My thanks to Paula Andruss for this infographic on Entrepreneur.com:
I’m read by Antonio Neves’ post Can School Make You a Better Entrepreneur? on Entrepreneur.com yesterday. Antonio does a good job giving a balanced view of that very interesting question, and he asks bonified smart person Chris Guillebeau too, which is always a good idea.
Chris gets the best quote in the piece:
‘You might as well learn as much as you can from as many sources as you can,’ says entrepreneur Chris Guillebeau, author of the New York Times best-seller The $100 Startup. ‘Experience may indeed be the best teacher, but you can certainly supplement that education with more traditional or nontraditional kinds.’
That’s smart. There are some dumb quotes in that piece, but Chris is right on. Absolutes don’t make sense. The right answer is not yes, or no, but rather, “it depends.”
I’m just one data point, but in my case I’m 100% certain that I could not have managed my successes in entrepreneurship without the MBA degree that turned me, at age 33, from business writer to business doer. But I’m also certain that lots of successful people did it without the luxury of education.
My opinion: if you don’t have the time, or the money, you can do without business education. If you get caught up in success so quickly that you don’t have time for business education, then don’t worry, you’re already getting it where you are. And if you have the luxury to have a choice, get a real education — math science, liberal arts — first, and then add business training later.
Funded or not, ambitious or not, I just don’t see the sense of startups having fancy offices. In the old days, as a consultant to startups and investors both, I hated walking into an interview with a startup when it was a nice office, beautiful windows, carpets, and lots of space. In the middle days, building my own company, I didn’t want to be spending on appearances when there was never enough for product development and marketing for growth. And nowadays, as an angel investor, I don’t want a company that has nice offices.
There are exceptions: some kinds of businesses need fancy offices as part of their strategy; accountant, lawyers, and some high-end consultants. Those are rare special cases. I was a successful and expensive consultant for years, out on my own, without a fancy office. I never met a client who wouldn’t work with me because my office space wasn’t nice enough. I did have at least one who selected me because (among other factors, obviously) he didn’t want to pay high-end-consulting overhead.
Another exception I always make is powerful tools. As consultant, entrepreneur, or investor, I don’t respect a company that has people working on slow computers, outdated software, or slow network bandwidth. That’s a dumb way to save money.
I just read 7 Frugal Startup Tips from Millionaire Entrepreneurs on Entrepreneur.com. It includes some great tips, like avoiding expensive office furniture, reusing supplies, being careful about space, and so forth. That reminded me.
A bootstrapped company doesn’t overspend because it can’t. By definition. It doesn’t have other people’s money. But a funded startup should spent the money on the product and the marketing. Not the offices.
I don’t respect obvious overspending. It doesn’t mean smart founders or smart investors. The best example are those absurdly expensive SuperBowl ads in 1999 and 2000. But a fancy office is right up there.
Entrepreneur.com asked What is the most important thing to have when you are just starting your company? on LinkedIn and here are the results:
While I really like the answer business plan — I’m a business planner — I don’t completely agree. If I weren’t biased down to my bones, I’d answer “something else” and clarify that what you really need, more than anything else, is customers. You can have money, idea, business plan, and the guts to go for it and still fail miserably if nobody wants to buy what you’re selling.
However, realistically, not all startups have the luxury of early customers. While ideally you find some early customers, or promises, or prepaid sales, sometimes you need to create something first (such as a product, website, app,etc.) before people can buy it. And in those cases, the business plan is the next best thing because — if it’s done well — it focuses on real indications, real information, and reasonable estimates of believable sales prospects. So that makes business plan is a good compromise.
And business plan alone isn’t enough; it has to be a realistic, practical, concrete business plan that you can execute on.
The guts to go for it isn’t enough. It’s what we call a necessary but not sufficient condition. You’re nowhere without it, but you might be even worse than nowhere with it. Courage without customers, for example, is a terrible combination.
What’s the difference between a marketing plan and a business plan? Doesn’t a business plan include a marketing plan? Why would anybody do one without the other?
Good questions, and since I get them a lot, I decided to answer them here:
- A business plan covers the entire business, including overall strategy, financial plans, target markets, sales, products and services, operations, and how they all relate to each other. A marketing plan, in contrast, focuses on the marketing: marketing strategy, target markets, marketing mix, messaging, programs, etc. Cash flow is vital for a business plan, but not usually included in a marketing plan
- Yes, a business plan almost always includes the marketing portion. Emphasis varies, and I’ve seen some plans that focus much more on product or service than on marketing. But those are unusual.
- Lots of people do marketing plans rather than business plans because their job or their attention or their focus is on the marketing, not the whole business.
I wrote 5 steps to creating a marketing plan in one of my columns for entrepreneur.com. I’m including a summary here:
Step One: Your identity as a business.
Create separate lists that identify your business’ strengths, weaknesses and goals. Put everything down and create big lists. Don’t edit or reject anything.
Then, find priorities among the bullet points. If you’ve done this right, you’ll have more than you can use, and some more important than others. Kick some of the less important bullets off the list and move the ones that are important to the top.
This sometimes requires input from your managers as well. For example, your management team thinks being conservative on spending is a weakness but you don’t. That might be something to drop off the list.
Step Two: Focus on markets.
The next list you’ll need to make outlines your business’ opportunities and threats. Think of both as external to your business — factors that you can’t control but can try to predict. Opportunities can include new markets, new products and trends that favor your business. Threats include competition and advances in technology that put you at a disadvantage.
Also make a list of invented people or organizations who serve as ideal buyers or your ideal target market. You can consider each one a persona, such as a grandmother discovering email or a college student getting his or her first credit card. These people are iconic and ideal, and stand for the best possible buyer.
Put yourself in the place of each of these ideal buyers and then think about what media he or she uses and what message would communicate your offering most effectively. Keep your identity in the back of your mind as you flesh out your target markets.
Step Three: Focus on strategy.
Now it’s time to pull your lists together. Look for the intersection of your unique identity and your target market. In terms of your business offerings, what could you drop off the list because it’s not strategic? Then think about dropping those who aren’t in your target market.
For example, a restaurant business focused on healthy, organic and fine dining would probably cater to people more in tune with green trends and with higher-than-average disposable income. So, it might rule out people who prefer eating fast-food like hamburgers and pizza, and who look for bargains.
The result of step three is strategy: Narrow your focus to what’s most in alignment with your identity and most attractive to your target market. In other words, focus on the area that is shared by all three lines in the diagram here.
Step Four: Set measurable steps.
Get down to the details that are concrete and measurable. Your marketing strategy should become a plan that includes monthly review, tracking and measurement, sales forecasts, expense budgets and non-monetary metrics for tracking progress. These can include leads, presentations, phone calls, links, blog posts, page views, conversion rates, proposals and trips, among others.
Match important tasks to people on your team and hold them accountable for their successes and failures.
Step Five: Review often and revise.
Just as with your business plan, your marketing plan should continue to evolve along with your business. Your assumptions will change, so adapt to the changing business landscape. Some parts of the plan also will work better than others, so review and revise to accommodate what you learn as you go.
I’ve been busy elsewhere this week, but managed to post two things I’d like to make available to you on this blog, because this is my main blog:
- My monthly column on entrepreneur.com came out today, summarizing the three financial guestimates every business plan needs. That one gives you a quick summary of the income (also called profit and loss), the balance sheet, and the cash flow. There are a lot of other tables a business plan might have, but these are the most useful, and the most important. These three put your projections into the same financial format analysts, investors, bankers, and managers are used to seeing.
- On Tuesday I posted the three essential questions you have to answer for angel investors, on the angel investment site, gust.com
I hope you find one or both of these useful, and have a great weekend. I’m in New York again this weekend, heading home to Oregon Tuesday, still enjoying a delightful taste of what makes Silicon Alley a high-tech startup hotbed.
- It’s French
- It’s ridiculously hard to type
- It’s not Twitter friendly
- It’s been thoroughly bastardized. (mompreneur, solopreneur, and intrapreneur, etc.)
- It’s begging for a lawsuit. (from Entrepreneur Magazine)
The first four are enough for me. I’m ignoring that fifth point because I write for Entrepreneur.com and Entrepreneur Press published my last two books. I like the people there.
So we need a new name for entrepreneur.
Robert suggested venturist on Monday. I commented that it wasn’t catchy enough. Then he suggested venturer in his next post, yesterday, called Kicking Off the Antipreneur Movement. He adds:
I would argue for a term that’s as broad and inclusive as possible. Language adoption relies on usage, and you don’t gain users by excluding people. The best term is one that encompasses all the different varieties of those we currently call ‘entrepreneurs’ — founders and buyers, tinkerers and turnaround artists, profit seekers and social visionaries.
With all those criteria in mind, I wonder if ‘venturer’ might be the term we’re looking for.
And that’s why I like empresario. It’s Spanish, from empresa, which means company. And we’re all getting very familiar with lots of Spanish words that become common in American English. And empresario is easy and fun to say, easy to spell, and, in my opinion, kind of cool.
But it won’t work unless everybody does it. Robert suggested we start using the hashtag #venturer on Twitter instead of #entrepreneur. I think #empresario is even better. What do you think?
I’ve been busy this week, with posts about business planning appearing on my column at entrepreneur.com, my post on Industry Word, and a post on Amex OPEN Forum. Meanwhile, I had one of those travel disasters — boring, you know the drill — getting out of San Francisco. Well, not getting out of San Francisco, stuck instead in an airport hotel. So it seems a good time to share those three other posts:
- First, on my column at entrepreneur.com, 5 questions your business plan should answer. Hire people? Change locations? Change pricing? The idea is that if you keep a business plan alive, and maintain good planning process, then your business plan can answer those questions.
- Second, as a guest blogger on community.sba.gov, I posted 5 planning fundamentals for every business.
- And on Amex OPEN, the real heart of planning as management, steer your business with plan vs. actual.
All three of these are about real business planning, not just a business plan document, but running your business better.
(image: Dimitri Shironosov/shutterstock)
Are you the winner who will be announced next January? If you want to be, get going, because the deadline for entering is June 15.
Picture a large hotel banquet room, something like 50 yards long and 25 yards wide, with a big well-lit stage, two huge video screens, and a podium. It’s set up for a fancy lunch with round tables of eight. The room is full. Media people, including Entrepreneur Magazine, local journalists, business writers, and bloggers are there waiting.
And then the announcement: you are the Entrepreneur of the Year for 2011. You might be the college winner, the emerging entrepreneur winner, or the grand prize entrepreneur of the year winner. There will be videos about you and your business. Imagine winning this prize. This is sponsored jointly by UPS and Entrepreneur Magazine. It’s a big deal.
I was there in January of 2010 when the 2009 prizes were awarded in a big event in Miami, and again in 2011 when the 2010 awards were announced in Atlanta. It’s a big deal. If you have any doubt, look at this web page listing winners of last year’s awards, or this web page with winners of the 2009 awards. There are prizes, cash or equivalents, and trophies; but the real win is the buzz.
For more information on how to enter, rules, and prizes, you can click this link for general summary and description, or this link to go directly to the entry information for general entries, or this one for entry information for college entries.
And good luck. I hope you win. If you do, give me some credit in your acceptance speech, okay?
A couple of weeks ago the editor of my entrepreneur.com column poked me sideways a bit with the suggestion that I explain how planning is management. He said (I’m paraphrasing):
What do you really mean when you say planning is management? It’s not immediately obvious. Can you explain how a business plan becomes better business management?
Which led to How Business Planning Leads to Better Management, published yesterday.
The key is going from strategy to numbers:
In order to chart your path, you’ll need to define long-term goals. Think broadly about how you see your business in several years. From there, get specific. You’ll want to establish milestones for when you want to accomplish certain goals, and know who you will want to carry them out. Go beyond sales, costs and expenses, and look at what really drives your business. It might be conversions, page views, clicks, meals, trips, presentations, seminars and other engagements.
And then, more important, you track and manage those numbers. You set a regular review schedule and manage performance based on the numbers in the plan plus the difference between plan and actual results.
Can you see the management brewing? Tracking and analyzing numbers can help you manage the work behind the numbers. You’ll be in a better place to recognize and highlight what’s working and what isn’t working for your business and your team. Managing your business successfully requires more than just praise and pats on the back. Sometimes it means focusing attention on problems, helping people solve them if possible, discussing and embracing mistakes, and, in the worst case, weeding out people who don’t care about bad results. This can all be accomplished more efficiently when you have a plan in place.
So that’s why planning, done right, is management. It’s controlling your destiny and steering your company. And that’s not just a plan, a single, use-once plan; no, it’s planning process. It’s regular use, review, and revision, that makes planning management. Like Eisenhower said: “the plan is useless, but planning is essential.”