify the skill sets to acquire and get them. You need to build a complete business from the ground up.
While it's impossible for me to tell you how to do all this in just one essay, or even 100 essays, I can give you an exercise that will really help you. And get you started on the right foot.
This exercise is for you to imagine what your business will look like on the day you sell your company to a larger entity.
1. What will be the date of that acquisition?
2. What will your revenues be on that date?
3. How many and what type of customers will you be serving?
4. Who will your key employees be and what roles will they perform?
5. Who will your key partners/joint ventures be with?
6. How many locations will your business have?
After you answer these questions, you need to start reverse engineering this vision. For example, how will you acquire the customers you will eventually have when you exit?
You need to start figuring this out, and planning this now. Since all great things take time and planning to achieve. Don't wait. At a minimum complete the exercise and write down your answers right now. And then tomorrow you can start building your action plan.
Suggested Resource: Building a sellable business is hard. And it's not something that happens overnight. That's why we've built a program that holds your hand month-after-month...so that with our support you can and will build a thriving business. That you can keep running or sell for millions. Check out Growthink's Insider Circle to learn more.
Written by Dave Lavinsky on Tuesday, February 21, 2012
Many of my newsletters and blog posts are on the topic of raising capital. I talk about how to raise angel funding. And venture capital, etc.
And don't get me wrong, I think, actually I know, that raising funding is critical. Because the #1 reason (by far) why entrepreneurs fail, is that they don't have or run out of cash.
But one thing I'd like to clarify is that you CAN start and grow a business without funding. Or with little funding.
In fact, many great businesses have been started this way. A survey of Inc 500 companies found that 48% started with $20K in financing or less, and 73% started with less than $100K in financing.
And, if you are looking for BIG funding sources, like venture capital, they will often want to see that you have bootstrapped or already raised other, smaller funding sources before they fund you.
So, if I misspoke or implied that you absolutely must raise lots of funding from the get-go forgive me. Rather, you must start by bootstrapping or raising enough funding to get you going, and then later on, many more funding sources will become available to you to help you grow your company.
Let me give you some examples of entrepreneurs who have done this. In fact, most of these entrepreneurs have started with these small amounts and then raised huge amounts of funding when they were ready for rapid growth:
- Under Armour's Kevin Plank funded his company's launch with credit cards.
- Brian Scudamore founded 1-800-GOT-JUNK, which now has over 200 franchised locations in the US alone, with just $700 of funding.
- Michael Dell launched Dell Computers with only $1,000.
- Jill Blashack Strahan launched Tastefully Simple, which offers easy-to-prepare foods and gifts with just $6,000 in savings. Her company now generates over $115 Million in annual revenues.
- Ben & Jerry launched with $8,000 in savings and a $4,000 loan.
- Pamela Skaist-Levy and Gela Nash-Taylor launched Juicy Couture Clothing with just $200 and a revolving line of credit. Juicy Couture was later sold for $53 million to Liz Claiborne.
- Google's Sergey Brin and Larry Page launched the company with credit cards (and later raised angel then VC funding among others).
And, in addition to these and other entrepreneurs who launched their companies with little funding, there are tons of entrepreneurs who have launched their companies with non-traditional sources of funding.
Such as Kenneth Cole, who raised hundreds of thousands of dollars in funding from a shoe manufacturer (vendor funding). Or Blowfly Beer, who raised tens of thousands of dollars in funding from customers (customer financing).
The key point I want to stress here is that the vast majority of entrepreneurs have the mindset that if they can't raise money from banks, angels or VCs, that they can't launch or grow their companies. This is simply NOT true. So don't fall into this thinking. As there are 38 other sources of funding, or bootstrapping, to turn to.
Suggested Resource: As you just learned, most entrepreneurs fail to get funded because they chase after the WRONG sources of funding. Do you want avoid this failure? And successfully raise funding to grow your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
Written by Dave Lavinsky on Saturday, February 18, 2012
I hate to admit it, but I'm a bit of a dork.
You see, I did really well in school, so I guess I could have been considered a dork back then. But I was also a really good athlete, so that made me "cooler" and so I never got a dork label.
But I did something many years ago that clearly classifies me as a dork. What did I do? I had one of my articles published in Quirk's Market Research Review. Quirk's is a trade journal for market research professionals that mostly talks about new market research techniques and ways to tabulate data. Pretty exciting stuff, I know :-)
I think many of the other authors at Quirk's are like the guys from Revenge of the Nerds, complete with pocket protectors. But, when I submitted my article, I didn't care, because I had something important to share.
What I shared with Quirk's readers (this was way back in 1994 so they don't even have an archive of the article on their website), was what I call "The Improvement Matrix." I originally created these matrices for bigger businesses who paid big bucks for them.
But over the years, I realized they could be created much less expensively, and have HUGE value to entrepreneurs like you.
So what is the "The Improvement Matrix?"
It's simply a way of looking at your products and services and figuring out what you should improve and in what order.
Let me walk you through it. As an example, let's assume that I'm Sal. Sal's my landscaper. He frustrates me to no end since he's such a bad marketer [in fact he makes me think about getting into the landscaping business since I know I'd clean up....but I'll stop digressing].
OK. The first step is to identify what it is that your customers find most important.
So, as a landscaping customer, Sal should survey me and his other customers on the 8-12 attributes of his business that I find most important.
Maybe Sal would have chosen these attributes to survey:
1. Quality of lawn mowing
2. Quality of plant trimming
3. Offers to do additional work (e.g., clean leaves from gutters)
5. Value (fairness of price based on quality of service)
6. Ease of billing
7. Ease of communications with company
8. Professionalism of workers
For each attribute, he should ask customers, "How important are these attributes to you in your landscaping company?"
He could have used a 4 point scale as follows:
1 - Not important
2 - Somewhat Important
3 - Very Important
4 - Extremely important
The results may have looked as follows:
As you can see, Sal's customers considered "quality of lawn mowing" and "ease of billing" to be the most important attributes. Conversely, the least important attributes were "professionalism of workers" and "offers to do additional work."
The next question on Sal's survey should have been: "How do you rate my performance on these attributes?"
He could have used a 4 point scale again as follows:
1 - Poor
2 - Fair
3 - Very Good
4 - Excellent
Importantly, Sal should judge responses to this performance question against how important the attributes are. The results may have looked as follows:
As you can see from the chart, on attributes like "value," Sal's performance is in line with importance. But, on the key attribute of "ease of billing," Sal is vastly underperforming. And, on the non- or less-important attribute of "professionalism of workers" (maybe Sal has his workers dress in formal uniforms), he is over-performing.
So, what should Sal do? Well he should clearly focus on improving his "ease of billing" since this will improve customer satisfaction. Also, if he is investing too much money and time in "professionalism of workers," he should consider re-allocating those resources to improving "ease of billing."
As you can see, the beauty of the chart, based on simply 2 sets of questions asked to customers, is that it identifies the most important areas of your product or service to fix to better satisfy customers and gain competitive advantage.
Now, a final way to look at the performance chart is as a matrix, which I call the "Improvement Matrix." You can see the matrix below.
The Improvement Matrix is simply a different way of looking at importance vs. performance data. It plots the data and classifies each attribute into 4 quadrants:
1. Underperforming (but OK): you are underperforming in this area, but customers don't care much about it, so that's ok.
2. Overperforming: you are doing well in this area; but customers don't value it. Keep doing what you're doing, or consider allocating resources away from this area into a more important area.
3. Keep it up: these are areas that your customers care about and that you are doing well in. Keep it up.
4. Improvement Quadrant: this quadrant is the key. It shows those areas that customers find important, but for which your performance is not up to speed. You MUST get better in these areas ASAP.
As you can see, the Improvement Matrix will alert you to the key areas of your product and service that you must improve. All it requires is a simple customer survey and plotting of the data. And the results can revolutionize your business. So do it!
Suggested Resource: Would you like to know more ways to improve your business; and turn it into one worth $10 million or more? Then check out Growthink's 8 Figure Formula. This video explains more.
Written by Dave Lavinsky on Tuesday, February 14, 2012
Many years ago I was involved in a business targeting the shoe market. Through some connections I made, I was introduced to a potential investor. This investor was one of the original employees of L.A. Gear, a shoe company that at one point went public and was the third leading athletic shoe retailer behind Nike and Reebok.
Within 5 minutes of my conversation with him, one thing became extremely clear: this guy could give me a ton more value than just the dollars he could bring to the table.
He could tell me exactly how the industry worked. He could tell me what trade shows to attend and which to avoid. He could tell me which manufacturers to work with, and how to negotiate the best rates. He could introduce me to the best distributors to make sure my product reached as many retailers and customers as possible. And so on.
I tell you this because far too many entrepreneurs look at investors, particularly venture capitalists, solely as sources of cash. When it reality, many venture capitalists provide a ton more value than just the cash they offer. In fact, the right venture capitalist or VC is often the difference between your success or failure, or achieving minimal versus maximum success.
The three top areas where VCs often provide value include:
1. Contacts they have in their networks (these contacts can be for partners, employees, customers, distributors, vendors, etc.)
2. Advice in running your business, based on deep experience in your industry and in successfully growing and nurturing ventures
3. Contacts to additional sources of capital
Consider the following five VCs who are consistently ranked among the most respected VCs in the industry. Read their bios, and think about how their experiences and relationships could benefit your company.
Jim Breyer from Accel Partners. Jim Breyer is one of Facebook's earliest investors. He serves on the boards of Dell, Wal-Mart, and smaller ventures such as Etsy, Brightcove, ModelN, and Legendary Pictures. Jim also negotiated the sale of Marvel Entertainment to Disney for $4.3 billion and BBN Technologies to Raytheon for $350 million; and most recently closed two new venture capital funds in China.
Michael Moritz from Sequoia Capital. Michael Moritz was one of the early investors in Google, Yahoo, and PayPal. He invested in video camera maker Pure Digital (Flip Video cameras) which was later sold to Cisco for $590 million. He also invested and served on the board of Zappos. Michael has also invested in and sat on the boards of Earth Networks, Gamefly, Green Dot, Klarna, Kayak.com, LinkedIn, Sugar Inc and The Melt.
Brad Feld from Foundry Group and TechStars. You should know Brad's name as he's a frequent contributor to the Growing Your Empire newsletter. Brad's been an early stage investor and entrepreneur for over 20 years. Brad has invested in and/or sat on the boards of tons of companies including Abuzz, Anyday.com, Critical Path, Cyanea, Dante Group, DataPower, FeedBurner, Feld Group, Gist, Harmonix, NetGenesis, ServiceMagic, ServiceMetrics and Zynga. ALL of these companies have either gone public or been acquired.
Marc Andreessen from Andreessen Horowitz. Marc Andreessen co-founded Netscape, Opsware and Ning. He serves on the boards of Facebook, eBay, Skype and Hewlett-Packard. He made seed investments in Twitter and LinkedIn, and later stage investments in Groupon, Skype and Zynga.
John Doerr from Kleiner Perkins Caufield & Byers. John Doerr has made some of the best investments ever, investing early in Amazon, Netscape, Sun Microsystems and Google, where he currently sits on the board. He's also invested in online gaming firms such as Zynga and Ngmoco and clean tech firms such as Bloom Energy and OPower.
These 5 venture capitalists are clearly at the top of their game. But there are hundreds of others that could also provide tons of value to you. Look at the BILLIONS of dollars of value that these VCs created, by investing early in companies and helping them achieve massive success. And consider the vast number of connections these folks have, from investing in now ultra-successful entrepreneurs and sitting on boards along with other highly connected superstars.
Importantly, when seeking venture capital for your venture, find the venture capitalists that have the most relevant experience and contacts in your niche, that can thus add the most value to