Written by Dave Lavinsky on Monday, June 7, 2010
I have two close friends that are very much alike.
They both grew up playing the same sports. They both look fairly alike. And they both went to the
same college and got nearly the same grades.
But one of them is now wildly successful, while the other is still sort of just getting by.
I had my hunch regarding why they have achieved such different outcomes in their careers. But it wasn't until the other day, when I picked up "The Luck Factor" by Richard Wiseman, that the difference became crystal clear.
In his book, Wiseman described an interesting experiment.
In the experiment, a researcher filmed two people, Martin and Brenda. Both had volunteered to participate in a study, even though they didn't really know exactly what the study was about. Prior to the study, Brenda described herself as an unlucky person. On the other hand Martin considered himself an extremely lucky person.
Both Martin and Brenda were sent to a coffee shop and told to wait for a researcher to arrive. The research team put a $5 bill on the ground in front of the shop. Martin saw the bill, picked it up, went in, sat down at the counter, and had a nice conversation with a businessman sitting there (who was actually the researcher).
Brenda, on the other hand, failed to notice the bill, stepped over it, sat down next to the businessman and did not say a word.
After the experiment was over, the researchers interviewed both Martin and Brenda. Specifically, the researchers asked each if they thought anything lucky or unlucky had happened
to them that day.
Martin was thrilled about having found the money and about his nice conversation... while Brenda described her day as uneventful.
What's so interesting is this: Both Martin and Brenda had the SAME EXACT OPPORTUNITY, but only Martin, who started the day feeling lucky, enjoyed and got value from it.
The point is this: How you feel about yourself, be it lucky or unlucky, WILL shape your success. Particularly your success as an entrepreneur. Because feeling lucky allows you to better see and act upon opportunities.
Importantly, the author's research found that luck has nothing to do with mere chance. And studies show that lucky people cannot predict good fortune, like winning the lottery, any better than unlucky people.
Also, people who consider themselves lucky do not score higher on IQ tests than unlucky people. And they are less superstitious than "unlucky" people.
But lucky people expect their lives to be full of luck, and are thus always on the look-out for more. They don't see setbacks as final outcomes. Rather, they look for opportunities and start working optimistically again toward positive outcomes.
And importantly, the author believes that with commitment and steady work, anyone can retrain their thinking and habits to improve the quality and quantity of luck in their lives.
I would venture to guess that virtually all successful entrepreneurs consider themselves to be very lucky. More importantly, I bet that BEFORE they became successful entrepreneurs, that they considered themselves to be very lucky. Because you must be able to see opportunities and act on them in order to be successful.
So, if you find yourself thinking negative thoughts, zap them. Everyone has obstacles to overcome en route to entrepreneurial success. Know that you can overcome your obstacles and achieve
If you want personal mentoring from me and my senior team to overcome any obstacles you face, and to successfully capitalize on opportunities, join Growthink University today.
Written by Dave Lavinsky on Monday, May 31, 2010
Not long ago, I drove from NY to Maryland to meet with 15 successful business owners for 2 days. Very cool stuff.
It's hard to realize everything you don't know until it's right in front of your face. You see, each of us took turns speaking. We each spent 30 minutes discussing things that were working well in our businesses, and then 30 minutes talking about things that weren't working so well and soliciting feedback from the group.
I walked away with 2-pages of great ideas to implement.
So, after the "Mastermind" meeting, I'm driving home from Maryland and something strange got my attention. This red truck sped by me. And it had a decal that really pissed me off.
The decal said: "Born to Hunt....Forced to Work"
Now I'm not upset about hunting. I'm not a hunter. And I know a lot of folks disapprove of hunting. But that's not my issue.
My issue is someone saying that they are forced to work.
You see, my decal would read:
"Born to Be An Entrepreneur...Happy to Work as an Entrepreneur"
Meaning that your work should be what you love. If you love to hunt, then make that your business. Sell hunting equipment or apparel. Set up a website for hunting enthusiasts. Become a coach that teaches hunters to improve their skills.
You get the point...
I just hate it when folks complain...when the answer is within their reach.
If you aren't running your own business yet, create your own decal. What would you say you are born to do?
And then figure out a business that you could start to leverage
And then create your business plan.
And then raise capital.
And then you're off to the races.
P.S. It's so powerful to get together with like-minded entrepreneurs. It's the fastest shortcut to explosive business growth I know of....
You get to avoid the mistakes that others have made before you... But more importantly, you can make huge leaps and bounds by learning what's working in each other's businesses.
Frankly, I wish I hadn't waited so long to join a Mastermind Group. And I'm even thinking about creating and running my own at some point in the future.
Written by Dave Lavinsky on Wednesday, March 17, 2010
There’s one role in an organization that most entrepreneurs and business owners’ don’t really understand.
It’s not the Marketing Manager. That’s pretty easy. The Marketing Manager is in charge of marketing the company’s products. It’s not the Sales Manager. Or the Operations manager either. These roles are also quite evident.
But the CFO (Chief Financial Officer) role confuses most entrepreneurs.
In fact, most don’t really understand what a CFO does, or think that the CFO role doesn’t apply to their business until they’re much bigger.
Well, recently I had the opportunity to learn more about the CFO role when I interviewed Jonathan Weiss.
Unlike many of the interviews I’ve done, Jonathan is not a famous author, investor or renowned entrepreneur.
No, Jonathan was simply a classmate of mine when I went to business school at UCLA (The Anderson School). But when I started speaking with him at our 10-year class reunion a few months back, I realized he had some special expertise.
You see, Jonathan had recently been the CFO of a small company, LA Rose, which manufactures fashionable uniforms for healthcare workers.
The company had been around for a few years and was generating $3 million in annual revenues when he joined it.
But in short order, Jonathan helped grow revenues from $3 million to $10 million, and then he helped sell the company for a nice multiple.
I listened to Jonathan’s story in amazement, and the questions started flowing. What did he do as the CFO of that company? Do all businesses need a CFO? What should my clients be doing to replicate his success?
But rather than monopolize Jonathan’s time at the reunion, I requested a telephone interview to ask these questions, and he was kind enough to oblige.
Here's an excerpt of my interview with Jonathan:
Click here to listen to and/or download the full interview and/or transcript.
Now, before I brief you on some of the interview’s highlights, let me explain the core role of the CFO.
As the title implies, a CFO or Chief Financial Officer is responsible for helping the company achieve it’s financial objectives.
Specifically, the CFO:
Ensures that key financial metrics (e.g., last month’s sales, current inventory levels, etc.) are reported in a timely manner.
Ensures that the company has enough cash to fund its growth
Helps improve the profitability and efficiency of the company
Figures out where assets should be invested
So, for example, some specific things that Jonathan did at LA Rose were as follows:
1. He created a financial dashboard. This dashboard showed the business owners exactly how the company was fairing on key metrics such as month-over-month sales, inventory levels, etc. This helped the company set and accomplish goals. Importantly, he also put key financial figures in terms that the business owners could understand so that they were able to make better decisions.
2. He improved the profitability of the business by better focusing the owners’ time. For example, one owner was amazing at designing new uniforms. But, she was only spending 10% of her time doing that (and spent her other time managing customers, employees, etc.). When those other roles were delegated and she focused more of her time on design, sales and profits skyrocketed.
3. Product sourcing. Jonathan boosted profits by finding new suppliers to manufacture the same quality uniforms at a lower cost.
4. New financing. Jonathan identified that much of the company’s capital was tied up in receivables (e.g., money owed to it by customers). He used a unique combination of factoring and receivables insurance to get this money from third parties at a low cost. The money was then reinvested in the company, and sales went up dramatically.
5. Investments. Jonathan made investments in IT that helped streamline operations and cut costs, boosting long-term profitability.
Whether your company needs to hire a CFO right now is up to you. But clearly someone needs to be performing the CFO role if you hope to really grow your revenues and profits.
To hear Jonathan tell his story and reveal his best CFO tactics, click here to listen to and/or download the full interview and/or transcript.
Written by Dave Lavinsky on Tuesday, January 5, 2010
After five years of living in our new house, my wife and I decided to buy a new clothes washer and dryer. We figured we'd upgrade to those new, ultra-efficient machines that use really little detergent, water and energy.
But right as I was about to make the purchase, I started to feel really bad for the washer and dryer manufacturer.
Well, we bought it at Best Buy, and before we made it to the front, where the registers are, our son Max stopped us in the video game section.
And so I started thinking. When am I going to buy my next washer and dryer? Maybe in another 5 years? 10 years? 15 years?
And when is Max going to get his next video game? Probably next month. And then the month after that. And then the month after that. (If he keeps up the good behavior and good grades as I expect he will.)
What an amazing difference! The washer and dryer manufacturers may only get one sale from me in the next decade while the video game companies might get 120 sales over the same period. Sure, the washer and dryer are bigger ticket items, but even if I'm satisfied, that manufacturer isn't getting squat from me for a long time.
Which made me think of the mistake I made when we first started Growthink.
When Jay and I first started Growthink, we focused solely on developing business plans for companies. We helped a ton of companies achieve a lot of success. But oftentimes, after we helped a company, they no longer needed us. The used the plan to raise money and grow their businesses, and didn't need to come back to us for another business plan.
We were like the washer and dryer manufacturer.
So, we set out to correct this mistake.
We started offering more services to help clients after developing their business plans. We launched our investment banking practice to help them raise capital and/or sell their businesses. And we began offering marketing and internet marketing services to help them generate new leads and customers.
And then we launched Growthink University to help clients with everything they need to successfully start and grow their businesses.
It took us years to get to this point, but now things are humming.
So, my key takeaway for you is to really think about your business:
How often will customers buy from you?
What is the lifetime value of your customers?
How can you increase the number of purchases that customers make from you?
Can you develop new products or services for them?
Can you offer them value month after month after month?
As we start this new year and decade, I want you to take some time to think through these questions. Make sure that you are adding as much value as possible to your customers; and giving them the opportunity to pay you month after month, year after year to receive this value.
Written by Troy Centazzo on Tuesday, January 5, 2010
If you're even considering selling your midsize company in the next couple years, here's the bottom line: you should start the process now.
That does not mean you should officially list your business for sale. It means you as the business owner should start some of the "behind the scenes" efforts (that is, preparation) that will enable you to maximize the value of your company during a sale and enhance the terms you'll negotiate as early as possible.
We certainly understand: you've been growing and leading your company for years, not working to sell it. You've been building it to last, not flip. The principals at Growthink have been in your shoes. We've started and grown businesses ourselves. And we've sold them too. We've learned lot of lessons along the way during our collective 100 plus years of start-up and business advisory experience.
But only about one of every three or four businesses successfully reaches a closing after they are listed for sale.
That's a discouraging statistic, but one that can be overcome. And consider, too, that various sources note that up to 75% of all business owners are planning to sell their businesses within five to ten years, creating a massive inventory of available businesses competing with you for buyers' attention.
Why should you care?
What's one of the key differences between those business owners who execute a successful sale of their company on good terms and those who fail to close?
Simply knowing the process well in advance, focusing on a few essential actions as early as possible, and taking a comprehensive approach that is integrated into your overall business management and planning process.
Growthink's approach is unique and designed specifically for business owners. Unlike accountants, lawyers, business brokers and other intermediaries, we believe in a comprehensive approach to optimizing the chances of selling a business for the highest price and on the best terms for the owner.
We recommend you focus on three distinct initiatives months (or years) before you officially offer the company for sale:
1. Enhancing Your Business Plan to Increase Your Value - and Sales Price. Since 1999, we've helped 2,000 clients build their business plans and strategies. We'll show you how to achieve a value for your firm that includes its future growth opportunities, not only its past performance. Consider why the stocks of some public companies in a certain sector command a premium price to others in the sector - it's because investors believe in the future prospects of that company compared to the others. You should work on developing that premium value for your company through maximizing your business strategy - a process you're probably already doing anyway.
2. A Complete Process. These include all the steps involved in selling your business, from beginning to end (and even after the close). Steps include improving your financial statements and records and thinking about future capital gains, estate and other tax issues as early as possible.
3. Creative Financing and Transactions. You don't have to sell your business to your first bidder through a straight asset or stock sale. We'll teach you a variety of structures to choose from, including tax efficient sales to your existing partners, recapitalizing the company so you keep a continued role, and selling to another company in your industry, among others. All options offer advantages and disadvantages. You'll learn why and what type of approach might be right for you.
Experience has shown that only a relative few midsize businesses start the sales process early and focus on a comprehensive approach. Quite frankly, these business owners have a better chance of a successful outcome that those who don't plan.
We encourage you to learn the basics - whenever you think you'll sell your business.
Online Seminar - Thursday, January 7th at 1 PM PDT/4 PM EST
Join the expert Growthink team businesses for 45 minutes, and learn key lessons that will benefit you whenever you decide to sell your firm. The official Growthink "Bottom Line Guide to Selling Your Business" will be provided to seminar attendees.
Thursday, January 7th at 1 PM PDT/4 PM EST
During the online seminar, we'll also disclose the top mistakes owners make when selling their businesses (the land mines to avoid), as well as government actions that may be coming soon and affect your sales process (yup, think capital gains taxes).
Sign up here.
Join the expert Growthink team and two entrepreneurs who recently sold their businesses for 45 minutes, and learn key lessons that will benefit you whenever you decide to sell your firm. The official Growthink "Bottom Line Guide to Selling Your Business" will be provided to seminar attendees.
Seminar Fee Waived for this Program. Strictly First Come, First Serve
Since our webinar system is limited to 200 registrants, sign up right away to attend via the link below.
Sign up here.
Look forward to your participation,
The Growthink Investment Banking Team
Written by Growthink on Friday, December 18, 2009
Looking for venture capital? Or looking for great insights to grow your business?
Well, we've scoured a year's worth of great blog posts from hundreds of venture capitalists and industry experts, and are pleased to present you with our 50 favorite posts of 2009.
Some great information is included in these posts, and savvy entrepreneurs and investors will heed this advice.
And we'd love to hear your comments...what posts did we miss?
1. Ed Sim (Dawntreader Ventures)Inspirational video for entrepreneurs
"Without a bigger sense of purpose, it is hard to be an entrepreneur and stick through the inevitable tough times that will come your way."2. Josh Kopelman (First Round Capital) Board Transparency - and the Implicit Web
Discusses the repurcussions of accessible data and the necessity of transparency with your Board of Directors. 3. Jeremy Liew (Lightspeed Venture Partners)Why the Economics of Social Gaming are So Attractive to Investors
Trend to watch for in 2010: Social Gaming, this article tells you why. 4. Seth Levine (Foundry Group)Want more jobs? Support Entrepreneurship
Levine recommends taking the steps included in his blog article to boost the economy and create jobs. 5. Chistopher Allen (Alacrity Ventures) Community by the Numbers, Part III: Power Laws
What defines the success of a community and how can we predict this?6. Fred Wilson (Union Square Ventures)Some Thoughts on Email After Dealing with 500 Emails
An inside peak into VC email response.7. Bill Gurley (Benchmark Capital) What is Really Happening to the Venture Capital Industry
VC Bill Gurley takes readers through an overview of the ups and downs of 2009. 8. Paul Graham (Y Combinator) Startups in 13 Sentences
If VC Paul Graham could tell startups 13 things, these would be them.9. Dave Hornik (August Capital) Innovation Doesn't take a Vacation in an Economic Downturn
Innovation isn't dependent upon finance. 10. Brad Feld (Foundry Group) VC Behavior in Board Meetings
Advice on putting the phone down, and paying attention at board meetings.11. David McClure (Founders Fund)Startup Metrics that Matter
This vlog teaches new entreprenuers what metrics really matter in the early stages of their development.12. Erick Schonfeld (Techcrunch) Venture Funds Raise Only $1.6 billion in 3rd Quarter. Most of That Went to Vinod Khosla
A quarterly overview on VC funds raised from Q3 2007 - Q3 2009. $750 million of the $1.6 billion raised went to Khosla ventures. 13. MG Siegler (Techcrunch) The Cost of FriendFeed: Roughly $50 million in Cash and Stock
A successful exit for a small social media startup; FriendFeed was purchased in August 2009 for $50 million. Highlights the payout for initial investors.14. Steve Fredrick and Don Rainey (VentureBeat) Venture Capital 2009: The Year in Review
Highlights included 3 venture-backed IPOs in Q3 2009, an expanding start-up world and the reduced cash required to start companies.15. Marc Andreessen (Andreessen Horowitz)Introducing Our New Venture Capital Firm Andreessen Horowitz
Announcing a new $300 million fund for technology startups. Investing between $50,000 and $50 million, this blog post outlines EXACTLY Andreessen Horowitz's requirements. 16. Laura Grimmer (VentureBeat)5 Ways VC firms Can Stop Shooting Themselves in the Foot
Excellent advice for VCs looking to grow their business and expand the pipeline of deals. 17. Peter Rip (Crosslink Capital)What's Broken - Venture Capital or Venture Perceptions?
Refutes the idea that venture capital is the worst place to be because the "old model doesn't work."18. Rick Segal (JLA Ventures)The "Take the Deal or Not" Debate
Questions every person should ask themselves before they take a deal with a venture capital firm.19. Mike Hirshland (Polaris Venture Partners) More on the Founder/CEO Question
When should the founder step aside as CEO for the greater good of the company?20. Jeff Bussgang (Flybridge Capital Partners) Should Entrepreneurs Be More Like Teenage Girls?
Recommendations for a growth mindset and success for reaching goals as an entrepreneur.21. Tim Oren (Pacifica Fund)Silicon Valley's Dirty Little Secret
What are the long term social and political impacts of Silicon Valley? Some insightful thoughts into Silicon Valley culture.22. Eric Friedman (Union Square Ventures) 99.99% (Or It's Totally Going to Happen But Isn't Signed Yet)
Until a contract is signed - it's not a done deal.23. Mike Speiser (SutterHill Ventures) Better Incentives Can Improve Online Advertising
Publishers should incentivize advertisers to create good content. Brings up the idea of ad content that enhances, rather than diminishes, user experience. 24. Matt McCall (DFJ Portage Venture Partners) Do You Need to Be in the Valley?
Addresses the age old question of whether entreprenuers in the tech space need to be in Silicon Valley to succeed. 25. Stu Phillips (Ridgelift Ventures) Venture Capital - Time for V3.0
Stu Phillips raises an important point - VC2.0 which began with the Internet and resulting bubble - is out. A new system needs to be created.26. Jason Caplain (Southern Capitol Ventures) Include Sales in your Strategy
Entreprenuers need to connect with their buyers early on; sales is an integral part of EVERY company. 27. Jason Mendelson (Foundry Group) Senator Dodd - Making it harder for small businesses to get funded
A VC outlook on the legislation changes proposed that will alter the ability for companies to get financed. 28. Nic Brisbourne (Esprit Capital Partners) Financial Forecasts in a Business Plan
"Any business plan that has financial forecasts under year 1, year 2, etc. rather than 2009, 2010, etc. is too early stage for us." Brisbourne urges entrepreneurs to be precise in their projections and have a definitive timeline for revenue.29. Albert Wenger (Union Square Ventures) Hiring: Lack of Diversity Becomes Self-reinforcing
Historical hiring practices may affect the ability to bring on diverse, younger talent.30. David B. Lerner (Totius Group, Columbia Venture Lab)Getting from Zero to One in Your Startup: Founder Compensation Should be Slim to None
An important point for every founder to konw - your investment is on the back end - not from annual salary.31. Larry Cheng (Fidelity Ventures) Succeeding with a Potential Single Point of Failure
Two success stories of companies who exited in spite of single point of failure possibilities.32. Raj Kapoor (Mayfield Fund) Prediction: Social Nets Will Make More Money Off-site vs On-site their Websites
Interesting take on how social networks will continue to monetize.33. Will Price (Hummer Winblad) Now
The importance of being present in the moment AND enjoying it.34. Howard Morgan (First Round Capital) UNI- Acquired Tastes in Food and Investing
Morgan talks about business plans that excite him as a potential user - not as an investor.35. Mark Suster (GRP Partners) How to (re)Approach People (Advice on the Eve of LeWeb)
"Business etiquette tips for dealing with VCs and Corporates at Conferences"36. Christine Herron (First Round Capital)
What's the Secret Success of Mint.com? The Real Numbers Behind Aaron Patzer's Growth Strategy
How much does it take to get started? When should you raise money? Interview with Mint.com CEO opens up and answers these questions.37. Fred Destin (Atlas Ventures) The Arrogant VC: A View from the Trenches (full length version)
Destin posts the answers to "tell me why VCs are disliked by entrepreneurs"38. Rob Day (@Ventures) Conventional Wisdom and Cleantech Venture Capital
Day clears up what Cleantech is, and in which firms "Cleantech VCS" invest.39. David Feinleib (Mohr Davidow Ventures)
When You Are the Product
A reminder that, regardless of the technology or device, when pitching investors you are pitching yourself.40. Bijan Sabet (Spark Capital)
Creating an Operating Plan for 2010
Advice for any year really, on creating an operating plan that works.41. Phillippe Botteri (Bessemer Venture Partners) Impact of the Recession on SaaS Sales & Marketing Productivity
How has the recession affected SaaS? Not much.42. Andrew Parker (Union Square Ventures)
How does Microsoft's Bing plan to compete? By paying customers not to compete.43. Mark Peter Davis (DFJ Gotham Ventures) Bootstrapping vs. Venture Funding
The pros and cons of two finance methods for startups.44. Allen Morgan (Mayfield Fund) Co-Founders vs. Early Employees
Quick thoughts on the differences between the co-founders and early employees. 45. James Chen (CXO Ventures)
Don't Bite the Hand that Feeds
This lesson applies to both business and government: Don't bite the hand that feeds you.46. David Aronoff (Flybridge Capital Partners)
Why do companies fail?47. Max Bleyleben (Kennet Partners)
The Hunt for Growth Is On
Tech success is creeping into Europe and other markets as the US emerges from recession.48. Jason Ball (Qualcomm Ventures Europe)
Pitch your startup: VCIC 2009
2009 awards have been given, but 2010 awards are just around the corner.49. Don Rainey (Grotech Ventures)
The 7 Troublemakers you meet in a Startup
7 personality archetypes an entrepreneur can expect to meet when starting a company. 50. Peter Haas (Founder, AIDG)
In Social Enterprise, Force Yourself to be an Entrepreneur First
Ten rules for starting an international service organization.
Written by Dave Lavinsky on Monday, December 7, 2009
Imagine for a moment that you were really great at something, but never acted on it.
How would your life, and the lives of others been impacted?
Let's take Michael Jordan. What would have happened if he never picked up a basketball? What would he be doing today? (I would bet he wouldn't be retired.) How much wealth would he and his family have lost out on?
Interestingly, a lot of people think that opportunities are lost or squandered when people are young. This is clearly not always the case.
Consider Grandma Moses. Grandma Moses loved painting as a child. But, she and her family didn't consider painting to be a real, paying job, so she spent decades earning a living doing embroidery work.
But, this all changed when Grandma Moses reached her seventies. Her arthritis worsened and she was unable to continue doing embroidery. So, Grandma Moses finally set out to do what she loved - painting.
She went to an Arts & Crafts store, purchased some supplies, and went to work. Within a few years, Grandma Moses would be creating two paintings a week. And each of these paintings would earn her more than she earned in a lifetime doing embroidery. In fact, in her eighties and nineties, she made paintings that would earn her over $300,000 each.
Now let's look at the impact of Grandma Moses' decision to start painting. Financially, she made millions. Money that would help her grandchildren get better educations, get better health coverage and live better lives. She also generated thousands in tax dollars which, among other things, would help fund essential projects. She generated jobs; she must have had assistants who helped her purchase supplies, arrange art showings, and handle her travel and financial affairs.
And then there are the millions of people that Grandma Moses touched by simply allowing them to look at her beautiful paintings.
Yes, even at an elderly age, Grandma Moses made an impact on millions of people.
But what about you and I?
The fact is that each of us have talents. And when we choose to reveal them, and nurture them, and fight to use them - essentially, when we choose to become true entrepreneurs - we positively impact many lives.
Because of this fact, I was not surprised by the Kauffman Foundation's recent study entitled "Where Will The Jobs Come From?
" The study reveals clear evidence that "new and young companies and the entrepreneurs that create them are the engines of job creation and eventual economic recovery."
In fact, since 1977, net job creation in the American economy would have been negative in all but a handful of years if not for startups and young companies (defined as < 5 years of age). And even in good times, like in 2007, when 12 million new jobs were added, two-thirds of the new jobs were created by startups.
So, if you are debating starting a business, now's the time to do it. If you have an existing business and are thinking about new growth initiatives, now is the time to launch them.
Yes, now is the time. It's not just about your personal satisfaction. It's about the tens, hundreds, thousands and even millions of lives that you can positively influence with your gift of entrepreneurship. It's time to really put that gift to use.
Written by Dave Lavinsky on Tuesday, November 24, 2009
When Jay Turo and I founded Growthink a decade ago, we each had a ton of responsibilities.
We had to find new clients, serve clients, develop our website, answer incoming phone calls, manage the books, pay receivables, negotiate partnerships, and so on and so on.
Like other successful entrepreneurs, as we grew our company, we knew we had to hire great people. There is no way that Jay and I could have possibly managed everything the company had to accomplish.
In fact, according to management guru Peter Drucker, an entrepreneur must narrow their role as they grow their organizations. The entrepreneur must focus on the areas that provide the most value to the organization, and delegate the rest.
Yes, your ability to determine what to delegate and to delegate to the right people is the only way to grow a successful company. As author Jim Collins states, "the most important decisions that business people make are not 'what' decisions, but 'who' decisions." That is, determining "who" should do the work is absolutely essential to the work getting done right, and the company being successful.
As a result, it's no coincidence that new ventures succeed, or fail, based on the quality of people they hire. It's no coincidence that Apple was so successful with a key early employee like Guy Kawasaki. Or that PayPal was so successful with Steve Chen, Chad Hurley and Jawed Karim as key early employees? (Steve, Chad and Jawed would later found YouTube.)
Simply put, your ability to hire the right people is absolutely critical to your success as an entrepreneur.
In order to teach you how to hire like an expert, I interviewed Dr. Geoff Smart. Dr. Smart is the Chairman & CEO of ghSMART, which helps companies and investors identify the right people to hire to ensure that they can achieve success. He is also the co-author of the current New York Times Bestseller "Who: The A Method for Hiring."
Interestingly, part of his research in conducting his book was interviewing more than 20 billionaires and 60 CEOs, investors, and other thought leaders, so Dr. Smart was able to learn real-world methodologies that allow entrepreneurs like you to hire with precision.
During our interview, Dr. Smart gave tons of actionable information. Some of the highlights included:
1) Tap referrals when seeking new employees: 77% of successful hires come through referrals. That is, by asking your employees and advisors/friends/colleagues who they know that could be "rock stars" in the open position, you can find great talent.
2) Don't just create a job description. Rather than simply creating a job description for your open position, create a "scorecard." Among other things, this scorecard should focus on the desired outcome of the employee. For example, rather than saying that the employee will be responsible for calling on prospects in Indiana, the scorecard must include numeric sales and prospecting goals (e.g., must make 10 to 15 sales calls/day and close $250,000 worth of sales each quarter). Importantly, entrepreneurs should also use the scorecard to judge employee performance after hiring them.
3) Probe in your interviews. Most interviews don't unmask the real information and insight you need to make quality hiring decisions. For example, if a salesperson said they generated $2 million in sales in their last job, it might seem very impressive. But, only by asking the three "P" questions can you really tell if it was. These questions include how the $2 million compared to the Previous year's sales in that territory, how the $2 million compared to the Planned amount of sales, and how the $2 million compared to sales by the individual's Peers.
Dr. Smart made tons of great additional points that entrepreneurs can use immediately to start building stronger teams and achieve more success. In fact, we are in the process of hiring more customer support staff for Growthink University, and will be employing his techniques immediately.
To hear a short clip of the interview, click the blue triangle on the player below:
Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/376.cfm
Written by Dave Lavinsky on Saturday, November 21, 2009
This past Tuesday, Warren Buffett and Goldman Sachs announced that they were donating $500 million to assist 10,000 small businesses in the U.S.
To begin, this is pretty cool. Any money invested in small businesses is sure to lead to more jobs and an improved economy. And even better when this money is not coming from taxpayer dollars.
However, what I found most interesting was where Buffet decided to invest the $500 million. I say "Buffett" and not Goldman Sachs, since Buffett's Berkshire Hathaway Inc. is the largest shareholder in Goldman Sachs, giving me the impression that he was calling the shots on this one.
According to Bloomberg.com, the moneys will be allocated as follows: "$200 million to local community colleges, universities and other institutions to provide small-business owners with practical business education.... $300 million through a combination of lending and philanthropic support to community development financial institutions."
$200 million to "practical business education" - that's what rang out the loudest to me. As one of the greatest investors ever, Buffett knows first hand that entrepreneurs that succeed are the ones who have the right business education and training.
Successful entrepreneurs realize that they themselves are one of their organization's greatest assets. As such, they constantly invest in themselves by taking courses, reading books, and upgrading all of their key skills.
Regarding the other $300 million, it is being provided to community development financial institutions (CDFIs). CDFIs generally provide financing and related services to individuals and small businesses in struggling or underserved communities. If you have or would like to start a business in one of these communities, go to CFDI Coalition website
to find a list of certified CFDIs.
Finally, speaking of practical business training, I'm unveiling a brand-new version of Growthink University this week.
Learn more, here:
Written by Growthink on Tuesday, October 27, 2009
This past Thursday, Growthink celebrated its 10 year anniversary with a reception in Los Angeles.
Thanks to all our friends, clients, and colleagues who were able to join us!
Here are some photos from the event:
Above: Jay Turo, Co-founder and CEO of Growthink
Above: Dave Lavinsky, Co-founder and President of Growthink
Left: Jay Turo; Right: Dan Hyman, Founder and CEO of XCOM Wireless
Left: Ken Jillson, Founder of Safari Air; Right: Melissa Welch of Growthink
Left-to-Right: Growthinkers Stacey Polychronis, Rocio Melgar, and Brittany Lawson
Click here to
view more photos from Growthink's 10 Year Anniversary Celebration.
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