I got home for work the other day and sat down with my family for dinner.
"How was your day?" I asked my kids. My kids proceeded to tell me about how their days went. Everything seemed like it was going well.
So, I asked my son, "Did you get to practice lacrosse today?" As a bit of background, my son plays on a highly competitive lacrosse team, and if he doesn't practice enough, he risks losing his position.
"No dad. I didn't have time," he replied.
Now this, unfortunately, is NOT an acceptable answer. In fact, according to Napoleon Hill, author of the famed book, "Think And Grow Rich," what my son gave me was an alibi (or excuse) for not succeeding.
In his final chapter, Hill listed 57 alibis for not succeeding. The list started with the following:
IF I didn't have a wife and family . . .
IF I had enough "pull" . . .
IF I had money . . .
IF I had a good education . . .
IF I could get a job . . .
IF I had good health . . .
IF I only had time . . .
IF times were better . . .
IF other people understood me . . .
IF conditions around me were only different . . .
IF I could live my life over again . . .
IF I did not fear what "THEY" would say . . .
IF I had been given a chance . . .
IF I now had a chance . . .
IF other people didn't "have it in for me" . . .
IF nothing happens to stop me . . .
IF I were only younger . . .
IF I could only do what I want . . .
IF I had been born rich . . .
Since I had just finished listening to the book (I constantly listen to books on tape while driving), the alibi "IF I only had time" was fresh in my head.
So, the correct thing to say to my son would have been, "You didn't have time. That's not an excuse. If you really want to succeed at lacrosse, you would have made time."
But, I didn't say that for one simple reason. And that reason is that my son is just nine years old. He doesn't need that type of aggressive coaching, yet.
But you, each of you reading this today, to you, I will stand by giving you a hard time for making any of these alibis. And as importantly, I hold myself accountable for every time I say I don't have time or "if" this or "if" that.
These "ifs" are unacceptable. If each of us are going to achieve our true potential as entrepreneurs, we need to remove these alibis. We need to envision success, and create business and action plans to achieve it. And we must not stop there. Because our original business and action plans most like will NOT succeed.
Rather, we need to keep assessing our progress and modifying our plans until we achieve success. And never ever, along the way, can we get caught up in alibis. Since these alibis will kill our positive energy. They will take us down the wrong paths. And they will prevent us from achieving our goals.
For my son, I'll give him five more years until I get tougher on him and teach him to stop making alibis. For you and me, let's put our alibis behind us. And focus our energies on achieving massive success. And then, making sure the people we know and love also do the same.
One of the absolute keys to a successful business plan is to create the right business plan milestones. Doing so is essential to securing investors and making real progress towards achieving your goals.
The story below illustrates the importance of business plan milestones, after which is some guidance regarding how you can create the right business plan milestones for your company.
There are lots of things that all of us do, and do as well as we have to, without thinking.
Like pumping gas.
I just pumped gas this morning. And thought nothing of it. Until now.
The fact is that I didn't just pump gas. Sure, the entire process of what I did was called pumping gas. But I did a lot of things that made up that process.
1. I pulled into the gas station. 2. I pulled next to a pump. 3. I put the car in park. 4. I turned off my engine. 5. I got out of the car. 6. I popped open the gas flap. 7. I swiped my credit card into the machine. 8. I typed in my zip code. 9. I pressed the button for the type of gas I wanted. 10. I unscrewed the gas cap. 11. I took the gas nozzle out of the machine and stuck it into my gas tank. 12. I squeezed the lever. 13. I waited while the tank filled up. 14. I put the gas nozzle back into the machine. 15. I pressed "no" I don't want a receipt. 16. I screwed my gas cap back on. 17. I shut the gas flap. 18. I got back in my car. 19. I turned on the engine. 20. I put the car in drive. 21. I drove off.
Wow. I did 21 things just to pump gas?
So who cares? Well, investors care. And partners care. And the success of your business cares.
Let me explain.
Your business is currently at point A. Where you want to go is to point B. Now getting from point A to point B requires you to complete milestones.
And the most important milestones are what I call "risk mitigating milestones." These are the milestones the help eliminate the risk of your company failing.
Let me give you some examples. For Google in its early days, risk milestones included completing their initial result ranking algorithms, getting customer to start using its search engine, and generating revenues.
Obviously once Google was generating a lot of revenues, it was not a very risky investment. But before customers starting using Google.com, it was very risky. And before its initial algorithms were developed, it was even riskier.
Every business has risk mitigating milestones. Investors obviously prefer to back businesses where more risk milestones have been removed. I know I do.
Would you prefer to back a restauranteur who just has a vision for a new restaurant; or would you rather back that same restauranteur after the ideal location has been determined, the restaurant has been built, the staff has been hired and trained, the local newspapers have given it a great review, and the restaurant now has 250 loyal patrons and is booming every night?
It is your job as an entrepreneur to identify your risk mitigating milestones. And not only do you have to identify them, but you need to prioritize them. So that every day you are spending quality time working to accomplish them (and not spending time doing things like replying to emails that seem to be adding value; but which don't actually put you closer to accomplishing your risk milestones).
But, actually, you can't work on completing your risk mitigating milestones each day until you break up each of these milestones into much smaller projects. For example, Google creating its initial algorithm and a restauranteur finding an ideal location are great milestones, but way too large to accomplish on a daily basis.
Each milestone needs to be broken down into numerous chunks; chunks that can be completed every day, and progress made. It's like writing a book. If you write one page every day, by the end of the year, you'll have a 365 page book.
And it's like pumping gas. You need to do a ton of smaller things in order to accomplish the big thing. And like with pumping gas, when you spend the time breaking the task into pieces, you often see how easy each piece is to accomplish.
Developing risk mitigating milestones is an absolutely essential component of your business plan, and belongs in your Operations Plan section. Investors need to understand these milestones and your projected timeline for accomplishing them. You need to understand them to prioritize your time and hire the right people at the right time.
If you still need to complete your business plan, let me send you my CD with seven more essential business plan secrets. I explain why I'm doing this and how you can get it now, on this page right here: http://www.growthink.com/seven-secrets
This past Sunday, CIT Group Inc., the 101-year-old commercial lender, filed for bankruptcy.
This filing is NOT good for American businesses, as CIT Group funds, via providing loans and working capital, about 1 million businesses.
CIT's bankruptcy will not only prove difficult for the small and medium-sized businesses that rely on CIT's working capital loans. But, it hurts the thousands of startups who planned to approach CIT for startup business financing; with the bankruptcy, it is highly unlikely that CIT will be able to make the same number of new loans as before.
It is for reasons such as this, that I frequently preach that businesses leverage multiple forms of capital. In fact, you've probably heard me talk of companies like Google, who leveraged credit cards, angel capital, venture capital and bank loans in its early days.
One form of startup business financing is never enough. It's the classic "putting all of your eggs in one basket." In addition to the risk involved in this strategy, it is also typically less expensive to diversify your financing. For example, bank loans used for the purchasing of equipment is almost definitely less expensive than using equity financing for the same expenditure.
Personally, my favorite forms of capital are creative/alternative financing (since it is easy to raise if you know what to look for), angel financing (also easy to raise if you know how to do it) and bank financing (easy to raise if your business is a good fit for it).
I'm also a big fan of venture capital and grant financing, but these forms of capital take a little longer to raise and are more challenging (but the rewards are significant if you are successful).
Entrepreneurs must have many skills. They must be able to spot opportunities. They must be able to create plans to seize those opportunities. And they must execute on those plans.
And, for most opportunities, and clearly for those opportunities that are really big, execution involves hiring and managing employees. Because no single entrepreneur can do everything themselves.
But you just can't have any employees. Companies that succeed have employees that are highly motivated.
So how do you ensure that your employees are motivated to succeed?
Clearly, giving them fair salaries helps. And clearly, stock options that allow employees to benefit when the company benefits are good practice.
But, there is an even better way. In fact, authors Adrian Gostick and Chester Elton in their book, The Carrot Principle, found a better way.
Where did they come up with this better way? Well, they conducted a study involving 200,000 people over a ten-year period.
Importantly, their study showed that the key characteristic of the most successful entrepreneurial managers is that they provide their employees with frequent and effective recognition.
That's right, significantly better business results were realized when managers offered recognition in the form of constructive praise and meaningful rewards (typically non-monetary).
The authors found that recognition is most effective when it is:
Positive (don't mention any negatives when giving praise)
Immediate (comes soon after the job well done)
Close (presented to employee(s) with their peers in attendance)
Specific (precisely recognizes why the task/job they performed merited recognition)
Shared (allows employee's peers to also comment during the recognition presentation)
Carrots are needed to motivate employees. But what I found most interesting about the author's findings was that recognition is more effective than monetary rewards. This is a critical finding for all managers, and particularly entrepreneurial managers who typically operate in cash-restrained environments.
Knowing how to motivate your employees will allow you to build a team that is as passionate about success as you are. And this will ultimately lead to your company achieving its goals. So, while it may not seem like a mission-critical focus today, it's definitely worth your time and effort. So don't delay...
Do you remember the Faberge Shampoo television commercial from the 1980s?
The one in which the woman says, "I told two friends about Faberge Shampoo, and they told two friends, and they told two friends and so on, and so on..."
Now imagine this happened to your product or service....that one buyer told two more buyers, who told two more buyers, and so on, and so on. Your revenues would go through the roof, and with virtually no marketing expense.
Ah, the entrepreneur's dream.
Unfortunately, I actually categorize this as a "dream" because I don't think any company can count on this type of viral marketing. Even if your product or service is that great, there's no guarantee that people will refer it to their friends.
But you CAN change that.
You can maximize the chance that people will refer your product or service if 1) you make it really easy for them, and 2) you give them the right incentives. In fact, employing a proven referral marketing program can be your most cost-effective marketing tool.
To learn more about referral marketing programs and other cool, cutting-edge marketing techniques, I interviewed Trevor Shanski, the founder of eWORDofMOUTH Inc.
I was not only interested in interviewing Trevor because eWORDofMOUTH seemed so cool, but because I knew Trevor was such a great executor. Specifically, in his previous position as COO of Warehouse One Ltd., he helped grow the company from 13 local stores to 108 national stores, and grew revenues to nearly $100 million in sales.
In the interview, Trevor provided some great tips on referral marketing including:
- What you need before you generate referrals: all you need are current customer and/or prospects
- The key requirement to get people to refer your business to them: they must be satisfied with you or they will not refer you
- How to reward people for giving you referrals: give them something of value; but that something doesn't necessarily have to cost you anything
- Tips to generate the most possible revenues via referrals: give rewards that encourage them to buy even more from you; for example, if you give them discount coupons, redeeming them would increase your sales
Trevor also gave some great tips on improving your email marketing success including citing the importance of personalizing your emails to recipients and to keep an eye on your open rates in order to determine the right frequency of your emails.
Importantly, Trevor gave me a private demo of the eWORDofMOUTH platform which combines email marketing with referral marketing into one, simple-to-use system. The system also allows for text messaging and multi-location emailing (i.e., if you have multiple business locations, you can centrally manage and customize emails to customers of each location) making it extremely powerful.
As you can imagine, by using eWORDofMOUTH, you can generate a significantly higher ROI on your marketing dollars than traditional marketing methods.
Not only does the interview cover referral marketing, email marketing and mobile media marketing, but I got Trevor to reveal his secrets to operational success (as mentioned, as COO of his last company, he grew it to nearly $100 million in revenues) and how he developed a highly-impressive, nine-person Board of Advisors.
To hear a short clip of the interview, click the blue triangle in the player below:
I just finished conducting an interview on how to be an entrepreneur.
And near the end of the interview I asked an interesting question.
I wasn't sure regarding the response I would get, but I was pleasantly surprised.
The question I asked was, "What do you think makes the difference between a good and a great entrepreneur?"
I was expecting a list of qualities that the great entrepreneurs have.
But instead, entrepreneurship expert Dr. Bruce Barringer, gave a really great answer.
He said, "A great entrepreneur makes a difference in your life."
He went on to explain that the founders of Google have changed his life as he spends so much time on Google these days. But you don't have to be the next Google to be a great entrepreneur.
The founders of the local coffee shop have also changed his life. As have the companies that created the podcasting technologies that he employs every day.
The point is that great entrepreneurs are those that create products and services that truly benefit their customers in such a way that the customers integrate them into their lives.
When I think about my life, I can concur. The entrepreneurs who started the gym I go to, the gasoline station I frequent, and the supermarket where I buy my lunch have done a great job creating products and services that meet my needs. If they didn't, I'd patronize their competitors.
So, as you start and/or grow your business, you should make all of your key decisions with this question in mind: "will this decision allow my company to better serve customers and make a bigger difference in their lives?" As Dr. Barringer pointed out, if you solve the customer need, the money will follow.
To hear Dr. Barringer's answers to all of my questions on how to be a more successful entrepreneur, listen to the full interview on Growthink University here:
The other day, a BusinessWeek reporter contacted me with a question about entrepreneurial success.
She wanted my thoughts on a new business opportunity that one of their readers was considering.
The opportunity was "to open a sports store to sell products just from the four major sports teams in my city."
I hated the concept.
I immediately wrote back to the reporter:
"Is there really a need for this store? Who else is currently selling these items (stadiums? national retailer like Champs?) If there is no directly competing store, maybe there is no market? Is it hard to purchase these items online? I would think most of these items are easily found online at decent prices.
Will you offer anything that a national chain (http://www.champssports.com/) doesn't. Even a formerly local store (http://www.cosbysports.com/ in NY) now sells all teams' stuff online. And Cosby has a lot of unique items (e.g., autographed equipment and pictures that you can't find elsewhere).
The only thing that I think could work is offering unique items that you can't find elsewhere, mainly stuff like autographed pictures/equipment and collector's items. This stuff is available on eBay, but many people still like seeing/touching used stuff over buying online. With new items, I can't see this concept working since there's too much competition.
Finally, note that with the new items, the online stores have so many items. A physical store can only have so many SKUs or the inventory cost will go through the roof.
Once again, the concept only seems to work if the store offers items not available elsewhere (which will also make it more authentic - which is GOOD)."
So, why I am telling you all this?
The point that I want you to get is that your success in business is predicated on just one thing - your ability to solve the needs of your customers better than alternative methods.
In this case, unless the store carried merchandise that others didn't, it simply didn't solve customer needs any better.
So even if this entrepreneur quit their job, raised money and worked 24 hours a day, they probably would fail.
You need to worker smarter and not harder. And working smarter means that you are always looking to better satisfy customer needs; since that is the key.
Whether you are a detergent company looking to get clothes even cleaner, or a chair manufacturer looking to make chairs even more comfortable at a lower price, you must constantly be thinking about solving your current and potential customers' needs.
Well, for some, they simply love the thrill of starting a new business. For others, they have a great idea that they think will help people, and are eager to fulfill this unmet customer need. For some, they want to create a paying job for themselves and/or not have to answer to a boss. And for still others, they have grandiose plans to "change the world."
While the individual goals for each entrepreneur may vary, most sophisticated entrepreneurs share one common goal when starting a business - to eventually exit the business for a large sum of money.
Savvy entrepreneurs know that they can make money day-to-day running a successful business. But, they know that the real money comes when they "exit"; that is, when they take the company public, or more likely, sell the business. That is when the million-dollar windfall comes that most entrepreneurs dream about.
Having successfully bought and sold businesses in the past, I have my own views on the topic of "exit strategy planning" or how to prepare a business to maximize the likelihood of 1) selling it and 2) the price at which it eventually sells. (Note that I tend to equate "exit" with "selling a business" since this is the most likely form of a successful exit.)
But, in order to provide more expertise on this subject, I recently interviewed John Davies.
Not only is John the co-author of "Selling Your Business For Dummies," but he has significant experience buying and selling businesses as the CEO of Merrymeeting, Inc.
In fact, not only does Merrymeeting own Sunbelt, the world's largest business brokerage firm, but Merrymeeting owns and/or has a majority interest in numerous national and international service franchise businesses.
In my interview, John conveyed his five insider tips for successful exit strategy planning.
The first is to make yourself replaceable. That is, if you as the business owner are too critical to the business' success, no one will want to buy it. You need to make sure that you have trained others that can run the business successfully in your absence.
The second tip is to make sure that your business has "predictable future revenues." The predictability of revenues has to do with how many new customers you get and the number of times your customers buy from you over time.
Clearly, a business that has repeat customers is more valuable than a business that has to constantly search for new customers. If your business is the latter, you need to figure out how to extend the lifetime value of your customers.
To learn more about these two insider secrets, get three more great secrets, and to learn John's personal 3-point plan that he's used to start, grow and run numerous multi-million dollar empires, listen to the full interview on Growthink University here.
To hear a short clip of the interview, click the blue triangle in the player below:
Most entrepreneurs fail to raise
venture capital because they
make a really BIG mistake when
approaching investors. And on
the other hand, the entrepreneurs
who get funding all have one thing
in common. What makes the difference?