Category Archives: Startup

This article is from Chapter 5 of Uncle Ralph's, "Don’t Do It the Hard Way”.  Read the book.

That was easy, let’s do it again!

board-mtgWe all tried hard to arrive early for the e2eForum meetings because it gave us time to chat informally with the other members and exchange comments on our businesses and other issues that were not on the day’s agenda.

Unfortunately, an accident on the expressway this morning had kept me from arriving early enough to review the agenda with Stan, who was chairing the meeting this week.

The discussion had already started and this was on the flipchart.

Discussion points: Serial Entrepreneurship

  • Another Start-up?
  • Or the next Screw- up?

What I heard was Paul was talking about the gourmet hamburger franchise he was considering investing in, “It looks like a safe investment and my son has some experience in the restaurant business. I’ve got the initial $60,000 and bank financing is easy because they love franchises.”

“Sorry, Paul,” said Dave, “but experience flipping burgers doesn’t mean your son knows how to run a burger joint. Even if the franchisor delivers all the management tools and support, do you really want to manage minimum wage staff and deal with unhappy customers complaining that your burgers suck? Your experience is all about managing highly qualified machinists and selling precision parts to multinational manufacturing businesses.”

“Yes, but I built a successful business in that industry, and this should be much easier. I have the time and the money and I need a new challenge to keep me interested. I don’t want to spend every day in retirement watching my money ride the stock market roller coaster.”

“It sounds like your entrepreneurial juices are percolating, Paul,” I said, “Maybe you should go back to the start-up criteria we talked about a few months ago. Look for an opportunity that really leverages your unique skills, knowledge, experience and contacts. Isn’t that what worked for you the first time?”

“True enough. All I bring to this business is a long history of eating hamburgers!” Paul was laughing at himself and it looked like he would leave his money in the bank, for now.

I was remembering what I have said to other successful businessmen: Making money doesn’t make you smart.What I said out loud was, “Before you throw your energy and money into a new venture, ask yourself a few important questions.”

“I hear another checklist coming!” chirped Larry.

“Thanks Larry, now I’ll have to give it a name. Let’s call it the Encore Performance Checklist. If you are determined to boast that you are a serial entrepreneur, not just a successful entrepreneur; then ask yourself these questions before you get started on your next venture:

  • What was it that made you succeed in your first business?
  • Did you build your business on your unique management ability, a new product idea, a preferred customer or supplier relationship? Which of these will apply to the new business?
  • What mistakes have you avoided in the past? Are you about to make them now? What new risks are you encountering for the first time?
  • Is now a good time to start something new? Are there no challenges left in your current business?
  • How much will a new initiative impact your current business and the demands on your time and resources?
  • Is your past success really transferable to the new business?”

“Many successful entrepreneurs have made the mistake of jumping into a new venture – merger, acquisition, restaurant franchise or real estate investment – and blown away the equity value they built in their original business. It’s another costly mistake to avoid.”

Brian shared his conclusion with us, “I’m now convinced that the next venture is something to set aside until I’m at the exit stage like Paul. When my current business is running itself and I have the time and money to very carefully select the next opportunity. I just don’t want to wait until I’m that old, sorry Paul. I’m thinking I’ll be ready for the next one at age 35.”

Stan added, “Too late for me, I’m already 39, but I’d like to accelerate the plan to get to that stage soon too. Then I can start the next one before I get bored and screw up the one I’ve got.”

I said, “I have seen that happen. Entrepreneurs who started to dabble in something more exciting, thinking their business was on cruise control and it headed into a crash landing instead.”

“So let’s avoid the unhappy ending of exit by default. Put it on the agenda for a future meeting – Preparing for Exit.”

We all agreed that was a good topic for a future meeting and concluded the e2eForum with our regular Roundtable update from each of the members before heading out for the day.

Your Uncle Ralph, Del Chatterson

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Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

Question-Exec-SummaryThis Real Life Story is an extract from Uncle Ralph's, "The Complete Do-It-Yourself Guide to Business Plans".  Read the book.

Real Life Story: “Things not to say out loud.”

When you are finally sitting down at the bank and reviewing your impressive and irresistible business plan, please be careful what you say. These people are not your new best friends, regardless of how friendly and helpful they all seem.

Remember: Their interest is to avoid any risk of losing their funds and to make money on you. And avoiding risk is more important than chasing a new account.
Your objective is to build their confidence in the plan and your ability to deliver. In my experience, some clients will blurt out admissions that do not help their cause with bankers, investors or potential strategic partners.
Some real life examples:
“We don’t have any more money to put into the business, our mortgage and personal loans are already at the maximum.”
“I don’t really want to do this, but I lost my job and had a nervous breakdown. So it’s hard to find anything else.”
“The prototype is not yet working, but I’m sure we’ll get our first order soon.”
“This is obviously a multi-billion dollar market, so we only need 0.002 percent market share to meet our sales projections. And the product sells itself.”
“I don’t know where those numbers came from.”
Please try to be more discrete when you’re forced to admit some of the negatives in your plan.  (However, if any of those admissions apply to you, then you are NOT ready to launch a business or request financing. Come up with better answers first.)
Honesty and full disclosure are good, but a confession of all your flaws is not required.
Whoever is listening to your pitch already knows that it is mostly fiction, that it will never go according to plan, and that they have a responsibility to protect their interests by asking the right questions and negotiating a good deal.
You should be equally professional about presenting your plan and defending your interests.
(Note: In all these Real life Stories, the actual names and business details have not been disclosed.)

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs. 

Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

 

 

This Real Life Story is an extract from Uncle Ralph's, "The Complete Do-It-Yourself Guide to Business Plans".  Read the book.

Real Life Story: “Don’t quit your day job, yet”

skydivingMany young daydreamers, and older ones that should know better, see entrepreneurship as their escape from a day job that is not meeting their needs.

“Running my own business would be better than this!”

Well, maybe not. The same reasons that you are not succeeding on the job may also be big obstacles to your success in business. And entrepreneurship will test skills and capacities that you have not tested before.

Consider the old IBM sales executive that retired early and …, bought a hot dog franchise. He probably used none of his skills and experience from IBM and then discovered he did not have the patience or aptitude to manage low-budget customers and low-skill employees. Neither a good investment nor a good career decision.

Or consider the frustrated young computer technician who wanted to sell his skills directly to all those home office users that needed his expertise, instead of working so hard for a demanding network services manager and having to run around big corporate offices where nobody appreciated him. We chatted about it and he wanted me to help him write a business plan. He wanted it to get a bank loan so that he could pay himself, until he found some customers and signed some contracts.

Sounds reasonable, right?

Not a chance. No bank would ever finance that plan.

I had to persuade him to stop daydreaming; keep his money and keep his day job. A better plan was to upgrade his technical skills and get some experience in management and sales with his current employer. The he could launch his own business with confidence in the same attractive corporate services market that he already knew. Too many unhappy computer technicians are already under-employed and under-paid in the difficult home office market. He kept his day job and started on a new plan.

- - - - -

Learn more at: Look before you leap.

(Note: In all these Real life Stories, the names and business details have been changed to protect the actual subjects of each story.)

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs. 

 

Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

 

skydivingLook before you leap

I often say, "Starting your own business is a lot like sky-diving – it seems like an exciting idea, but you’re not likely to do it until you’re pushed out the door.”

In my own case, I had literally been pushed out the door of a technology company (AES Data) that was winding down and my number came up. Not a surprise, since I had spent the previous nine months closing facilities and letting people go, but it was a painful experience, nonetheless.

I quickly had two other corporate job offers from Nortel and Rolls Royce, both with similar job descriptions and compensation packages, but I decided it was time to take care of my own career plan and not let someone else decide whether I had a job and what I was doing next. Besides, with an MBA and lots of experience, I was ready to prove that I was at least as good a manager and businessman as the people I had been working for. So I went back to consulting on my own and started to explore opportunities to start in business for myself.

That’s when I met the owners of TTX who were looking for a distributor of their computer peripheral products in Eastern Canada. That appealed to me because it matched my interests in technology and I had good credentials in managing the distribution side of a business. So I quit consulting, put in some cash and agreed to start with no salary as we opened a joint venture in Montreal. It was a great experience from the first day.

It was only much later that I recognized the two important checklists to go through before you launch your business.

First,  my short list of the Characteristics of a Successful Entrepreneur

  • Energetic, competitive, independent, confident, persistent, action-oriented, decisive.
  • Passionate, persuasive communicator.

If you don’t have them all, then you better include a partner in your plans.

Don’t quit your day job yet

And before you leap into the unknowns of entrepreneurship, you need to go through another checklist, starting with your Basic Defensive Interval. (Simply: How long can you last without income?)

The "Before you Launch" Checklist

  • Skills, knowledge, experience, and contacts relevant to your business plan.
  • Expectations and preferences for the entrepreneurial lifestyle – work routine and environment, prestige and compensation, work/life balance.
  • Personal strengths and weaknesses that will help, not hurt, the business.
  • A healthy foundation – family, physical and financial. Solid not shaky.
  • Strategic resources in place – partners, suppliers, facilities, key customers and employees.
  • Financing for start-up – including your Basic Defensive Interval and the first few months of negative cash flow.

If you can’t put a checkmark with confidence in every box, then you better try harder – recognize the deficiencies and fill in the gaps. Maybe you require more time to develop your skills and get more relevant experience or to beef up your foundation and strategic resources before launching.

 Look before you leap

(An extract from "Don't Do it the Hard Way" by your Uncle Ralph.)