Avoid Becoming a Statistic - 5 Startup Hazards to Avoid

Statistics about startup failures are widely known by entrepreneurs as well as those thinking about starting their own businesses.  The SBA says that only 44% of new business startups can expect to still be doing business just four years after inception.  Even if businesses that were closed by choice, or due to retirement, the owner moving on to something else, or another planned exit strategy are ignored, and if we ignore non-traditional “business opportunity” type businesses, where commitment levels are infamously low, the statistic is still discouraging.  To those not sturdy of heart, numbers like these could be more than enough reason to want to throw in the towel before even beginning down the entrepreneurial path.  But don’t give up just yet.  While there are certainly no guarantees of success, planning for likely difficulties can considerably lessen your chances of becoming part of the bleak stats.

5 Common Startup Hazards

Be aware of these ten common pitfalls and keys to overcome them:

1. Family Ties. Starting a business is going to affect your family.  Whether you’re shifting around the family finances to cover startup costs, taking time away from home to tend the store, or converting an extra bedroom into your office, your family will likely need to make some adjustments to accommodate your new venture.  Success key: Get them involved.  Even if your new business isn’t the type where the kids can help in daily operations, just keeping everyone in the loop will go a long way toward mutual support.  From the beginning, let your family know what you’re doing and what sacrifices you’ll be asking of them.  Listen to their concerns, and even their advice.  Remember, they aren’t likely to be as excited about your new venture as you are, so they might just add some needed impartiality.  Talk about the changes you’re making, and avoid family matters deflating your ambitions.

2. Isolation. By nature, entrepreneurs tend to be independent people.  We love the idea of being “self-made.”  Be careful not to isolate yourself though.  Particularly in the beginning stages of business, we can easily get caught up in all that needs to be done and forget the importance of staying connected.  Success Key: Network, network, network.  The old saying is true: what you know isn’t as important as who you know.  Don’t try to go it alone.  In between your other activities, make time to network within your community of business people.  You’ll find valuable contacts to help you with everything from advice on your marketing and website, to the best ways to find suppliers and clients.  And once your business is going strong, don’t give up networking.  You’ll benefit from learning new marketing strategies, staying current on business trends, and building lasting relationships that can be priceless as you grow.  To find local groups that meet regularly, check out Meetup.com.

3. Overload. Any entrepreneur has a lot on his/her plate no matter what.  But one thing that will take the wind out of your sails and kill your startup before it ever really gets off the ground is becoming overwhelmed with all you have to do and not having a plan to deal with it.  Even if you’ve gone through all the proper planning and you’ve thought your business through backwards and forwards, it’s unlikely you thought of everything.  So although it looks like you can handle everything on paper as a one-person show, it doesn’t take many unexpected fires before you can start to feel like you’re in over your head.  Success Key: Delegate the stuff you hate. For all of us there are tasks we’d rather give to someone else.  They’re the ones that are boring, tedious, or take you longer than anything else, because they just aren’t what motivates you.  Another way to look at it is to identify those tasks that are not directly contributing to building your business.  For example, accounting is absolutely necessary, but if accounting isn’t your business, someone else should be doing it.  If employees aren’t in the cards, consider a virtual assistant for those tasks that are distracting you from your core responsibilities.  Whatever you do, don’t let overload kill your business.

4. Productivity Drainers. It’s 2 o’clock on a warm, sunny day, and your friend calls you up to invite you to have a couple of beers on the patio at your favorite restaurant.  You remember point number 2 above, and think, “Well, I don’t want to isolate myself, and hey, I’m my own boss, so why not!”  Hold on a minute.  There will be a time, if you do what it takes to make your business successful, when you can take it easy and goof off for the afternoon.  While you’re in startup mode is not that time.  Success Key: Create and stick to a schedule.  Especially when you’re first starting out in a new venture, making the best use of your time is critical.  Don’t let diversions pull you away from what’s important to you.  Also, you’ll want to be sure to organize your work area, use prioritized to-do lists, and implement a scheduling system to keep track of appointments and contacts.  Even if it’s just Outlook or the calendar in your Blackberry, putting your to-dos and appointments in something other than your head frees your mind to focus on your business and keeping headed in the right direction.

5. Money Issues. Just as starting a business is going to affect your family; it’s also going to affect your finances.  Hopefully, it’s a positive effect, but not usually for a while.  If you’re expecting to make a killing right off the bat, you have to know that’s not typical.  That’s not to say it can’t happen, but it would be foolish to count on it.  And nothing will kill your business and your enthusiasm for it faster than the worry and strife that comes with running out of money.  Success Key: Expect the best, and prepare for the worst.  Speaking of statistics… The number one reason startups fail is lack of capitalization.  The key is to balance your optimism about the success of your business with the reality that there are likely to be ups and downs.  Even in best case scenarios, business is cyclical, so simply plan for those cycles.  Make sure that you have enough reserve to get you through the lean times, and don’t spend like a drunken sailor during the good times.  Plan ahead, save, and spend wisely, and you’ll get to party like it’s 1999 soon enough!

Share your startup story, in the comments below.  What are or were your biggest obstacles?   What have you done to get past them and avoid the statisticians?

Perfecting Your Pitch - 7 Questions in 60 Seconds

“What do you do?”  It’s a simple enough question, and for many, the answer is simple and easy.  If you work at a job, for example, it’s easy enough to say, “I’m an HR manager for Sears,” or “I’m a cashier at the Piggly Wiggly.”  Even for some entrepreneurs the answer can be short and sweet.  But if you’re interested in truly communicating what your company does in order to gain interest from a potential customer - or more importantly, a potential investor - some thought needs to go into your answer.  In fact, whether you encounter a potential investor in an elevator and need to give your “elevator pitch” or you’re planning on attending a networking event, having your pitch prepared and memorized is a must.

When formulating your pitch, it’s important that it be clear and concise and that you’re able to communicate it in a likeable, passionate, compelling, credible manner.  Oh, and you need to do it all in a minute or less.  A tall order?  Maybe, but it can be done - no matter how complicated your business is.  Remember, you’re not presenting your whole business plan.  You’re simply answering some basic questions.  If you generate enough interest with your 60-second pitch, you’ll have plenty of opportunity to go into more detail later.  To help formulate the perfect pitch, here are the seven questions your pitch must answer:

1. What is your business idea?
In the most basic terms possible, simply state your business concept.

2. What’s the status of the idea or business?
Tell how long you’ve been in business - five years, startup, etc.

3. What market does the business target?
State who your customers are, and how your concept serves them.

4. What advantage do you have in the marketplace?
How are you different from whatever else is available? Tell why people will pick your company over others.

5. What’s the competition in the marketplace?
Demonstrate that you know who the competition is and where you stand in the market.  Do this without being too negative about the competition.

6. What revenue model will you follow?
Explain whether your business is strictly e-commerce, retail, wholesale, etc.

7. Who have you assembled as the team that’s going to make the business succeed?
hether you’re a one-man-show or a team, briefly describe the experience of your management team.

Note: If you are looking for financing, you’ll add information about what you need the money for, how much you’re looking for, and the projected return on investment.

You can change the order of these points to suit your strengths and make your presentation flow properly.  While it looks like a ton of information, two or three questions can sometimes be answered in a well crafted sentence, so it’s not that hard to get it into a one-minute pitch if you work on it.

Once you’ve formed your pitch, it’s time to practice, practice, practice.   The trick is to memorize it so well that when you say it the words come out naturally - not like they’re memorized.  You’ll only get one chance to present this mini-speech to any one person, so it pays to polish it and have it down pat.  In fact, your confidence in delivering the pitch is at least as important as the words you’re saying.

How will you know if your pitch is working?  People will start asking you for more.  When you hear, “How can I get more information,” you’ll know for sure your time has been well spent!

Should Entrepreneurs be Thankful for the Recession?

It seems like for the past couple of years you can’t look at any list of the day’s news headlines without finding at least one story about the down economy, jobless rates, and all the challenges that go along with them.  And while the media is notoriously negative and loves to over-dramatize things, there’s no denying things have been rough for a lot of people.  There are some bright spots in the economy though.  One such ray of light can be found in the statistics about new business startups.  It seems that those with an entrepreneurial spark have turned hardship into opportunity in a big way.

The Kauffman Foundation, the world’s largest foundation devoted to entrepreneurship, concluded a study recently, the results of which might be surprising to some.  They found that in the US, in 2009, 558,000 new businesses were started per month by new and repeat entrepreneurs.  This represents the highest year on record, including 1999 - 2000, the peak technology startup boom years.

When you think about it, this shouldn’t be a big shocker.  When you read blogs and participate in communities that cater to entrepreneurial-minded people, you find that many people are actually excited about this time in our economic history.  In fact, a lot of leading entrepreneurs have been saying for a long time that we may very well look back on this period as a very positive shift in our economy.

Regardless of the overall economic climate, there has always been a large percentage of people who work at jobs, but have entrepreneurial dreams.  Even those who enjoy their jobs often think about what it would be like to own their own business, and some truly long to make it happen “some day.”  The problem is, people are prone to become complacent when things are going okay, so “some day” never comes.  Others have a “don’t rock the boat” mentality, and the fear of leaving a “secure” job to go it alone is just too scary.  Well, now a lot of people are waking up to the fact that there is no such thing as a secure job.  There are no guarantees.  So if working for someone else is a risk anyway, why not take a risk on self-employment?

Because of high unemployment rates, many people are finding themselves out of work, forced to do something other that what they’ve always done.  For thousands, this means starting a business will finally become a reality, and that’s a very good thing - for them, and for the economy.  Book after book on how to be successful preaches the need to get out of your comfort zone, and losing your job will yank you out of your comfort zone like nothing else.  Sure, it’s scary - even terrifying - at first, but the Kauffman numbers indicate that it’s motivating a lot of people to take action that they might not otherwise have taken.

So it seems that many entrepreneurs can indeed thank the recession.  And the rest of the country can say thank you right back to these entrepreneurs.  After all, new businesses mean spending - spending on things like office furniture, technology, marketing, and more.  And they also mean more jobs.  So the same entrepreneurs who are stepping up and finally making their own dreams come true will be the ones who help pull the economy out of the dumper.

One last point needs to be addressed: There are of course entrepreneurs who have suffered because of the recession, and it’s important that we acknowledge their struggles and support them.  One thing we know about entrepreneurs more than anything else is that they’re never down for long, so if you’re facing challenges right now because of the economy, do what you do best: persevere, adapt, and look to the future with the hope and determination that we know you have within you.

The 3 Words That Can KILL Your Potential

We hear them all the time.  They’re common words, and many have their usefulness when used right.  On the other hand, most are used in a disempowering, negative way most often, and some should never be used at all.  If you want to boost your potential and change your life for the better, work to eliminate the disempowering forms of these words from your vocabulary.

But - You hear this word everywhere, including a lot from entrepreneurs.  Proof can be found in the comments of this or any other blog, where you’ll see things like, “Great post, but…,” or “You make some good points, but….” Unfortunately, you also hear “but” a lot when you’re telling your plans and ideas to others, and it can be discouraging.  The last thing anyone wants to hear is that something they want to do or that they did is good - BUT. And it usually comes from people whose opinions are important to you (friends, family, etc.), but who really don’t know what they’re talking about.  In other cases, we say it to ourselves - “I would start a business, but….”  In all these cases, the word “but” is being used to focus on the negative.  It’s negating the words before “but” and putting the focus on the negativity that comes after.  There’s nothing wrong with not agreeing with something, and it’s important to look at all angles, so different opinions and viewpoints can be valuable.  These can be addressed in a better way though.  How about, “I want to start a business, and I have this challenge, so let me figure out a way to make it happen” or, “That’s a great idea.  Do you know how you’ll handle…?”  These phrases get the thought process started rather than squashing it.  There is a good time to use “but”, and that’s when you intend to downplay the first part of your statement: “It will be a challenge, but I know I can do it!”  Oh, and if you think “however” is an acceptable alternative, think again.  It’s just a “but” in a tuxedo.

Should have - Ok, this is actually a two-word phrase.  The point is, it’s perhaps the most pointless phrase anyone can ever utter.  While it’s important to learn from the past, this phrase is filled with negativity, and until someone makes time travel possible, it serves no purpose, other than to point out a mistake.  Turn this around by focusing on the future.  Instead of saying, “You should have…” change it to, “Next time, try this….”  This simple shift changes the focus from negativity to possibility and helpfulness.

Can’t - Few words, if any, are more disempowering than the word “can’t.”  It’s so final.  When you say “can’t” you’re saying that something is literally impossible.  The thing is, that’s almost never really the case.  You might be up against a very difficult situation, and your challenges might seem insurmountable, but that doesn’t mean something can’t be done.  It just means it’s going to be very difficult.  And because of the level of difficulty, sometimes it makes sense to choose not to follow through with something or to start it in the first place.  Entrepreneurs frequently evaluate a situation and make a decision not to proceed.  This is often a prudent decision, and it shows maturity and professionalism, whereas simply saying it can’t be done is an excuse and not to be taken seriously.  So rather than telling yourself you can’t do something, think in terms of what it would take to make it happen, and then evaluate whether you want to proceed, and make a decision based on the facts.

The language you use really does matter.  Whether it’s internal talk or when you’re speaking to others, words have an affect on your thoughts, therefore your emotions, and therefore your actions.  So choose words well and eliminate those that don’t serve to keep your potential intact.

Niches to Riches in 4 Simple Steps!

What if you could optimize your marketing in a way that would allow you to save time and money while increasing your conversion rates and your bottom line?  Sounds too good to be true?  Not at all.  The secret is to identify a specific segment within your overall market and change your strategy to speak directly to this niche.  It really is that simple, but of course there are some specific steps to take to make this happen, and they’re listed below.

But first, let’s address why you would want to niche your business. It might seem strange to some people to narrow your market.  After all, don’t you want to sell to as wide an audience as possible?  While that might make sense at first glance, think about what it means.  First, you need to be able to effectively market to that wide audience.  The wider the demographics of the group, the more avenues you’ll need to take to get your business name and offerings in front of them.  For instance, Wal-Mart and McDonald’s each spends hundreds of millions of dollars a year to reach their target markets, because their markets are massive - pretty much anyone who doesn’t hate them.  They can afford this kind of marketing, so it works for them, but most of us aren’t in the same boat.  Notice also that these companies tend to be low-price leaders, taking smaller margins to appeal to a wider audience.

On the other hand, look at a guy named Fred Gleeck.  Fred is a marketing expert who had an all-around, general marketing expertise.  Somewhere along his marketing career, he recognized the power of a niche market.  He could have targeted his services at anyone in need of marketing, which is pretty much every business everywhere.  That would have meant spending a lot of marketing dollars to reach his audience in hopes of converting enough people to make a living, and it would also have meant competing with the throngs of other marketing firms, all trying to attract the same prospects.  Instead, Fred decided to niche.  He ended up targeting the self-storage industry.  He changed all his material to focus on this niche and created products that addressed the specific needs of self-storage facility owners.  The result is that Fred became the recognized expert on the topic.  He ended up as a sought-after speaker at industry events and even wrote a book about how to market your self-storage facility.   Not only that, but because he chose an underserved market, he had literally no competition, so he was able to charge considerably more for his products and services than he ever could have as just another marketing guy.

So you can see that finding and targeting your niche can allow you to stand out from the crowd, save money on marketing, and charge more for your products and services.  Now, here are the steps to niche your business:

1. Identify your big target. Who is your overall target audience?  You’re going to get more specific, but start with a wider target first.  Begin by just nailing down who your overall target audience is, from a big picture perspective.  The answer to this question might be “business owners”, or “parents”.  It’s probably a very big group and might cover a very wide age range, both genders, and a wide geographic area.

2. Narrow down your niche. Somewhere within your wider target market is a sub-group of people who have specific wants, needs and characteristics that don’t match up with the rest of the market.  For example, if your wide target market is parents, within that group is the group consisting of single mothers.  While single mothers share a lot of the same wants and needs as all parents, they also have certain wants and needs that married fathers, for instance, don’t have.  You’re not done yet though.  Within the smaller niche, there is often an even more focused niche.  In the example of single mothers, what about single mothers of teens?  Want to get really crazy?  How about single mothers of troubled teen boys?  Obviously, it can get to the point where it’s just ridiculous (southwest Indiana single mothers of troubled teen boys whose favorite color is green…), but the point is to narrow your niche down as far as it makes sense for your business and your market.

3. Analyze your niche market. Get clear on who this customer base really is.  If your answer to the first question was “business owners”, and you identified a niche market of retail clothing store owners, now’s the time to ask what those business owners really want and need.  Are there universal wants that apply to everyone in your target niche?  What are those, and how can your product or service address them?  In addition to analyzing who this group is, it’s important to look deeper and determine the habits of the market - even if it’s not related to what you’re offering.  Where do they hang out online and in the real world?  What’s important to them?  What trade associations serve this niche? Getting inside the heads of your target audience is important to be able to effectively market to them.  If you’re having trouble nailing down a niche, think of it this way:  Chances are the niche that suits you best is the group of people who you can most relate to.  For instance, if you yourself are a single mother of a troubled teen, you’re going to be able to more easily create a plan to market to that group.

4. Build and execute a plan. This is the fun part!  Now that you have identified your niche, it’s time to figure out how you’ll reach them and what you’ll offer to address their specific needs.  This step is very much specific to your business and your niche, so it’s difficult to detail what you’ll end up with.  What we can say, is that step 3 is the key to making step 4 effective.  Once you know your niche market inside and out, you’ll know how to reach them and what to offer them to solve their unique problems.

Remember, the title of this post indicates these are simple steps, but not necessarily easy.  It will take time and effort in the beginning to execute this strategy.  The payoff in the end more than makes up for the work though, so go find your niches, and then count your riches!

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