Resourcefulness, Self-Motivation, and Resilience: Character Traits Required for a Successful Journey as an Entrepreneur

"Entrepreneurship is hard" are the words I hear often from friends who mad the jump into the turbulent world of business ownership. And more of my friends, whether residing in the United States or abroad, took the plunge recently as unemployment soared as a result a pandemic mitigation measures including small businesses closing their doors. In the U.S., "pandemic entrepreneurship took off at unprecedented levels, leading to the largest increase in new business applications in recorded history," according to the U.S. Chamber of Commerce. "In 2020 over 400,000 start-ups were formed in the UK," Island Echo noted. Impressively, "around 80 new businesses" in the UK were formed per hour in the first half of 2021. Many of these entrepreneurs are experiencing the difficulty of transitioning from the corporate world to being your own boss.

CNBC published an article about a woman's transition from corporate employee to launching her own business. "For more than a year," Giselle Sitdykova, aged 45, "had been working from home in Oak Park, California, as an analytics manager for a mortgage company. Remote work suddenly gave her four hours back to her day free of commuting and shuttling her 11-year-old son to and from school. With more time and energy, she launched her own company: Dwellics, a website that gives personal recommendations for people planning to move."

The article adds: "By the summer of 2021, Sitdykova's employer planned to bring everyone back to the office. Not ready to give up on her own business, Sitdykova joined the Great Resignation and quit her job. The act was 'freeing,' she tells CNBC Make It: 'I feel like I can take life back into my own hands.'"

Discussing the stresses of entrepreneurship, the article explains that "It was also hard to shift her mindset from working for a big company to suddenly being on her own. 'I always associated myself with my job title, salary and being in the corporate environment,' Sitdykova says. 'Suddenly, I had no title, no salary, and my new business didn't have a name yet. It's like moving from a nice house to an empty lot and starting to build from the foundation up, where you hope that at some point what you build will be bigger than the house you once had.' She worked non-stop through the stress and uncertainty for weeks."

Randi Boyette, founder of Spark Medical Marketing Inc., a Florida-based digital marketing firm that helps take medical and aesthetics brands into the digital marketing space with a team of experts, gave an interview about her journey from corporate executive to business owner. Ms. Boyette, who is the daughter of my good friend and advisor, Ted Felix, begins the interview by saying that as a child growing up in New Jersey, her father "worked around the clock to provide for our family. I often wondered as a child why my dad wasn't around all the time, but as I grew up and understood his goals as an entrepreneur, it became a foundation for my own work ethic. He did whatever it took to achieve success, which set up our family to have everything we needed. His drive was instilled in me, and today he plays a role in my business."

Responding to why she decided to launch her own business, Ms. Boyette said, "After working in corporate America for many years, I realized I wanted more control over my schedule, success and personal life. I had learned so much [in the corporate world], but I was looking for a change." Her words resonate with me as I often advise people who are considering launching their own business to consider the reasons for doing so. Being your own boss and maintaining creative control are two key reasons. However, given that over 50 percent majority of businesses fail during their first few years of existence, making a lot of money should not be part of the equation for becoming an entrepreneur. As Mark Organ, an entrepreneur and consultant, writes: "The most successful entrepreneurs are not motivated by money. It's about the experience, the way of life, the chase, the identity, the rush. ... Entrepreneurship is not a job, or a get-rich-quick scheme. It's a journey."

Resourcefulness, self-motivation, and resilience are three character traits Ms. Boyette says are most instrumental to her successful journey as an entrepreneur. With respect to the first, "Anytime I am presented with an opportunity, the answer is always yes. I might not always know how to do something and might be faced with a challenge, but I always figure out a way to make it happen."

Regarding self-motivation, Ms. Boyette insightfully explains that "Being an entrepreneur can be challenging, especially in the beginning. You are the only one pushing yourself on the good days and the bad, it's critical to motivate yourself every day. No matter how little sleep I have had, as we work many late nights, I wake up motivated by the fact that our entire team is depending on me to do what I do to keep the business alive."

As for resilience, she notes: "I had many doors slammed in my face while growing Spark. I thought it was the biggest curse at the time, but I kept going. No matter how many times I was told 'no,' I persevered. Resilience is a character trait critical to success, not only in a career but also in life."

When I first met Ted, who has served as one of my most valuable advisors since 1998, he advised me on the importance of having a business plan (a topic that is often discussed on this forum). I recall an early conversation where he said that the path to success is not always straight up. Serving as a road map, a business plan will help entrepreneurs navigate their path to success.

For most business owners, stress and uncertainty is present throughout the entire duration of owning a business. Another trusted advisor told me when first entered into the foray of entrepreneurship that if you are not putting out fires on a regular basis, then your business is not growing. Author and entrepreneur, Neil Patel, adds that growing your business is "freaking terrifying. Scaling your business to great heights will require you to learn new skills, hire and lead a team, and get so far out of your comfort zone that you risk a mental breakdown."

In an article published by Forbes, Yusuf Berkan Altun, a Forbes Councils Member, wrote: "Such a natural accelerator of startups as the pandemic has undoubtedly had a positive effect on the global economy. These developments on the individual entrepreneurship level are likely to aid numerous economies to quickly defeat the consequences of the pandemic. However, at the same time, some of the newly formed enterprises may not be able to withstand competition or find an application and are likely to quickly go bankrupt."

Having been an entrepreneur for close to 30 years, I agree that "entrepreneurship is hard." While the journey is not easy, a comprehensive business plan along with character traits including resourcefulness, self-motivation, and resilience, the path to success will be a bit less treacherous.

What character traits do you think are necessary to leading a successful business? How do you deal with the stresses of owning a business?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

A 'How-to' Guide for Strategic Planning

"The process of developing and writing a strategic plan is widely regarded as the most challenging and frustrating task that leaders and managers are called on to execute," according to Lieutenant General C.V. Christianson, USA (Ret.) and Colonel George L. Topic, USA (Ret.) in an article entitled "Strategic Planning: A 'How-to' Guide." Published in Joint Force Quarterly 74 (3rd Quarterly, July 2014), the co-authors point out that "It is rare for senior executives, military commanders, and agency directors, and by extension their subordinates and team members, to go long without facing this requirement. It not only calls for focused effort for extended periods but can also be highly stressful."

Based on my experiences of going through the strategic planning process for those ventures where I served as a co-founder, I agree with the article's authors "that an effective strategic plan cannot be developed without the sustained commitment and effort of the leaders of the organization and the cooperation of major stakeholders, both present and future. This process is so challenging because teams and leaders need to ask and discuss—and answer—many difficult questions." To facilitate the process of creating a plan for a new business venture, I created a document that presents questions on a variety of topics founders should consider.

Messrs. Christianson and Topic importantly add that "in some cases these questions are unanswerable. Ironically, answers are not always necessary; a satisfactory payoff on the investment of time and energy can sometimes result merely from the process itself. Such endeavors are not without risk. Ill-conceived or poorly managed efforts can do great harm and even catastrophic damage."

In addressing why bother with creating a strategic plan, the article correctly explains that "strategic plans are developed because of recognition of significant changes in the external and/or internal environments or under direction from senior leaders. In the latter case, this is presumably a well-reasoned judgment that a new plan is necessary because the leader sees or understands something that might not be obvious to everyone. In any event, it is important for every participant to understand the impetus for the effort. It is also useful to refer back to this question and the answers during the development, writing, and implementation of the plan."

Referencing Simon Sinek's book Start with Why and video from a 2009 TED conference, the article's authors suggest these resources "offer a useful introduction to how to think about the why question." According to Messrs. Christianson and Topic:

While there is no "one size fits all" solution, Sinek's approach can be used as an "icebreaker" to help start thinking about the central issues a strategic plan must address. He uses a pattern he calls the golden circle to describe how some leaders and organizations have been able to achieve a disproportionate influence while others have not. He defines three concentric circles. The outside circle is "what we do." Sinek postulates that every organization on the planet knows what it does—that is easy to identify. Moving toward the center, the next circle is "how we do what we do." This circle is not as obvious as the what circle and is often used to describe differentiations from one organization to another. The center circle is "why we do what we do." Sinek states that few individuals or organizations can clearly articulate their why—that is, their purpose. They also "distilled Sinek's pattern or framework into the following basic questions around which this portion of the process should generally revolve:

• "Why does the organization exist? Why is it there and why should anyone care? This is the purpose of the organization.
• "What guiding principles do we embrace? This describes how we do what we do by identifying the core beliefs that define organizational culture and behavior.
• "What do we do? This describes our mission (this is harder to answer than it might seem) and what essential elements and critical tasks are necessary for success. If everyone agrees to the answers to these questions, the rest of the process should be relatively straightforward."

The article includes a discussion on strategic goals, roles and responsibilities, implementing guidance, and the important role of strategic communications. Regarding the role of communications and strategic planning, Messrs. Christianson and Topic note:

The key to communications and strategic planning is to start early, and that must be an element of every part of the plan development process. Waiting until the plan is complete before deciding how to convince everyone it is their plan is generally unwise. The essential task is to ensure that each step enjoys clear understanding and broad support both internally and externally. Plan writers will not be the ones integrating, synchronizing, and prioritizing the work/ actions of the organization in concert with the goals. Making sure participants are genuinely welcome to voice their concerns and raise questions not only builds support but also produces better results and possibly averts catastrophes. Offering stakeholders a voice in the development and assessment of a plan, or merely allowing them to ask questions, is vital to gaining support. Finally, having open and robust communication channels promotes transparency and demonstrates commitment to the continuous improvement of the plan.

Lastly, I agree with the article's concluding paragraph on the importance of listening: "We encourage strategic planners to be bold and creative and above all to listen—both to others and to themselves. Planners often fail to hear their own voices and ignore their own visions because they spend all their time cobbling together the equities of everyone else. Finally, nothing is final. The best plans are continually assessed and adjusted as factors change."

In my post, "Your Business Plan Is Your Business's Roadmap," I note the importance of having a business plan. In those ventures where I serve as a co-founder, the process of writing a business plan is one of the first exercises my colleagues and I will undertake. While I can attest to how stressful the process is, there are many benefits of undertaking the task of creating a plan. These benefits include ensuring we have a shared vision on the product or service we seek to create and alignment on how we will structure, run, and grow our business. The business plan serves as a useful tool to define our company's mission, goals, monetization strategy, key performance indicators, financial data, and risk factors. I also find the article prepared by C.V. Christianson and George Topic a useful "how-to" guide for business planning.

What aspects of the article do you find most useful?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Stop Waiting, the New Normal Is Already Here

"Waiting for the new normal" is what I hear often in my discussions with business leaders. However, as we close out a year as the world deals with the Omicron variant of covid-19, the new normal seems elusive and distant. Or, perhaps, we are living in age of the new normal. As explained by The Economist, "The era of predictable unpredictability is not going away. In 2021 people have been yearning for something like stability. Even those who accepted that they would never get their old lives back hoped for a new normal. Yet as 2022 draws near, it is time to face the world's predictable unpredictability. The pattern for the rest of the 2020s is not the familiar routine of the pre-covid years, but the turmoil and bewilderment of the pandemic era. The new normal is already here."

Air travel, for example, forever changed as a result of the terrorist attacks of September 11th, 2021. "In the years that followed each fresh plot exposed an unforeseen weakness that required a new rule," The Economist notes. "First came locked cockpit doors, more armed air marshals and bans on sharp objects. Later, suspicion fell on bottles of liquid, shoes and laptops. Flying did not return to normal, nor did it establish a new routine. Instead, everything was permanently up for revision."

What is more, "The world is similarly unpredictable today and the pandemic is part of the reason. For almost two years people have lived with shifting regimes of mask-wearing, tests, lockdowns, travel bans, vaccination certificates and other paperwork. As outbreaks of new cases and variants ebb and flow, so these regimes can also be expected to come and go. That is the price of living with a disease that has not yet settled into its endemic state."

"For much of humanity the new year is a time for reflection on the past, The Economist says in another article. "But many minds will also inevitably cast forward. If the fitful past two years of the covid-19 pandemic offer any lesson, it is that the future remains murky and uncertain."

The article, which contains the image below, adds, "Not to be deterred, we have turned to prediction markets to give us a glimpse of 2022. Pooling data from punters on exchanges like Betfair, Metaculus, PredictIt and Smarkets, can offer a theoretically better guide to the future than plunging headlong into the unknown. Will the pandemic claim millions more? Might Russia invade Ukraine? Could America's high inflation persist? And will Tom Brady win an obscene eighth Super Bowl? Another eventful year awaits."

A business' success is often determined by how it can quickly adapt to changing circumstance cause by natural disasters, health crises, or financial market volatility, just to name a few. Defined as an ability to recover from or adjust easily to misfortune or change, resilience is a word that must be in the lexicon of all business leaders. As explained in a post on this forum about an article published by Dr. Linton Wells II, an expert who focuses on links between policy, technology and decision-making, especially in building resilience and cybersecurity, "Resilient companies produce impressive results. They have shown positive earnings and sales growth during recessionary years, improved their corporate image by effective strategic responses to natural disasters, raised dividends for several consecutive decades, and won back market share against low cost and online competitors."

While it is ideal to have more certainty on what may take place in the future, this is simply not possible. Whether it is for our home, business, or community,, the best we can do is prepare for uncertainty. There are events we can prepare for as evident in a video entitled "The World Ahead 2022: five stories to watch out for," but we must also create plans to quickly adapt to those unforeseen events.

Recognizing that the new normal has arrived, we should be asking: How can we ensure future-readiness by preparing for disruptions, be it a pandemic, natural disaster, geopolitical crisis, or a volatile financial market?

What are your predictions for 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

SBA Launches Its 'Ascent for Women' Online Platform Geared to Help Women Entrepreneurs Grow and Expand Their Businesses

"Women entrepreneurs start and own nearly half of all businesses in the United States, employ 9.4 million workers, generate $1.9 trillion in revenue and represent all industries," the U.S. Small Business Administration (SBA) said in a press release announcing the launch of its new initiative for women interested in starting or growing their small businesses. According to the Jan. 11th, 2021 announcement, Ascent for Women is "a first-of-its-kind, free digital e-learning platform geared to help women entrepreneurs grow and expand their businesses. Ascent has valuable content such as tips on preparing and recovering from disasters, strategic marketing and business financial strategy development."

A joint initiative between the White House, the SBA, the U.S. Department of Labor's Women's Bureau and the U.S. Department of the Treasury, Ascent is "designed to support women entrepreneurs looking to remain resilient in their operations" and the platform "is packed with content and resources from each agency and backed by academic research," the press statement explained.

Developed by experts in women's entrepreneurship, the platform is divided into major topics called Journeys. Within each Journey, users will find Excursions with the tools they need to master a topic. Each excursion includes a time estimate for completion. Below is a list of items users can explore within Excursions:

• Exercises & Tools: Learn and apply growth practices to your business;
• Fireside Chats: Learn from experts about how women grow their businesses;
• Infographics: Gain a snapshot view of growth concepts;
• Success Stories: Be inspired by stories from real-world entrepreneurs;
• Discussion Guides: Use questions to stimulate thinking for you, your advisors or team;
• Videos: Grasp key concepts in just minutes;
• Key Insights: Understand key topics to support your business growth; and
• Self-Assessments: Benchmark your current practices through self-focused inventories.

The aforementioned press release noted that "Ascent offers several key journeys to assist women business owners with strategies towards growth and success, including Disaster & Economic Recovery, Strategic Marketing, Your People, Your Business Financial Strategy and Access to Capital. Each journey contains content and tools needed to grow your business. Additional topics will be added over time."

This initiative is one of two learning platforms created by the SBA designed to empower and educate small business owners, The previous post on this blog focuses on the SBA's Learning Center, which is aimed to help small business owners start, pivot, or grow their business.

SBA Launches Largest Expansion of Women's Business Centers in 30 Years

Prior to announcing the launch of the Ascent for Women platform, the SBA issued a press release on Jan. 4th, 2021 saying "grant funding and the historic launch of 20 new Women’s Business Centers (WBC) across America to serve rural, urban and underserved communities alike. The opening of the 20 new WBCs is the largest single expansion of WBCs across America in its 30-year tenure, and these centers will be pivotal to the success of women-owned businesses as they continue to recover during this time. The WBCs will be hosted in rural and underserved markets and widen the footprint and partnership with Historically Black Colleges and Universities (HBCUs)."

The press statement added that "SBA's WBCs are a national network of 136 centers that offer one-on-one counseling, training, networking, workshops, technical assistance, and mentoring to women entrepreneurs on numerous business development topics, including business startup, financial management, marketing, and procurement."

What are your thoughts about the SBA's initiatives to help women entrepreneurs? Are there additional resources you recommend?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

SBA's Learning Center Helps Small Business Owners Start, Pivot, or Grow Their Business

In my post "Your Business Plan Is Your Business's Roadmap," I include numerous online resources entrepreneurs and small business owners should utilize in building their business plan. One resource is a business guide the U.S. Small Business Administration (SBA) created to help small business owners through the process of launching their business. A comprehensive business plan serves as a roadmap for how to structure, run, and grow a business.

In addition to its business guide, the SBA created an online learning platform, which include two learning programs designed to empower and educate small business owners every step of the way. One program is SBA's Ascent for Women, which is the topic of the following post on this blog, is a free online learning platform for women interested in starting or growing their small businesses. This post focuses on the SBA Learning Center, which consists of 17 courses covering 236 objectives. The objectives address a wide array of topics including how to estimate startup costs, strategies for employee recruiting, understanding customer intent, and how pricing relates to marketing. The videos and worksheets, which are accessible for free, are segmented into the following five groups:

Plan (Research, plan, and document your ideas)

• How to Write a Business Plan (22 objectives): Plan, outline, and develop your own business plan.
• Legal Requirements (16 objectives): Review how small business legal requirements can impact your business.
• Buying a Business (10 objectives): Decide if buying a business is right for you.
• Young Entrepreneurs (22 objectives): Understand the basics of creating and financing a successful business.

Launch (Turn your business plan into a reality)

• Financing Your Business (18 objectives): Assess your financing needs and discover financing options for your business.
• Introduction to Pricing (20 objectives): Understand strategies and the impact that pricing has on the success of your business.
• High-Tech Products (11 objectives): Understand the product life cycle of high-tech products.

Manage (Master day-to-day operations to run your business)

• Employee Recruitment and Retention (7 objectives): Strategies to help you locate, recruit, and retain talented employees.
• Understanding Your Customer (16 objectives): Discover resources that will help you understand your customer and increase sales.
• Sales (19 objectives): Review sales plans and other tools to get your product or service into your customer/consumer's hands.
• Selling Your Business (8 objectives): Examine how to sell or close your business.

Market (Understand your competition and strategies to win customers)

• Market Research (13 objectives): Identify your customers and start developing your marketing strategy.
• Marketing 101 (12 objectives): Define marketing and understand its vital role in the growth of your business.
• Competitive Advantage (9 objectives): Leverage the uniqueness of your business to develop your competitive advantage.
• Social Media Marketing (18 objectives): Use social media to help increase sales of your product or service.

Grow: Expand by finding new funding, customers, and locations.

• Finding and Attracting Investors (10 objectives): Understand the benefits and process for seeking investors.
• Pricing Models for Successful Business (15 objectives): Set prices, calculate costs, assess competitors and much more.

Do you find SBA's Learning Center a useful tool?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Eight IP Questions You Should Ask Before Starting Business in a New Country

A post previously published on this blog focuses on how to choose an export market for your business. While business leaders will focus on advantages each country presents for their enterprise, it is prudent to identify, evaluate, and mitigate those risks which may prevent their enterprise from achieving success (i.e., profitability).

The value of many businesses may be found in its intellectual property (IP). Protecting your IP is crucial to protecting your creativity or idea including time and expenses invested on research and development. Or, as Darren Heitner, an attorney based in Florida, explains in this article, "Owning intellectual property helps you protect from others using something identical or similar to your creation, brand or product, and can also create new sources of revenue should you desire to license your goods or services out to third parties. Without protection, you could end up spending a lot more money in defending against someone else or even rebranding, and miss out on commercial opportunities."

A blog post published by Matthew Dresden, an attorney with the Seattle, Wash.-based law firm Harris Bricken, presents eight questions "companies starting a business in a foreign country should ask about their own intellectual property before they start doing business in that foreign country, be it Mexico, Spain, Japan, Thailand or wherever."

1. Can we adopt, use and register as trademarks the names we want to use for our products or services in the foreign country?
2. Is any aspect of our IP new, inventive and useful and therefore potentially patentable in the foreign country or anywhere else relevant to our business?
3. Have we instituted procedures to keep our potentially patentable inventions confidential until a patent application may be filed?
4. Are there any third party patents that could prevent us from selling our services or products in the foreign country or even from manufacturing our products there or anywhere else?
5. What aspects of our products or services are protected by copyright?
6. Is the design of our product protectable as a design patent in the foreign country or elsewhere?
7. Are there any third party design registrations that could prevent us from selling our product in the foreign country or elsewhere?
8. Do we have written agreements with our foreign country employees and manufacturers that clearly assign to us any IP we create with them and that provide for maintaining the confidentiality of our information and our trade secrets?

In addition to answering these questions posed by Mr. Dresden, I can attest based on my experience that business leaders will need to determine whether or not the country they are considering provides a political culture which fosters a strong business environment. Such a business environment must include a legal and regulatory system that protects intellectual property rights.

What additional questions do you recommend business executives should ask before starting a business in a new country?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

No Market Need, Didn't Use Network, Poor Marketing and 17 Other Reasons Startups Fail

As stated in the previous post, a comprehensive business plan is essential to providing investors, advisors, and employees with the opportunity to comprehend the company's mission, vision, goals and financial targets as well as its product, sales and marketing strategy, management team, risk factors, key performance indicators and financial data. A business plan that looks good on paper, however, does not mean the founders have a guarantee to build a successful (profitable) business. There are a myriad of reasons why a startup fails despite the best-laid plans.

CB Insights, a New York-based firm that develops software predicting new technology trends, breaks down the top 20 reasons for startup failure by analyzing 101 startup failure post-mortems. "After we compiled our list of startup failure post-mortems, one of the most frequent requests we got was to use these posts to figure out the main reasons why startups failed."

Here are the top 20 reasons startups fail:

20. Failure to pivot
19. Burnout
18. Didn't use network
17. Legal challenges
16. No financing / investor interest
15. Failed geographical expansion
14. Lack passion
13. Pivot gone bad
12. Disharmony among team / investors
11. Lose focus
10. Product mistimed
9. Ignore customers
8. Poor marketing
7. Product without a business model
6. User un-friendly product
5. Pricing / cost issues
4. Get outcompeted
3. Not the right team
2. Ran out of cash
1. No market needed

Ideas have little value without having the ability to create an execution plan. Building the right team is essential to effective execution. Not doing so will cause the startup to fail quickly. The article correctly notes: "A diverse team with different skill sets was often cited as being critical to the success of a company. Failure post-mortems often lamented that 'I wish we had a CTO from the start,' or wished that the startup had 'a founder that loved the business aspect of things.'"

Every business should have at least three goals: (1) build a product and service of the highest quality, (2) understand their customer and provide an exceptional service to each and every customer with a brand that represents integrity, quality, and innovation, and (3) build shareholder value. While founders, particularly those of whom are starting tech companies, tend to focus on developing their product or service, many businesses fail because they either built a solution without understanding the problem their customer is experiencing (no market need) or ignored their customer. I concur that "Ignoring users is a tried and true way to fail. Tunnel vision and not gathering user feedback are fatal flaws for most tech startups."

With respect to building a product without a business model, CB Insights says "Most failed founders agree that a business model is important – staying wedded to a single channel or failing to find ways to make money at scale left investors hesitant and founders unable to capitalize on any traction gained." And regarding pricing or cost issues, "Pricing is a dark art when it comes to startup success, and startup post-mortems highlight the difficulty in pricing a product high enough to eventually cover costs but low enough to bring in customers."

Despite building an amazing product, I have witnessed many startups fail because of poor marketing. Founders, particular of tech companies, mistakenly believe customers will naturally pay for their product without putting much effort into a marketing strategy. Taking a line from the movie Field of Dreams, "If you build it, he will come," too many founders place their misguided belief that "if they build it (the product), they (customers) will come." CB Insights correctly explains that "Knowing your target audience and knowing how to get their attention and convert them to leads and ultimately customers is one of the most important skills of a successful business. But an inability to market was a common failure especially among founders who liked to code or build product but who didn't relish the idea of promoting the product."

A comprehensive marketing plan should incorporate two elements, strategic marketing and operational marketing. The former is determining how your company competes against its competitors in a market place. In particular, it generates a competitive advantage relative to its customers. Operating Marketing is executing marketing functions to attract and keep customers to maximize the value derived for them as well as to satisfy the customer with prompt services and meeting the customer expectations. The marketing mix should include product, pricing, promotion, and placement.

A business also needs to understand the risks and rewards of pivoting. "Not pivoting away or quickly enough from a bad product, a bad hire, or a bad decision was cited as a reason for failure in 7% of the post mortems. Dwelling or being married to a bad idea can sap resources and money as well as leave employees frustrated by a lack of progress." However, founders should pivot without losing focus: "Getting sidetracked by distracting projects, personal issues, and/or general loss of focus was mentioned in 13% of stories as a contributor to failure." I often warn entrepreneurs the risks of being "opportunistic" — just because you can does not mean you should.

Among the 20 reasons listed above, "didn't use network" is one of the easiest to avoid. Most locations host a number of opportunities to meet new connections. And building (trusted) relationships requires time and effort. As a mentor said to me early in my career, "Surround yourself with people smarter than you." Utilizing this network may be the most effective way to avoid or mitigate many of reasons why startups fail.

Lastly, as an entrepreneur myself, I occasionally experience moments of burnout. While entrepreneurs thrive on working long hours dealing with the stresses of business management and relishing in the rewards these efforts will yield, it is important to maintain a healthy mind and body. Taking a 30-45 minute walk (even in bad weather), running the stairs in my office building or going to the gym on a regular basis provides me with the opportunity to decompress from the stresses of leading a business.

Which of the 20 reasons of why startups fail resonate with you?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Your Business Plan Is Your Business's Roadmap

Whether it is based on my experience of launching my own ventures or serving as an advisor to my clients, I strongly agree with the U.S. Small Business Administration (SBA) that "A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business."

What is more, according to the SBA, "Business plans can help you get funding or bring on new business partners. Investors want to feel confident they'll see a return on their investment. Your business plan is the tool you'll use to convince people that working with you — or investing in your company — is a smart choice."

Some entrepreneurs feel a business plan is unnecessary. "It's too hard" is what I hear most often when I ask why a plan has not been prepared. Launching a new venture and following its "Path to Success" (transitioning from idea/concept to demo to revenue to profitability to sustainable profitability) is stressful with little room for error. In other words, business is hard.

And as discussed in previous posts on this blog, most new businesses will fail within the first few years of existence. If preparing a business plan is too hard, then how will you handle the difficulties most founders encounter almost daily in trying to grow their business?

Although some investors wrongly advise founders not to prepare the formal business plan, I refuse to consider financially supporting any enterprise that does not have one. A comprehensive business plan is essential to providing investors, advisors, and employees with the opportunity to comprehend the company's mission, vision, goals and financial targets as well as its product, sales and marketing strategy, management team, risk factors, key performance indicators and financial data.

I recognize, however, that creating a roadmap for your business can be an intimidating process. While there are thousands of books, webinars, and websites that provide information about drafting a business plan, I find the SBA to be a useful resource for entrepreneurs.

The quotation above comes from a website the SBA created to help entrepreneurs through the process of launching their business. The four sections of the business guide are listed below with links to other pages containing additional information that is essential to building a successful (profitable) business:

Plan your business ("You've got a great idea. Now, make a plan to turn it into a great business.")

• Market research and competitive analysis
• Write your business plan
• Calculate your startup costs
• Fund your business
• Buy an existing business or franchise

Launch your business ("Turn your business into a reality. Register, file, and start doing business.")

• Pick your business location
• Choose a business structure
• Choose your business name
• Register your business
• Get federal and state tax ID numbers
• Apply for licenses and permits
• Open a business bank account
• Get business insurance

Manage your business ("Run your business like a boss. Master day-to-day operations and prepare for success.")

• Manage your finances
• Hire and manage employees
• Pay taxes
• Stay legally compliant
• Buy assets and equipment
• Marketing and sales
• Small Business Cybersecurity
• Prepare for emergencies

Grow your business ("When business is good, it's time to expand. Find new funding, locations, and customers.")

• Get more funding
• Expand to new locations
• Merge and acquire businesses
• Become a federal contractor
• Export products
• Women-owned businesses
• Native American-owned businesses
• Veteran-owned businesses

The SBA also provides a website presenting "10 steps to start your business":

1. Conduct market research: "Market research will tell you if there's an opportunity to turn your idea into a successful business. It's a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business."
2. Write your business plan: "Your business plan is the foundation of your business. It's a roadmap for how to structure, run, and grow your new business. You'll use it to convince people that working with you — or investing in your company — is a smart choice."
3. Fund your business: "Your business plan will help you figure out how much money you'll need to start your business. If you don't have that amount on hand, you'll need to either raise or borrow the capital. Fortunately, there are more ways than ever to find the capital you need."
4. Pick your business location: "Your business location is one of the most important decisions you'll make. Whether you're setting up a brick-and-mortar business or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue."
5. Choose a business structure: "The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability."
6. Choose your business name: "It's not easy to pick the perfect name. You'll want one that reflects your brand and captures your spirit. You'll also want to make sure your business name isn't already being used by someone else."
7. Register your business: "Once you've picked the perfect business name, it's time to make it legal and protect your brand. If you're doing business under a name different than your own, you'll need to register with the federal government, and maybe your state government, too."
8. Get federal and state tax IDs: "You'll use your employer identification number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. It's like a social security number for your business. Some — but not all — states require you to get a tax ID as well."
9. Apply for licenses and permits: "Keep your business running smoothly by staying legally compliant. The licenses and permits you need for your business will vary by industry, state, location, and other factors."
10. Open a business bank account: "A small business checking account can help you handle legal, tax, and day-to-day issues. The good news is it's easy to set one up if you have the right registrations and paperwork ready."

While I recommend retaining the services of a professional accountant who has experience working with small businesses, there is value to becoming familiar with the tax regulations of the Internal Revenue Service (IRS). Through its Small Business and Self-Employed Tax Center, the IRS provides a comprehensive list of helpful publications for small businesses.

If you are planning to launch your business in the state of Washington, the "Small Business Guidance" website provides a plethora of information including "8 Steps to forming a business in Washington State" and the Small Business Guide.

Similar to hiring an experienced accountant and becoming familiar with the rules and regulations of the IRS, you should retain the services of an attorney who is familiar with the specific state and local laws of where you plan to launch your business.

And if you anticipate launching your business in Washington State, I recommend becoming familiar with the state's statutes as they apply to corporations or limited liability companies through the Washington business corporation act or Washington limited liability company act, respectively.

Lastly, I created a document that presents questions on a variety of topics founders should consider when drafting their business plan.

What are your recommendations for preparing a business plan?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

'If You Can't Measure It, You Can't Manage It'

The concept of "if you can't measure it, you can't manage it" is more prevalent today than when I launched my first business many years ago. Startup entrepreneurs and corporate executives alike have access to a variety of methods to evaluating the success of an organization or a particular activity in which it engages through key performance indicators (KPIs).

An article published by Early Growth Financial Services, a California-based accounting services firm, accurately notes how KPIs are important indicators that "show the health status of your startup. Like how tracking what you eat, how you sleep and your blood pressure increases your likelihood of having a strong well maintained life, KPIs help illustrate how a business is connecting with the needs that keep it strongly humming along."

Furthermore, KPIs "are all the trackable elements that let you see where to find your greatest areas of opportunity, as well as where focus may have drifted and is needed. It can be easy to overlook tracking KPIs, or even setting up a track list to begin with, since they are repetitive measurements. Despite that, they remain essential to the smart manager or leader because it is in the routine that the base is secured for achieving the grand goals ahead."

The article suggests that KPIs can be classified into two different categories: leading and lagging. "With leading indicators, you are setting the marks to aim for; these are the future goals. Since they are oriented on what is to come, they are more challenging to measure accurately, yet easier to influence. An example might be the number of new prospects scheduled for engagement in the following week.

"By setting a target number you can track how well your sales team is engaging and getting in front of faces. The higher the number of meets the more potential for conversion into clients and revenue."

What is more, "Often sales can achieve a big close one week and lose focus the next on maintaining the drive to prospect. This won't show up immediately if you just look at revenue, but that's the beauty of having a lead indicator. Similarly, you can further break this down to more granular KPIs such as:

• Number of cold calls daily setting up engagements;
• Number of follow-ups with previous clients for further services; and
• Revenue goals per salesperson.

"Leading KPIs are input oriented. They represent numbers to aim for. They are useful for setting culture and expectations with employees."

Conversely, "Lagging indicators are output oriented. They are easier to measure since they are based on what has already taken place. Often these are more internal, such as a KPI of burn rate or new employee growth per quarter. While you can measure many dimensions of accomplishments and benchmarks through all departments a solid core range of financial KPIs is especially useful for startups."

Lagging KPIs allow a company "to take stock of how things have been running. This aids firms when seeking investors. Many times, they will be used in tracking the financial health of the operation. Lagging indicators can make up a monthly or quarterly report card on how well your strategy and efforts are being achieved. Investors like firms to back up promises of potential with charted previous outcomes."

I concur that "[l]agging and leading KPIs work best when you bridge them together into a matrix for the firm. While one states your vision as realized accomplishments, the other breaks down the activities that create those accomplishments. If you see a steady rise in one without a rise in the assumed corollary, then you know it is worth reevaluating your strategic hypothesis."

Moreover, the article is correct "that KPIs are great at the company level, department level, and employee level; setting them up and running them is one of the surest ways to create repeatable solid success."

TYPES OF STARTUP METRICS

While created for startups, this infographic provides a comprehensive list of metrics that will help businesses of all sizes measure and manage performance:

1. Monthly Recurring Revenue (MRR): monthly total of paid customer fees
2. Annual Recurring Revenue (ARR): recurring revenue on an annual basis
3. Average Revenue per Account (ARPA): MRR/Total # of Customers
4. Gross Profit: total revenue minus the cost of goods sold
5. Total Contract Value (TCV): value of one-time and recurring charges
6. Annual Contract Value (ACV): value of a contract over a year
7. Lifetime Value (LTV): prediction of the net profit from the entire future relationship with a customer
8. Deferred Revenue: amount that was received by a company in advance of earning it
9. Billings: current quarter revenue + deferred revenue from previous quarter
10. Customer Acquisition Cost (CAC); full cost of acquiring one user
11. Customer Concentration Risk: revenue from largest customer/total revenue
12. Daily Active Users (DAU): users other than one-time users per day
13. Monthly Active Users (MAU): users other than one-time users per month
14. Number of logins
15. Activation Rate: number of users taking a specific action to get value out of a product
16. Month-on-Month Growth: average of monthly growth rates
17. Compounded Monthly Growth Rate ((latest month/first month)*(1/# of months)-1
18. Monthly Churn Rate: lost customers this month/prior month total
19. Retention by Cohort: % of original installed base (1st month) that are still transacting
20. Gross Churn Rate: MRR lost in a given month/MRR at the beginning of the month
21. Net Churn: (MRR lost - MRR from upsells) this month/MRR at the beginning of the month
22. Monthly Cash Burn Rate
23. Net Burn Rate (revenues - gross burn)
24. Gross Burn (monthly expenses + any other cash outlays)
25. Total Addressable Market (TAM) (revenue opportunity available for a product)
26. Annual Run Rate (projection of current MRR into the future, annualized)
27. Gross Margin (difference between revenue and cost of goods sold)
28. Sell-Through Rate (number of units sold in a period/number of items at the beginning of the period)
29. Network Effects (effect of one user on the value of that product to other people (ex. Metcalfe's Law))
30. Virality (viral coefficient - avg. number of invitations sent existing user * conversion rate of existing user)
31. Net Promoter Score (how likely user is to recommend your product to a friend or customer)
32. Platform Risk (dependence on a specific platform or channel)
33. Direct Traffic (traffic that comes directly and not through an intermediary)
34. Organic Traffic (unpaid traffic from search results)

Which KPIs do you find most valuable to your business? Do you use any KPIs not listed above?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

When and How to Value Your Time

My friend, John Vander, who works as an independent consultant, recently sent me an article from the New York Times entitled, "The Right Way to Ask, 'Can I Pick Your Brain?'" Authored by Anna Goldfarb, John found this article relevant as he is often asked to meet with people for coffee for the purpose of getting his advice on a number of topics including business planning, effective management strategies or raising funds for working or expansion capital.

However, he often gets frustrated by the wrong way people ask "can I pick your brain?" and felt Ms. Goldfarb's article provides useful advice on the right way to ask that question. While I agree with the central premise of the article, it does not address another concern my friend expressed to me: when and how to place a value on your time.

I recommended that John read "No, You Cant No, You Can't Pick My Brain. It Costs Too Much" by Adrienne Graham. After doing so, John said he supported Ms. Graham's claim that "[m]y brain costs money to maintain. There's training, classes to attend, reading (I have to buy books), gaining certifications, costs of memberships so I can network, attending conferences and mastering my skills that all cost me money.

"I have to protect my investment. How fair is it to me to give away all the knowledge I have acquired that I use to make my living, pay my bills and eat?"

The article further notes: "With the Internet being so widely available loaded with free information, people automatically assume that you too have to provide information for free.

"My response to that is go ahead and read the free stuff. But when you still find yourself lacking answers, then apparently the FREE stuff doesn't work. You can't come to a professional and ask them to work for free. In essence, that is what you're doing when you ask to pick someone's brain."

I explained to my friend that as a consultant, I recommend to people whom seek to "pick my brain" to read the free information on the internet including my blog and then schedule a fee-based consult if they need my assistance on how the information they read can be effectively applied to their business.

Some of my advice to John resonates with Ms. Graham's recommendations on when and how to value your time:

• "Believe that what you know is valuable. If it wasn't then why are they coming to you? You're their chance to solve a problem or find a solution. That has value. Charge for it.
• "Create a fee schedule. Whenever someone wants to pick your brain, make sure you have your fee schedule in front of you. Give them a quote for how much it will cost them."
• "Decline lunch/coffee invitations unless they are strictly non-business. If the conversation swings around to business, quickly and politely tell them you're off the clock. If they are interested in a consult they can book an appointment and let them know what the charge is for that.
• "Keep it light. ... Give the why and what but never the how. Anything beyond the why and what comes with a charge. And don't even point them in the direction to obtain the how. That's short changing yourself.
• "Prominently post that there are no freebies. OK not in those words. But if you have a blog or website, and even on your social media profiles, make sure you mention that consultations are available at a fee.
• "Exchange for equal value. This puts you in an advantageous bargaining position. If someone requests free information or help, you must feel comfortable in asking for an in kind value service. Assess what they have that can be of equal benefit for you. If they are genuine, they should have no problem in an even exchange of knowledge."
• "Refer them to your 'free' resources. If you write a blog, have published articles, have archived videos or podcasts or have a show in which you dispense advice, refer them to that information."
• "Don't be afraid to send them to Google. You can recommend they go to Google, or any other search engine or to sites that have articles or information about what they need advice on. You can also recommend a book or magazine that might be helpful."
• "Ask them for a paying referral. If they truly want your expertise, they have to be willing to help you out too. It's kind of like the Equal Exchange point I made above crossed with paying it forward. Before you dispense any advice, ask them to provide you with referrals to others who most certainly need (and can afford) your service.
• "Don't back down. I know it's hard to say 'no' sometimes. But you can't back down. People will know how far they can bend or push you. Stand firm, set your boundaries and guard your treasures (your brain and the know how in it). The minute you compromise you devalue yourself and your expertise."

John and I agree that "[m]any in the marketing circles will tell you the freebie give away is vital. But it doesn't always lead to a sale. ... It's up to you to determine what you're willing to give away and how much of it. Know your worth, understand your value."

When and how do you determine the value of your time?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Preparing Your Business for Internal and External Risks

In a previous post on this blog, I wrote, "Risks may be classified in various ways such as internal (weaknesses) and external (threats) with variations depending on geopolitical and socioeconomic conditions." This post focuses on how companies and organizations can identify and evaluate internal and external risks.

It is only natural for business owners and their managers to focus on their business' market opportunities with the goal of maximizing profit. Given the high rate of failure, however, businesses should equally consider the internal and external risks their venture may encounter.

Whether it is for a business where I hold an equity stake or corporate clients that I am advising, I evaluate the strength of any business plan or long-term strategy on the following eight risks:

1. Product Risk;
2. Technology Risk;
3. Market Risk;
4. Management Risk;
5. Scale Risk;
6. Climate Risk;
7. Capital Risk; and
8. Exit Risk.

Businesses should consider product risk, which, according to this article, is defined as "the potential for losses related to the marketing of a product or service. It is managed using a standard risk management process of identifying, treating, controlling and monitoring risk as part of product development or product management." The article presents a number of common types of product risk:

• Demand Risk. Failure to generate demand for a product launch and other risks related to demand.
• Operational Risk. Operational risk such as delayed product launch due to production issues.
• Price Risk. Price risks such as a new product launch that sparks a price war with a competitor.
• Customer Experience. Customer experience issues such as a product with poor usability.
• Quality Risk. Poor quality. This can occur due to requirements, non-functional requirements, design, testing or quality control issues.
• Brand Risk. A product reflects poorly on your brand. This can occur due to the customer experience and quality issues. Alternatively, it can be a product that simply doesn't appeal to your customers such that it impacts your brand image. For example, a snowboarding brand that alienates customers with a line of ski wear.
• Inventory Risk. Problems with inventory such as shortages in one channel and excess inventory issues in another.
• Reputation. Damage to your reputation as a firm due to a failed product and resulting publicity.
• Compliance & Regulations. A product that is deemed to violate laws, regulations or standards. In some cases, a product can attract new regulations if it is perceived to damage markets, the environment or quality of life.
• Product Liability. Failures of a product that cause damages such as an unsafe product that results in injuries.

Technology Risk is defined as the potential for implementing new, unproven technology looms large in most content strategy projects. This article provides 36 types of technology risk. What is more, a business must consider the risk of a cyber attack or data breach. How is your company planning for the potential of technology failures to disrupt your business such as information security incidents or service outages?

Market risk includes geographic (different risks exist when doing business in China compared to the United States, for example), as well as sector risk. Launching a new search engine brings significant competitive risks within the sector. Forming a bank involves significant regulatory risks.

Regarding management risk, is the company being led by a competent management team with a proven record of success? If not, who are the managers soliciting advice from?

The Startup Genome Report, published in 2011 and subsequently edited 2012, addresses the risk of premature scaling. A startup can maximize its speed of progress by keeping the five core dimensions of a startup: customer, product, team, business model and financials in balance. The art of high growth entrepreneurship is to master the chaos of getting each of these five dimensions to move in time and concert with one another. Most startup failures can be explained by one or more of these dimensions falling out of tune with the others.

With respect to climate risk, many businesses owners are facing the twin pressures of extreme weather events and failure of climate-change adaptation. A report by McKinsey & Company, a consultancy, classifies climate risk into two categories: Value-chain risks and external-stockholder risks. The former include physical risks ("those related to damage inflicted on infrastructure and other assets, such as factories and supply-chain operations, by the increased frequency and intensity of extreme weather events, such as wildfires, floods, or hurricanes"), price risks ("increased price volatility of raw materials and other commodities"), and product risks ("the core products becoming unpopular or even unsellable").

External-stockholder risks include ratings risk ("the possibility of higher costs of capital because of climate-related exposure such as carbon pricing, supply-chain disruption, or product obsolescence, regulation risk ("government action prompted by climate change"), and reputation risk ("either direct, stemming from a company-specific action or policy, or indirect, in the form of public perception of the overall industry").

The common starting point for creating a mitigation strategy is to undertake a full assessment of where climate-related risk lies within a firm.

Every company, whether a startup or multinational corporation, experiences capital risk. Not having adequate funds to develop the product or service, pay its employees, invest in materials and equipment are just some of the concerns businesses of all sizes may encounter during its lifespan. How you are going to mitigate the risk of running about of money? Is your startup in position to utilize any of the following options to raise capital: small business loan or line of credit, purchase order financing, vendor financing, product pre-sales or crowdfunding?

It is often said that if you are focused on your exit plan, you are not focused on your business. However, a business owner must anticipate how and when investors receive their return on investment. Listing the shares for the public to purchase through an initial public offering or being acquired by another company or private equity firm carries their own unique risks--if the opportunity to exit presents itself.

In addition to evaluating a business plan on the seven risk factors listed above, I recommend using a SWOT analysis to evaluate internal and external risks. The SWOT analysis (alternatively SWOT matrix) is an initialism for strengths, weaknesses, opportunities, and threats—and is a structured planning method that evaluates those four elements of a business venture or specific project. The questions following the SWOT matrix below will assist business owners and managers to evaluate risks by identifying specific strengths, weaknesses, opportunities, and threats.

INTERNAL

Strengths

• What are your strengths?
• What do you better than others?
• What unique capabilities or resources do you possess?
• What do others perceive as your strengths?

Weaknesses

• What are your weaknesses?
• What do your competitors do better than you?
• What can you improve given the current information?
• What do others perceive as your weaknesses?

EXTERNAL

Opportunities 

• What trends or conditions may positively impact you? 
• What opportunities are available to you? 

Threats

• What trends or conditions may negatively impact you?
• What are your competitors doing that may impact you?
• Do you have solid financial support?
• What impact do your weaknesses have on the threats to you?

How do you identify internal and external risks for your business or organization?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.