tag:blogger.com,1999:blog-35886599395330852992024-02-20T03:57:53.793-08:00Itechbahrain Business BlogGane smithhttp://www.blogger.com/profile/07132041959472937437noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3588659939533085299.post-61095164376620733142017-04-14T05:58:00.002-07:002017-04-14T05:58:55.095-07:005 Finance Tips All Business Owners Should Follow<div class="separator" style="clear: both; text-align: center;">
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<br /><br />I don’t know about you, but finances aren’t really my strength. I’m an entrepreneur -- a big picture guy. I like to tackle big problems and develop big visions. I don’t like to sit around staring at a financial spreadsheet while I spend hours upon hours entering expenses by hand.<br /><br />But whether we like them or not, finances are a necessary part of running a small business. To get some insight on effective procedures that entrepreneurs can adopt to improve their own accounting practices, <a href="http://growtheverywhere.com/marketing/allan-branch-lessaccounting/">I sat down for a quick chat with LessAccounting founder Allan Branch</a>.<br /><br />Here’s what he had to say on this critically important subject:<div>
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1. Don’t procrastinate.</h2>
<br />One of the biggest mistakes Branch sees new entrepreneurs make is that they put off their bookkeeping needs. If you aren’t financially-minded, programs such as Quickbooks can make small-business accounting seem completely unmanageable, especially if all you need to do is send out a few invoices and track a few expenses.<br /><br />The problem is, of course, that if you put off your accounting work, it doesn’t go away. It just gets bigger, and eventually you’re going to be faced with an overwhelming mess that you’ll need to sort out. The bigger the mess, the more you’re likely to procrastinate.<br /><br />Fortunately, though, Branch argues that small-business bookkeeping is actually very simple. If you break everything down into small categories -- categorizing expenses, paying employees, sending invoices -- the whole thing becomes much more manageable and the compulsion to put it off lessens.<br /><h2>
2. Understand your seasonal cash flow.</h2>
<br />Another cautionary tip Branch gives to young startups is to understand seasonal <a href="https://www.entrepreneur.com/article/66008">cash flow</a> -- and that pointer comes directly from his personal experience. LessAccounting, for example, has major seasonal spikes that occur during tax season, followed by a slowing of conversions from April to October. It wasn’t an easy lesson to learn, but Branch eventually realized that he needed to maintain a three- to four-month cash cushion to help get the company through these slower periods.<br /><br />You need to know your <a href="https://www.entrepreneur.com/article/56510">sales cycles</a> as well. If you’re a business-to-consumer retailer that sells $20 items, your sales cycle is likely fast enough that having a cash buffer on hand is less of a concern. But if you’re a business-to-business company whose sales cycles last months, or even years, having extra capital in the bank can mean the difference between being able to weather the long periods before revenue from past sales manifests and having to fold early because your cash has dried up.<br /><h2>
3. Focus on your core strengths.</h2>
<br />One issue that both Branch and I see far too much is startup owners, particularly software-as-a-service providers, believing that they need to create everything from scratch. I get it. If you’ve already got a coder on your team, it can be seriously tempting to have him or her build internal apps and products rather than investing in existing solutions.<br /><br />The problem with this approach is that it wastes your time. It might save you a few pennies at the end of the day, but the cash you’ll save is peanuts compared to what it cost you to take a key employee away from those activities that drive revenue for your business. Instead, it’s far more cost-effective to work with existing providers and use the tools that they’ve already perfected, rather than trying to reinvent the wheel on your own.<div>
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4. If you have to work 80 hours a week, you’re not profitable.</h2>
<br />This lesson from Branch was an interesting one for me. I’m big on growth hacking (I don’t run a website called <a href="http://growtheverywhere.com/">Growth Everywhere</a> for nothing!), but Branch’s approach to business has been much more moderate. Of particular interest to me was his assertion that, if you have to work 80 hours a week to keep your business afloat, you’re not profitable.<br /><br />Too many startup entrepreneurs blow through the earliest stages of their company's growth by putting all their time and energy into their businesses at the expense of their health and relationships. While I’d argue that that’s fine for short periods, I get why Branch says that this shouldn’t be a part of your long-term financial calculations. It’s simply not sustainable.<br /><br />If your company is only in the black because you’re working yourself to the bone, your numbers are going to take a major turn once you scale back your workload -- if you don’t collapse from exhaustion first, that is.<br /><br />Whether you choose to apply Branch’s “no growth hacking” philosophy to your business, make sure that your labor costs are fully accounted for. Undervaluing the time you invest in your business hurts everyone involved.<br /><h2>
5. Ask for discounts.</h2>
<br />Finally, here’s a fun tip from Branch: if you’re seriously tight on available funds but you want to take advantage of existing solutions, try emailing the founder and asking for a discount. It won’t work in every case, but you’ll be surprised by how often you can get free stuff just by asking.</div>
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Gane smithhttp://www.blogger.com/profile/07132041959472937437noreply@blogger.com0tag:blogger.com,1999:blog-3588659939533085299.post-55479907502437443942017-04-02T05:49:00.000-07:002017-04-14T05:59:14.505-07:008 Myths Technologists Believe That Sink Businesses<div class="separator" style="clear: both; text-align: center;">
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Most technologists have little interest in the mechanics of starting and building a business. That’s why I recommend that they find a co-founder who loves business challenges, including marketing and finance. I usually envision a 50-50 ownership split for their efforts, but every engineer believes the technology side deserves the majority share.<br />
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In fact, an entrepreneur friend of mine, who made millions on her marketing expertise, asserted recently that most inventors fail in business because they refuse to believe that any business expertise or experience is worth more than 5 percent in partner equity. If you consider yourself a technologist, you probably believe and may be propagating one of the following myths:<br />
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1. The first priority for funding should be to develop the technology.</h2>
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Outside investors are most interested in scaling a proven business model, not research and development. Thus it’s a waste of time for most entrepreneurs to be looking for investors until they have a product and some customer revenue. Most founders bootstrap product development.<br />
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2. Fabulous solutions require great technology.</h2>
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Business success requires customers to see a solution as exciting, and they rarely care about the technology behind it. I exhort entrepreneurs to keep it simple, start with a minimum viable product (MVP), and test it out with early customers. The best technologies are barely invisible and low cost.<br />
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3. New technology is so exciting it sells itself.</h2>
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The reality is that consumers and businesses alike are afraid of new technologies, due to the learning curve, potential quality problems and side effects. This fear can easily override their fear of the problem the technology aims to solve. Business people know how to downplay the technology and market the value of the solution.<br />
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4. Marketing is a necessary evil to mask poor technology.</h2>
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In today’s world of information overload, everyone relies on marketing and social media to find solutions to match their needs. Even the best technical solutions often fail due to lack of good marketing. The right marketing efforts can cost as much as the technology.<br />
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5. You can’t build a business case until the technology is finalized.</h2>
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In fact, building a business case, starting with market opportunity and customer segmentation, is the only way to know what you can afford to spend on the technology. Technology that can’t be sold for a profit or appeals only to early adopters is not a viable business.<br />
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6. Patents are not worth the effort, since big companies will win.</h2>
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Intellectual property is a business issue, not a technical issue. Patents can raise startup valuation by investors by as much as a million dollars, and will attract acquisitions rather than copycats. Patents can apply to innovative user interfaces, processes or a new technology algorithm.<br />
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7. Business efforts should start only after the product is right.</h2>
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Business <a href="http://www.conversionaid.com/build-a-marketing-strategy-before-you-start-building-your-product/">experts</a> often now recommend that entrepreneurs start their marketing first to confirm that they have real customer interest and an appealing product concept. Elegant implementations may be too expensive or too complex for non-technical customers.<br />
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8. Perfecting the technology early removes most business risk.</h2>
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It’s true that inventions can’t be scheduled, but it’s equally true that customers can’t be invented. The ultimate risk is trying to sell a solution that customers don’t need or want.<br />
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All this doesn’t mean that a great technologist can never be a great entrepreneur, but it does suggest that business skills are as key to startup success as technical skills. Very few people have both, but there are some notable exceptions, including <a href="https://en.wikipedia.org/wiki/Mark_Zuckerberg">Mark Zuckerberg</a> of Facebook and <a href="https://en.wikipedia.org/wiki/Elon_Musk">Elon Musk</a>, founder of Tesla Motors, SpaceX and others. The odds are still against you being the next one.<br />
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The alternative is to find a co-founder who can provide the business acumen, as <a href="https://en.wikipedia.org/wiki/Bill_Gates">Bill Gates</a> did with <a href="https://en.wikipedia.org/wiki/Steve_Ballmer">Steve Ballmer</a> for Microsoft, and Google did by bringing in <a href="https://en.wikipedia.org/wiki/Eric_Schmidt">Eric Schmidt</a>. I’m personally a technologist, and I’m always disappointed when good technology languishes on the sidelines for 20 years in denial of business realities. Don’t let a few myths stop you from changing the world.</div>
Gane smithhttp://www.blogger.com/profile/07132041959472937437noreply@blogger.com0tag:blogger.com,1999:blog-3588659939533085299.post-29829552921106886842017-03-20T05:55:00.000-07:002017-04-14T05:59:06.776-07:008 Practices to Promote Urgency Within Your Startup<div class="separator" style="clear: both; text-align: center;">
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The business world is changing ever more rapidly these days. If you see a need or a big opportunity but don’t act fast enough, the opportunity will pass or a competitor will get there before you do. Customers and opportunities don’t wait. If your startup culture doesn’t include a sense of urgency, your probabilities of long-term success are miniscule.<br />
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Some of you may remember <a href="http://techcrunch.com/2011/06/28/sean-parker-on-why-myspace-lost-to-facebook/">MySpace</a>, which came early to social media, but lost the lead to Facebook by evolving too slowly, many analysts say. Other examples often mentioned include <a href="https://twitter.com/mikeyavo/status/223263315038711808">Hashable</a> and <a href="http://www.businessinsider.com/mapquest-a-symbol-of-everything-thats-gone-wrong-2009-2">MapQuest</a>. A sense of urgency won’t save a bad idea or the wrong team, but the good news is that it will fail faster, allowing people to move on quickly to more productive opportunities.<br />
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A culture of urgency does not mean a hyperactive reaction to the crisis of the moment. It does mean a proactive and ever-vigilant plan to keep moving forward with the market and stay ahead of competition, even if you must make your own products obsolete. As an advisor to entrepreneurs, I recommend the following practices to build and nurture an urgency culture:<br />
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1. Be a visible role model for urgency vs emergency.</h2>
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We all know the harried startup founder who is great at putting out fires. Better startup leaders display a calm but visible urgency for scaling the business, designing the next product generation and attracting customers just out of reach. Culture follows the leader.<br />
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2. Demonstrate the positives of urgency to the team.</h2>
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Make urgency a positive by highlighting the value to your company for getting the right things done, and publicly rewarding empowered team activities. Don’t let false urgency add fear and stress, or be a de-motivator. Emergencies are problems, whereas urgencies are opportunities to win.<br />
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3. Exhibit urgency in your personal operating style.</h2>
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That means consistently delivering on personal commitments and deadlines, and showing up for work on time. Don’t be seen as wasting your or other people’s time on casual conversations, or long, drawn-out meetings. Get to the key point quickly and encourage everyone to do the same.<br />
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4. Communicate milestones and wins to all constituents.</h2>
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People on the team need to see progress, investors relish growth and customers love brands that appear to be on the forefront of a wave. People never get tired of being thanked for their contributions. A sense of urgency will blossom and contribute even more.<br />
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5. Tie internal measurements to marketplace data.</h2>
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Many internal teams are content to measure their productivity against their own prior periods, while competitors and market changes may set whole new benchmarks. Constantly urge urgency with external market data, competitor announcements and innovative approaches from outside.<br />
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6. Translate emergency implications into urgency.</h2>
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Once a crisis has been resolved, convene the team to address the longer term changes required to prevent recurrence. These root-cause analyses are often forgotten in the heat of the next problem. Smart entrepreneurs focus on turning emergencies into the next opportunities.<br />
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7. Set an urgency tone in hiring, feedback and training.</h2>
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Perfectionism, skepticism and complacency are the antitheses of urgency. Don’t hire people with these attributes, and remove or retrain them quickly, before others are infected and your credibility is lost. Promote and generously reward people delivering stretch results and innovations.<br />
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8. Get the team engaged in urgency.</h2>
Just talking and reading about it is not enough. Plan team events and games where urgent physical actions are rewarded. Produce a video with potential viral impact and bring in your best customers for a brainstorming session and lunch with your team.<br />
When was the last time you walked the halls of your startup and palpably felt that sense of urgency that will keep your business in the forefront of a rapidly changing marketplace? Maybe it’s time to check your own leadership style and practices to see you are sending the right messages to your team. Try to squeeze it in before you get tied up handling the next crisis.</div>
Gane smithhttp://www.blogger.com/profile/07132041959472937437noreply@blogger.com0