1. The VC's Golden Rule: "He/She who has the gold, rules". (Example of Senators financing. Last $5m of $85m capitalization plan calls the shots.)

2. ABC: "Always Be Selling" or "Always Be Closing" (from the film, Boiler Room, Ben Affleck's character). 'You want attenuators, I've got attenuators. You want connectors, I've got connectors,' Jozef Straus is reputed to have said at a trade show in the early days of JDSU. Sales is all about face time (face-to-face time). Emails, telephone calls, brochures, web sites, faxes, snail mail, yadda, yadda, nothing outsells interpersonal contact. (If you can't do a F2F, then choose to sell by telephone next, then email, then fax, then snail mail then by thrid party-- in that order of preference and effectiveness.) Remember, don't push on a string-- get in front of the decision makers, 1 on 1, and sell, sell, sell.

Guerrilla Marketing is just another term for smart marketing (substituting brains for cash in the marketing wars). In marketing, nothing sells better than faces. Nothing gets more micro second recognition than faces. Faces are important everywhere even in cyberspace of the near future (see Neal Stephenson's description of the 'metaverse' in Snow Crash.) Give your sales staff a living base salary; one they can live on and pay their bills with. Load up the incentives. When you do this, you get the whole person- their effort and their creativity. When you pay 100% commission, while you have no fixed overheads, your sales staff have no commitment to you. Your tunrover rate will be unacceptably high. There is a lot to be said for stability; it helps you to develop an 'institutional' memory. A major nation wide store chain regularily sacks its experienced staff to avoid wage creep and reduce its fixed costs. It also reduces customer service to close to zero. Its competitors like Home Depot and Walmart who belive in staff training and retention are eating its lunch.Always pre-sell everything. Remember if it was up to the engineers and lawyers, no product or service would ever be ready for prime time. If you pre-sell your product or service, you'll have a lot more confidence that you're on the right track and not about to go over a 1,000 foot cliff. When selling don't be afraid to name big numbers ( refer to: What They Don't Teach You at the Harvard Business School, Mark H. McCormack, Bantam Books, New York, 1984 plus his follow up book, What They Still Don't Teach at the HBS, 1989). There is an art of pricing; learn it. If you really want to sell someone something, go to see them. It is a lot harder to say "No" in person and you can read body language and other non verbal clues too. Don't be afraid to make the first move- lots of deals go sideways because each side lacks the confidence to be first to name a price; they don't build trust- people like to buy from people they like. Don't take 'no' for an answer. Don't overstay your welcome- when the client says 'Yes', thank them and get out. Don't forget to ask for the sale. 'Yes' is better than 'No' but 'No' is better than 'Maybe'. Watch out for the 'Hoop Treatment' where a potential client says: "If only your (product or service) could do XYZ, then I' buy it." You go away and fix it and come back six months later; they're still not ready to buy- they raise the bar or hoop a little higher. You've become a poodle in training- people don't like to say 'No'. They would rather you figured it out yourself. Listen carefully for a 'Yes' or a hidden 'No' and act accordingly. Tell then that if they say 'Maybe' you're just going to assume it's a 'No' and save you both a lot of time. You'll be amazed how often that leads to a deal. Don't be afraid to ask the client/customer: "What's your budget?" Don't be afraid to put your prices on your web page- people want data from the net and you don't want someone who is looking for a Volkswagen in your Mercedes showroom anyway. Selling is all about providing information, not selling things to people they don't want or need. Everyone in your company is in sales- the techies, the receptionist, even the accountants and lawyers. Nothing is worse than calling up a company and asking the receptionist for help re. your serivces or products and they answer with a "Huh?" That isn't their fault- it's yours for not training your staff. When companies fail it is almost always management's fault, not the union, not the government, not the market, not the competition, not the employees, not your suppliers, not your clients or customers- it's your fault.

"Selling is persuasion. Marketing is persuasion. Every business meeting is based on persuasion.... You can do all of them better if you understand how the mind works, how people think," Scott Adams, Creator of Dilbert, BizEd, November/December 2002, p.19.

Don't be afraid to name big numbers. Often the difference between getting a low price for a thing and a high one is simply the quality and direction of information. As you name higher prices for a thing, the size of the market that your product or service is addressed to shrinks- the number of persons or institutions that can afford it is smaller. Getting a higher price can be as simple as increasing your price with no other change at all (the example of an Ottawa apartment hotel comes to mind. Their low prices discouraged business travellers who felt that a) a low price meant low quality and b) a low price meant a lack of security for their personnel. By simply raising their rates and some limited marketing efforts, they repositioned the hotel- their vacancy rates went down, their volume went up and their margins increased too. The bottom line received a double whammy effect. Higher prices meant greater demand in this case.) The direction of information can also make a large difference: that means getting quality information into the hands of the right people. In real estate and tech, that means appealing to a wider geographic marketplace for the lands, products or services.

You have to learn accretive selling; this means that you provide not only the service or product but also the financing for the customer or client to purchase your product or service. Auto companies have been doing this for decades with affiliated finanance companies. But this can just as readily apply to other fields such as consulting where it is less common. In real estate, for example, this can mean assisting your clients arrange a mortgage on land to pay their land use planning consulting costs which is then discharged by the sale of the property or its refinancing at the time of development. Thus, the client never actually has to draw on their cash resources. Accretive selling means that you have given some thought in advance as to how the client will pay for your services or products before you pitch them.

Selling in the New Economy is not as straightforward as it has been in the past. Often the question comes up: Who pays whom? The answer is often non obvious as in the case of the ABC Network dispute with Time Warner. ABC has Peter Jennings and Time Warner has the cable to the homeowner- who should pay whom here? ABC says Time Warner should give it a slice of cable fees as a rights fee for having access to Peter Jennings and all of ABC's programming. Time Warner says that ABC should give it a slice of advertising dollars on the network because without their pipelines into US homes, ABC is toast in the ratings.

Digital Guard is providing a service to homeowners to assist them with a visual inventory of their belongings. This will presumably cut down on insurance fraud and speed up claims and make them more accurate. Should the homeowner pay DG or should the insurance company pay DG and give the participating homeowner a break on their insurance rates? Answers to these questions can make the difference between working harder and working smarter.

Sales Tip: You are NEVER too busy to return a sales call. Recently, a SME business owner I know, was contacted to quote on a monster account but he was too busy to return the call. Everyone is busy, I understand that. But we are often busy doing urgent but unimportant things while important but non-urgent things (like returning this call) get ignored. Wrong. You should call back potential clients within a day or two (at the latest) no matter how busy you are, if only to say that you are too busy to respond properly right now, but can you get back to them later and then set/schedule a time for that call. Dr. Bruce M. Firestone, December 2002.

A real estate company wants to sell a piece of land for a theme park. Accretive selling means approaching potential theme park operators with the opportunity to manage the park. Once a management agreement is in place and an experienced management company is committed then the financing for the theme park should in principle be easier to arrange; the land owner then can arrange to be paid out in whole or in part upon the takedown of the funding. This is accretive selling with a strategic partner. Hotels are often built this way with investors owning the project; the landowner and developer get paid out through this process.

Remember, always volunteer to write up the deal or the minutes of the meeting or even the agenda for a meeting-- He/She who wields the pen, wields a mighty power.

Everyone in your organization is in sales. Nothing is worse than calling a receptionist and asking him or her to direct your call to the right person or department and they answer: "Huh?" Your front line staff are just that- they are the point of first contact for many future and existing clients. Your receptionist is really your CIO (Chief Information Officer) even if you don't think so. Staff training is essential.

Your accounting and finance staff are selling too. Where do you find new customers? Firstly, from your existing client list (your accounts receivable list). Secondly, from your accounts payable. Your AP can be an even more valuable tool- what can you sell to people who you buy from. Many sports teams check to see if their plumbers and electricians and dozens of other suppliers are season ticket holders; if not, they soon will be. This is reverse selling. Don't treat your accounting and finance staff as glorified book-keepers; they are a crucial source of leads and cashflow (collect early and pay late).

Never confuse marketing and sales. Marketers get to wear nice suits and make $35k per year. Top salespersons make six figures and never get laid off. Marketing is part of the tail of an organization; sales are part of its teeth. Market studies are nice to have but can never replace real world experience. A NHL marketing study once indicated that it was possible to sell 100,000 season tickets in that marketplace when even the very elite teams struggle to sell 15,000.

In assessing the market, remember that you are not the market. Your views, your likes and dislikes are essentially irrelevant. The market is always right, even when it is wrong. People are often irrational and markets can be as well. Sometimes you get more demand by raising prices not less (snob appeal, for example).

Probably less than 3% of all people are leaders and less than 1% are still leaders after age 30 because they get burned and quit. One young person I know, after two business failures, quit to take a J.O.B. He wouldn't take on any more debt (he had $35k in debt at the time) or any more risk because of his recent failures. But what is entrepreneurialist culture if not risk and reward- a balance of probabilities; careful use of resources including OPM? Keith is beaten before he starts. He should have learned from his failures and gotten on the horse again.

Your finance people are selling to a) the banks, b) other institutional lenders, c) shareholders, d) investors, e) debenture holders, f) VCs and more. They renegotiate terms for debt and debentures and they can lower your costs and create additional cashflow that way.

Do the little things well and the big things will take care of themselves. It is amazing how quickly companies will grow if you take care of the details. Small accounts and customers grow into whales provided that you take care of the details and their needs- don't let them fall through the cracks just because they are small. Teach your employees to treat every customer excellently. Having said that, fire your worst clients- the ones who take all your time, put you through the hoop treatment (designed for trained poodles, by the way) and probably won't buy (much) from you anyway.

The most important decisions you make are your staffing ones. Get the right people and you are more than halfway to success.

Do your best in the interview process, don't waste time on people that you feel may not turn out. But take the time to find the right people. When hiring for any position make sure to interview at least four different people. Your objective is to try to get to know these people and understand their needs. Just like selling your product to the end user, employees have to be sold also on their job. Ask a lot of anecdotal questions. " Tell me about the worst experience at your previous employment", get to know how they deal with pressure and tension. Tell them about your company's vision and goals, then ask them about their personal goals. "Where do you see yourself in five yearsa?" Everyone has a secret dream; find out what their's is.

If you feel there's a fit (work hours, challenge, compensation etc…) then move forward. Build commitment from day one, be serious about your idea or company. Get to know what makes them tick, what motivates them. Hint. It's not always money!! Conduct 2-4 interviews and make sure they completely understand the environment they will be immersed into. No surprises. As an employer, always honour your commitments to your staff. They are your representatives, your front line. Remember they have different lives and each should be treated as individuals. When times call for it, be firm. But never disrespect people. Always approach your staff in a proactive manner when addressing problems. Look to them for input and solutions. Make them accountable. Take the time (once every 6 months) to recognize your people and their achievements.

Reward those that achieve more, work hard, play as a team, and do that little bit more. When dealing with conflicts always address people one on one in a private setting. When dealing with consistent bad performance get to know the issue and assess whether it's a commitment or skill issue. If it's a skill issue, then use your experience to transfer those skills, if it's commitment, then agree that the relationship should be terminated. Always try to terminate a relationship in the friendliest manner possible. You never know when your paths may cross again!

3. Goal Setting: "We (the Ottawa Senators) have a 7 to 12 year plan to win the Cup; we want to make the playoffs within five years and, in our first year, we'll get 22 points or better." Results were: 24 points in Year One, the team qualified for the playoffs in Year Five on the last day of the season by beating the Buffalo Sabres and Dominik Hasek 1 - nil in a win-and-in or lose-and-go-home situation and achieved 103 points and 95 points in Years Seven and Eight. The Stanley Cup remains at bay. Every entrepreneur faces obstacles; every society has an elite that takes the preservation of their position and power seriously. They don't want you to succeed. The top levels of politics, media and business in most countries form an identity- like the pigs in George Orwell's Animal Farm, at the end, the plebian animals can't tell the differnce between their pig 'brothers' and their former human master. So it's your job to never take "No" for an answer. Visualize and verbalize. If you can visualize yourself completing your race, achieving your goals and you will greatly enhance the chances for success. There is a saying in Japan: "You fall down seven times, you get up eight times." If you verbalize your ideas with a trusted confidante, you can sort throught the really bad ideas and get at the good ones much more reliably. Remember the example of Tom Hanks' friend "Wilson" in Castaway; as soon as Tom had someone to talk to and someone he could bounce ideas off of (even if it was a volleyball'), he started to make better decisions.

Meet "Wilson"

You need to also give some thought to the role of 'hope' in human endeavours. Hope is a central requirement to survival- survival of human life and human businesses and organizations too. You need to engender hope in your employees and your suppliers and customers and clients too. If they are hopeful about the future and about your future, it will help you achieve your goals.

4. Under Promise and Over Deliver. Lower expectations. Push analysts and media 'back'. Your most important signpost on the way to under promising and over delivering is the decisions you take in HR. Your first hire, your tenth hire, your ten thousandth hire should first and foremost have a good 'heart'. Good hearted people don't quit on you when the going gets tough. And it always gets tough in entrepreneurialist culture. Everyone who you interview is going to have the right credentials- good education, great experience. Look for the ones who have a good heart- they'll be team players and they won't blame everyone else when things go wrong. They'll understand that every job is 98% work and 2% glory.They'll learn from their mistakes and won't repeat them. Never fire anyone for making a mistake, fire them for making the same mistake (over and over). Always ask yourself and your managers every so often, out of the 20 employees who report to you, which is the person you're least likely to turn to for help in a crisis. Fire that person. Virtually everyone can think of one person in 20 (just 5% of your employees) who doesn't cut it. You can add (a lot) by subtraction. When you don't do this, you keep deadwood around and the rot begins set- your good employees see that someone can do little or nothing with few if any consequences. That is a bad scenario.Remember: Take responsibility for your own actions. Don't pass the buck. Learn from your mistakes. Tolerate mistakes in others, once. Hire people who have 'good hearts' first, education and experience are second. They stick with you and won't fold at the first hint of trouble. Don't hire part timers if you can help it. Don't let employees have two or more bosses. There are no fallback positions. You are either in the boat or stay on shore.

5. Don't overplan. Have goals and a short term plan and some longer term objectives but realize how unpredictable markets, technology, competition and life are. The Master and Margarita, by Mikhail Bulgakov, for example. Remember long term forecasting is insanely difficult: for example, "THE STOCK MARKET HAS PREDICTED NINE OF THE LAST FOUR RECESSIONS," Brown.

6. Ideas are cheap. 35 million Americans are right now in their basements working on your business plan. Some of the best new businesses are simply good execution of technical changes in existing systems and services. Fed/ex comes to mind. It isn't e = mc**2! Fred Smith saw: a) a need for overnight, guanranteed delivery, b) a future market made up of time crucial (predominantly) packages, c) an existing service provider that was slower and unlikely to move in this new direction (the US Postal Service), d) a way to actually economically achieve this objective (the hub and spoke system). Until Fred Smith came along, a network of 'n' cities had a total number of possible routes (N) equal to n(n-1)/2. For 50 cities, for example, there are then 1,225 possible overnight routes to connect every city in the network to every other city and, presumably, packages can go in both directions on each route so that the total number of overnight flights required could be as many as 2,450 flights, an obviously impossible task. By constructing a hub and spoke system, Fed/ex was actually able to greatly reduce this number and thus implement Smith's vision. A useful (second order) and timely insight but it's not Newton's Laws of Motion. "In the end, a vision without the ability to execute is probably a halluciantion," Stephen M. Case, AOL Time Warner. Execute, execute, execute.

Fred Smith's idea was "overnight package delivery" is 'cheap' because it is easy to say, but very difficult to do. On the other hand, his creativity in implmentation is very valuable because the hub and spoke system that he devised is the basis for a hugely successful operation-- ideas are cheap but creativity counts.

I believe you can become more creative.

 

"Why invent radically new things that are like science-fiction movies when there are smart, gifted people who have been working on maps for centuries, trying to convey lots of information on a flat space? I think that invention is a terribly difficult thing, and we should try to get away with the minimum that we can," Tim Bray, inventor of XML language for the web, on why he uses maps as the basis for searching for information on the Internet, November 2002. (Ed.: Many students and entrepreneurs feel that they need to start a business where: a. there is no competition and b. where they are using a totally new idea/concept/technology. Perhaps there is a reason why no one is doing what the new entrepreneur is proposing to do? Maybe it is a bad idea. The number of new businesses that are started where e = mc^2 are few and far between-- that is more like winning the lottery and you cannot plan on winning the lottery. For every Ebay and Priceline you have thousands, probably hundreds of thousands, of Starflyers and Transitus startups-- startups based on creative ideas like flying discs that you can use at night or taxi signage that is nine sided that fail utterly (because a. people don't want to play with flying discs at night and b. advertisers don't like taxi advertising no matter what the sign looks like.)

7. Keep the winners and dump the losers. Know when to held 'em and when to fold 'em. How to recognize 'Zombie' Companies when a company or project or division or parts of a company are dead and need to be pruned. The Renatlex Story. Don't marry your ego to your business. Don't let it get in the way. When bad things are happening to your business, as Ripley (aka, Sigourney Weaver) says to her crew mates in the Alien series: "Deal with it!" One the event is completed it is forever in the past. Don't dwell on past failures or live off of past successes- you are only as good as what you did today, not only in sports but in the business world too. When you get to be successful- remember what you did to be a success and remember who you were and where you're from. Even large companies can be destroyed in a hurry when they forget the keys to entrepreneurial success.

Dump the Losers and Your Bucket Fills up a lot Faster

8. Limit your personal risks. For peace of mind and a clear field of fire, take steps to limit your personal risks. In a very litigous society, you may be sued for almost anything. Any litigation has risks. Even if you appear to have the truth and right on your side, there is still a risk of failure. In Ontario, you may be sued as a director for environmental contamination, unpaid employee remittances, statutory payments (PST, PAT, GST). A limited liability company does not protect you from this. Staregies for limiting personal liability include: a) exercising due diligence, b) placing personal assets under your spouses name, c) directors' liability insurance. Personal investing for entrepreneurs often is quite conservative (using, for example, the "Warren Buffet" method of investing- invest in value: great companies with strong brands and good management; hold for long periods, avoid commissions and capital gains taxes, sleep well at night, stay away from day trading, timing the markets and general 'casino' style investing). Take risks in your business not your personal investing. Try not to pledge your personal assets in the course of your business. Try not to give personal guarantees. While companies you own may go into bankruptcy or Chapter 11, never allow yourself to file for personal bankruptcy if it can be at all be avoided. The latter will cause you no end of grief- you can not get a loan or a credit card; you can not be an officer or director of any company. Bankruptcy laws are there for two reasons- a) to protect creditors and b) to allow the entrepreneur to start again. If you go bankrupt personally, that may not be the end of it- the Trustee with the concurrence of the court can reach beyond the bankruptcy and compell the individual to pay a portion of their future earnings to their creditors. You will end up paying the Trustee's fees and the creditors too. However, if you do or your company does go bankrupt, you have four days to get over it: Day 1 (Feeling Sorry for Yourself), Day 2 (Getting Some Exercise), Day 3 (Thinking About Your New Future), Day 4 (Getting onWith the Rest of Your Life). Remember to practice the smart truth in these difficult circumstances. Say little. Most people hang themselves (unfairly, in most cases). Remember the Bankruptcy Act is there, in part, to also help you get a new start. Don't throw yourself away. It is a terrible waste in any society to unnecessarily dump our most valuable resources (our human resources) because they have failed. From failure comes experience, from experience comes success.

9. Protect your personal reputation. "Good will win, if Good is very, very careful," said First Officer Spock on the USS Enterprise as Captain James T. Kirk fights the Captain of the Gorns. Tell the truth, the smart truth. Linear thinkers tend to get wiped out in entrepreneurial endeavours by their competition, the media or the political establsihment. P = M = B; there is an identity between politics, business and the media at the highest levels of most societies and they will seek to protect their positions. There is no welcome mat for gate crashing entrepreneurs. High ethical standards and smart, timely disclosure will establish your reputation for fair dealing and when things get tough, as they inevitably do, people will be willing to go out of their way to help you or cut you some slack (even bankers, VCs and Vulture Captialists- i.e., cut throat VCs) because you have a reputation for fair dealing. Every town or city has less than a few hundred people who are really doing things and make a difference at the macro level. If you get a reputation for (as they say in legal circles) sharp practice, you are ultimately doomed.

10. Buy Low, sell high. People are sheep. Go against the tide (easier to say than to do.) Every clothing sales person is taught to reinforce the perception that 'everyone is buying (this style) this season'. It is the single biggest closer.

11. To be a successful entrepreneur, you have to be the "Impeccable Warrior" (Carlos Casteneda, The Yacqui Way of Knowledge). Don't drink and think. Don't smoke. Pursue lifetime fitness (not peak fitness). Eat moderately and well. Get enough sleep. Drink little or nothing. Don't take drugs. As the ancient Greeks said: "Everything in moderation." The Dalai Lama suggests: "Try to get 20 minutes alone every day." He also says when you have a difference of opinion with someone: "Deal with that issue. Don't bring up the past." This is Sigourney Weaver's character in the Aliens series. Deal with the present. Assigning blame is usually not helpful in resolving matters, expecially in a crisis. Know yourself. Take the ECQ test. You need to engage in lifetime learning- as soon as you feel you know everything, you will grow old. Taking responsibility and looking in the mirror first and keeping your perspective when everyone around you has lost theirs are key to a successful career. A career is an agglomeration of achievements and learning experiences. Remember, sometimes the 'centre does not hold'; your next failure is sometimes just around the corner after your greatest success. Learning to deal with failure often separates the successful individual from the unsuccessful. Work hard and work smart. Get up every day and go to work. All you can, is all you can do. "The harder I work the luckier I am," Stephen Leacock.

There are both positives and negatives in choosing to become an entrepreneur. Make your choice an informed one. As Owner or President of a company, you are responsible for everything. If things go wrong, even if it isn't your fault, it is. You never get off the hot seat and you can never share or delegate this ultimate responsibility. All entrepreneurs get tired of this and from time to time try to get someone else in to do this part of the job. Never do this. When you are fed up, share your lonliness with someone you can trust- a mentor, a peer. It helps to know that all entrepreneurs have the same fears and many are, in fact, quite lonely. If you really can't take it anymore, it is time to sell instead of trying to pass the buck, bringing in a partner, hiring a new manager or absenting yourself. Do any of these things and your business is doomed.

First Person: "Do you want to be more successful?"

Second Person: "Yes."

First Person: "Then, before you do anything else, you have to raise your expectations of yourself."

To be a successful entrepreneur, you need to able to lead and co-ordinate your team. Team members are not only your employees but also your suppliers, your clients and customers and your banker, your shareholders, your lawyer, your accountant, the media, the community-at-large, community associations, trade assoications, politicians, government ministries, regulators and many others. You need their confidence and trust to be successful and you need to be able to communicate with the team accurately and successfully. People make better decisions when they are fully informed- don't hoard information. A team that is top down directed can only move as fast as the entrepreneur- you, can move. Teams that are networked with you at the centre of an interconnected, communicating web move much faster and are synergistic and are learning organizations. Probably the most important decision you will make is who to select to be on your team. They must trust you. You must be able to trust them. I happen to believe that the number one thing in life is not love but trust; I learned that after some hard life lessons. Whether you are picking an employee, a supplier, a banker, a lawyer, pick the best not the cheapest. You should also carefully select your clients and customers. Firing clients and customers can sometimes be the best thing for your business. 20% of your clients take up 80% of your time. Fire some of these and you will be more productive. Recruit people who are as good as you are or better. Don't fear the truely expert. Don't be afraid if someone knows more about something than you do. Don't react like the not-invented-here manager who can't stand it when someone else thinks of a good idea. Give credit where credit is due. Learning is a lifetime exercise for everyone including you- adopt best practices wherever you find them. You aren't necessarily in a popularity contest as a leader- your job, rather, is to make your views, positions and goals popular amongst your broadly defined team, which btw includes not only your employees but your suppliers, your clients, your community and the regulatory/legal framework within which you work. Never lead-by-fear. Remember that real power comes from ability, not the organizational chart, not from age, not from title or position. My daughter recently (circa summer 2004) got a job as a life guard at Red Pine Camp on Golden Lake in Ontario. It's a family camp with over 50 staff and 350 campers of all ages in camp at any one time. She asked me why people love to gossip so much. I told her that gossip can serve a useful purpose, in fact, three purposes: a. It establishes a pecking order. Have you ever noticed that group dynamics always have an informal structure to them? It doesn't matter what the formal org. chart says, some people just have more say than others. Two peers are not the same; one is almost always dominant. It is the 'unseen' pecking order that makes an organization actually function. If you have two lead dogs in any one group, that organization is going to be dysfunctional. Gossip helps to establish that. You need a pecking order-- one vision must prevail. b. Gossip gives you information on people and a heads up on who's who. This can be incredibly valuable-- if someone has a bad temper or is deceitful or whatever, knowing that in advance can be crucial to your success. It also helps you establish who you can trust and helps you form alliances that can contribute to your success and your organization's too. c. Gossip provides a fast, efficient (and unofficial) communications network that alerts you to trouble and opportunity both within the organization and outside. I have found that people don't like to say 'no' to your face and don't like to give you bad news. Gossip can act like an early warning system.

Power does not equal Position and Hierarchy Instead: True Power is proportional to Ability

You should know that there are many people who do not want to be leaders and they don't want to be led either. Many people spend a lot of energy trying to avoid responsibility and covering up their mistakes. I respect people who will first look in the mirror to see of there is anything they can do to improve a situation. Here is a tongue-in-cheek look at avoidance and cya behaviour. Engineers and computer nerds love flow charts- here is a worthy example of anti-leadership behaviour. It is quite a clever strategy for staying out of trouble- it cycles back in on itself. However, this is not the type of effort that put people on the moon and returned them safely to earth. You need to be able to communicate well- in public, in meetings, one on one. You need to be able to communicate clearly and effectively and to think-on-your-feet. You need to tell the truth, the smart truth. Always practice and rehearse before a presentation, Verne Chant once recommended. Think things through. If you don't know the answer to a question, say so. Never guess. Say that you will get back to them on that. Never agree to anything without giving yourself a chance for a timeout, Rod Bryden once told me. Say something like: "That sounds reasonable, let me think about it overnight and we'll get together tomorrrow to decide." Give your subconcious a day to mull it over and you'll be surprised at how you can improve things or clarify things that will be an advatage to both sides. If you can write well, this is a huge advantage. As my PhD thesis supervisor told me: "It's the first million words that are the toughest, Bruce." Like most other things, you get better with practice, so practice! A Vancouver legal secretary was recently awarded the top prize for bad writing (Nationa Post July 11, 2001). Here is her introduction to an imaginary novel: "A small assortment of astonishingly loud brass instruments raced each other lustily to the respective ends of their distinct musical choices as the gates flew open to release a torrent of tawny fur comprised of angry yapping bullets that nipped at Desdemona's ankles, causing her to reflect once again (as blood filled her sneakers and she fought her way through the panicking crowd) that the annual Running of the Pomeranians in Licechenstein was a stupid idea." 12. You should fear failure, not success. Sounds obvious? Well, test yourself. Make sure that you don't really fear success! 13. Cashflow is King. "To me, in order to run a business, you have to be profitable from day one. I never learned this business of, 'Hey, here' $10 million. Go and hire some people and lose money for three years'," Omur Sezerman, Oz Optics. Build a real business with cashflow, profits, customers, clients before going public with discipline and focus. Stick to the business model if its working. If it isn't, change it or dump it. If you have cashflow, you will get finaincing. If you are profitable from Day One, you'll never get bullied by the Golden Rlue Practitioners. Your startup cashflow plan should be: a) as accurate as you can make it, b) conservative (under promise and over deliver), c) once you've set it down, work very hard to deliver. Meet your cashflow goals every month- don't expect to do it all in the last month of each quarter or the last quarter of each fiscal year.

"Earnings, within reasonable limits, are just an opinion. You can manoeuvre the earnings ... but you can't manoeuvre cash. You either have it or you don't," Dick Currie, CEO, George Weston Ltd. (Loblaws), Financial Post, September 29, 2001. Note: To successfully manage most SMEs, all you really need is to watch your AP, your AR and your cash balance every month (taken from your bank statement).

N = ?, today.

You need to test your business model implementation at every step by asking some simple questions like:

a) Is this a nice to have new hire or new purchase or do we really need it now?
b) If we really need to do it now, can we afford it?
c) Can we afford not to do it?
d) How much cash do we have in the bank today, how much did we have last month and how much are we going to have in a month?
e) What's our 'burn' rate and if we didn't make a sale and close it and collect our receivable from the sale, how long will we last? (Tech firms try to keep one year's cash on hand, a lofty and usually unatainable goal for bootstrap businesses.)
f) Can we turn a cost centre into a profit centre?
g) Is there another organization that can do a task better than you can do it in-house?
h) Are we really ready to cross the 'chasm' now or should we wait to spend our marketing dollars until we're sure we're not just blowing our money? (Will a ten cent web site that we program and update ourselves and photocopied brochures do for now; like, do we really need that 30 second superbowl ad right now for $2m as so many dot bombs recently concluded that they did need it?)
i) Is there someone else who is going to the trade show or advertising and marketing in our field that we can piggy back on? (Co-op advertising, for example.)
j) Can we collect early and pay late? (Always ask your suppliers first.)
k) Who benefits from our activities and what can we ask them to do to give us a hand up? (We want a fishing pole not a fish from our stakeholders- suppliers, shareholders, clients and customers.)
m) Do we really need to finance our equipment with equity or can we do some fixed asset financing or leasing?
n) Can we factor our receivables for cash?
o) How are our margins- are we really sure that if we work harder, if we make more sales, we'll make more money? (How many business plans are there out there that even if they execute them perfectly, they are still losing money on a monthly cashflow basis (EBITDA). No matter how much capital you start with, if you lose money every month, you'll eventually run out!)
p) Are we doing business with people who do business with us? (The Sens always check that if someone is fixing their plumbing, they have a season ticket package and a sponsorship package too.)
q) Is there anyone on staff who we could do just as well or nearly as well without them? ("We could've finished last without you," former Atlanta Braves Manager to their star players when they asked for a raise when the Braves were B.T.T. (before Ted Turner).)
s) Is there something we're missing out on that if we did it, our bottom line would increase?
t) Is there something we're doing that if we stopped doing it, our bottom line would increase?
u) Have we remembered that sometimes the best place to find more sales is from our existing customers and their friends too? (Your receivables list and your former customer lists are hugely important assets of your bootstrap startup- the best place to find new customers is your old customers.)
v) Have we asked our suppliers, clients and customers for their endorsement of our products and services? (Everyone reads the book covers before they buy: "It was a page turner. Couldn't put it down," Acme book critic.)
w) Have we asked people in related fields to cross-market our services or products. (Service clubs and hockey tickets, for example. Toy companies and burger fry chains for another. Home builders and insurance brokers.)
x) Can we negative pledge some assets to acquire greater levels of financing? (Pledging not to pledge certain assets- to leave them unencumbered to obtain non recourse financing.)
y) Have we remembered that everyone in our company is in sales and that sales is all about providing accurate, timely information to people who need our service or product? (You need to provide staff training and you should remember that your accounting staff is a manistay of your eraly days sales effort! "How's that," you say? Your payables list is one of your most important assets. Yes, assets. If you owe people money, they're your partners. Is there anything you can sell to them; are there any products or services that you make or provide that they may want to buy from you? This is reverse selling or tied selling and it is a powerful force in bootstrap startups.)

z) Have we made maximum use of the web and technology? (The web and technology is all about automation. That's the easy part. It's all about reversing out the work to your customers and clients and your suppliers too. Have we made it possible for our clients to fill in all the 'forms', book appointments, follow the progress of their new acquisition (whatever it is), etc. on the web by doing all the data entry themselves? Can our supliers find out when we need lumber for those new homes we're building by logging onto a passowrd protected web space themselves?)

You need to learn how to define and construct a business model.

Why Gizmos and Gadgets don't make a sustainable business model.

14. Check, check, check. There are no 'fire and forget missiles' in management. (See Jack Welch's comment above.) Set goals, follow up, achieve them.

And don't take 'no' for an answer. When someone says: "it can't be done or it's never been done before or it is done this way because that's the way it has alwys been done," those words should trigger a nearly automatic check by you to see if their premises are correct or not. If it weren't for Gino Rossetti (the architect of the Palace of Auburn Hills and the Corel Centre) challenging conventional wisdon, he would never have revolutionized both the aesthetics of arena design and their economics by creating multiple levels of concentric rings of suites.

He asked a simple question of the owners of the Detroit Pistons when visiting Joe Louis Arena: "Why do the people (suite holders) who pay the most money sit furthest from the floor?" They answered that "Every arena is designed with their suites (if they have any at all) at the top of the building-- it has always been done that way." He then pulled out his sketch pad, which always accompanies a renaissance person like Gino, and quickly drew a sketch that became the de facto global standard for arena design. Not only was it now possible to have 140 suites generating enough predictable, committed, long term income to pay for the capital costs of a new building, but by constructing the arena in this way, with balconies over concentric rings of suites, everyone was closer to the floor or ice surface-- and smaller spaces with greater intimacy between performers and guests are much better, more exciting people placesare (and, coincidentally, smaller volumes happen to be less expensive to build too).

Also think things through. You are presumably a smart person. If you think about something overnight instead of ruching into things and if you think out your strategy ahead of time, you will allow your intellectual resources to be brought to bear on a problem. This is a big advantage to you. Don't throw it away by making snap judgements and walking into things unprepared. Your subconcious, if given some time to chew on a problem, can help you avoid a lot of problems and turn some of them into opportunities.

15. Pick your spots. "The best trades you make are the ones you don't make," Glen Sather, former GM of the Edmonton Oilers. In the face of overwhelming odds, run. Out of every 100 deals that come across your desk, reject most or all of them. When the right one comes along, strike quickly. Carpe diem. Having said this, entrepreneurs never actually make a final, final decision about anything. They stay flexible and change their position in light of new facts as they become available. There is no ultimate solution in life or business. Life is a series of tests so you never actually get 'there'. You need to be able to change and adapt, much as successful organisms change and adapt to changes in their environment. The entrepreneurial life is a lot like professional sports- it's 'what have you done for me lately' from all stakeholders (your shareholders, investors, suppliers, partners, customers, employees, your family and so forth.)

16. Focus on your core competency. Contract out everything else. If it isn't in the business plan, don't do it. Divest everything outside your core competency or simply stop doing it if you can't sell it. You need discipline and focus. You need to be in a niche that is big enough to generate something bigger than just a J.O.B. for you; that means your niche has to be wider than you thought and a lot deeper too. Everything else is just a hobby. Don't turn your hobbies into a business. You'll hate yourself in the morning. The differnece between a J.O.B. (aka, Journey of the Broke) business and an entrepreneurial company is that the latter creates value that is independent of the Founder. Make sure you're in that space. In operations that don't form part of your core competencies, costs always rise to exceed revenues. That is why you need to contract these types of things out to companies that specialize in that area, who know how to control costs, who know how to make a little bit of money over a large base of transactions. Payroll management, arena management, parking lot operation, security services, cleaning services, routine manufacturing come to mind. You should know that if you keep non core stuff inside your company that costs always rise to exceed revenues. It is kind of like your personal income, you always seem to spend more than you make no matter how much you make. Profitability is a key to success; not so you can go spend time on a beach but so you can reinvest in your core business to make it stronger and better. Profitability is power. It is independence from the bank and creditors; it is power to grow the reach of your business to do the insanely great things you have in your b. plan. With the National Hockey League's Ottawa Senators, core competencies included a) managing key commecial relationships (season ticket holders, sponsors, suite lessees, signage, concert and event promotion, junior fan club) and b) the management of hockey operations- putting a winning product on the ice. Everything else was contracted out- radio rights, TV rights, parking, F & B, security, cleaning, arena management, catering. Note that web rights were kept in-house as a key to managing commercial relationships. Anything that is not in your core competency should be contracted out or you should fold it and stop doing it or you should sell the division. It is surprising that even very small businesses have within them projects or divisions, products or services that can be sold to a third party. You can add by subtracting (get rid of loss making products or services, allow your people to focus on what they do best and your costs will drop, your revenues or margins will increase and your bottom line will grow). Also, somewhat surprisingly, you can often sell these unwanted divisions, product lines, services and businesses at a profit- what you don't want may have value (sometimes a lot of value) to someone else who can make better use of your asset; you can turn a liability into an asset this way. Mergers, acquisitions and divestitures can form a big part of your success. You have to make the other party feel that they have won a hard fought battle so even if you are happy with the first offer, haggle a bit- make a counter offer. But don't be greedy and never look back- don't worry if you left a little too much on the table; life has a funny way of rewarding you. Clients who feel they did particularily well in their dealings with you will often come back themselves or refer someone else to you- your sales volume will be higher than it otherwise would have been. Click here for more about selling your business or product line or service.

17. Turn cost centres into profit centres. Be creative. Think around corners. Think things through. Sleep on 'it' over night. Leverage your assets. Listen to your intuition. Force yourself to go over and over a problem over a period of days or longer to turn it into an opportunity. You can learn to be more creative. Necessity is the mother of all invention. Learn the three levels of ordered thinking; you can certainly achieve level 2 and, occasionally, level 3. Entrepreneurs are people who can do for a dollar what any fool can do for two. Nothing focuses the mind like the fact that you are being hung in the morning. Example: the lone holdout in the Palladium land assembly actually improves the ultimate traffic solution for the Corel Centre. Practice the Yacqui way of seeing. For example, seeing the spaces between the leaves of a tree rather than the leaves. Hearing the jazz notes that the artist doesn't play. Seeing the things that a great architect didn't build. 'Thousands can speak for one who can think. Thousands can think for one who can see. To see clearly is poetry, prophecy and religion, all in one.' (Rankin.) Make sure you use appropriate technology and technique and level of resources for each problem. Don't spec American-style suburban homes to solve an affordable housing problem in the third world. Examples: the grass ball and twisted bark anchor rope as a latrine plug in Africa and the Rifle Slung Apple Picker in the Middle East. Jack Welch talks a lot about differentiation- he means it too in all facets of business: product or service differentiation, differentiation in HR (rewarding your top perfomers differently from run-of-the-mill performers), etc. In the real estate business, every time you drawa line on a piece of paper, you make more money- severances, mini offices, retail at grade with apartments or condos above, offices with lofts, offices with water views, offices with balconies, indeed, if you make every space in a building a bit different from its neighbor, people feel special and will pay more. The web will make it possible for tract home builders to 'customize' their product and charge more at the same or lower cost, for example. For more on how home builders might take advantage of the web, see the Inaugural Lecture in the Magic From a Hat series. When we operated mini offices in the 1980s, every month we lost money operating the word processing unit. We sold the rights to operate that business for $65,000 and they paid us rent. Within three months that micro entrepreneur who ran that unit had turned it around and was making money.

18. Balance out the lows and highs. Recognize that all entrepreneurs suffer from periods of self doubt, fear of failure and success. Try to stay on an even keel. A huge part of success is time based work and effort. The harder you work, the luckier most of us get. Get up every day and go to work. Remember that by definition, all you can do, is all you can do and that is enough. Is that all you can do? Having a stable home life is important as well. Physical fitness (lifetime fitness, not peak fitness), eating right and getting enough sleep are important too- become an impeccable warrior. Never drink and think.

19. Bootstrap your business- use both guerrilla marketing and bootstrap financing. Start small and grow it. The slower you go sometimes, the faster you go. Business Week (February 19, 2001) ran a headline in their e.biz report: "Shakeout! ... How will their (VCs) woes affect startups?" Well, some of the best businesses were started with bootstrap financing (Mark McCormack started IMG, an international sports management group with $500 and one client who happened to be Arnold Palmer). Bootstrap startups won't be affected at all by the VC shakeout of 2001. Cashflow is King. The best startups are capital starved. They learn how to use a dollar wisely. "Simply put, an entrepreneur is someone who can create two dollars of revenue, where any fool could make one dollar." They see things and connections and opportunities and relationships that others miss. They build the old fashioned way- with customer service and good products. You need financing? Everyone suggests start-up founders go to the 'bank', VCs, rich 'Uncle Buck', Mom, Dad, your friends. How about 'none of the above'? None of these folks have any real stake in your business plan. So, who are the true stakeholders? They are your suppliers, your (future) customers- people you buy from and sell to. They will help you get started if they see that your b. plan will address one of their needs. Afterall, what is your new business worth if you have an advance order or contract with a credible customer or client? A lot more than it is without it. It builds your credibility; it builds your potential cashflow; it reduces uncertainty; it allows you to finance future revenues (receivables). Presell everything. Now you need a ton of money to build your product or service; get at least half of it on supplier credit. Use guerrilla marketing to make your limited funds go further. Again, the slower you go, the faster you go. If you have a secure base to venture out from, you are more likely to succeed. For every 'overnight' success there are thousands of examples of people who built great companies over very long periods of time measured in decades. Sam Walton comes to mind. Remember you are not the market. You may like your idea but maybe you are the only person who does. The reverse also applies. The market is always right, even when it's wrong. Understanding the market and developing a world view or a 'mental map of the way the world works' is incredibly valuable to the entrepreneur. That way you can perform what Albert Einstein called 'thought experiments' to assess whether your great new idea is going to work before you do it. The human mind is the fastest tool and is a far more accurate barometer of success than any number of market surveys if you have developed an accurate mental map of the way the world works.

Nortel after the recent stock melt down ran a full page text ad in the Financial Post on Friday March 9, 2001 explaining to (upset) Nortel shareholders how the company intended to deal with certain matters. It was a well written piece signed by John A. Roth, President and CEO. There was only one thing wrong with the all text ad- it didn't run a picture of John. People relate to faces. Marketing without people, and specifically without faces, misses the mark.

Avoid reverse marketing and PR. There are a lot of things that you initiate that make the situation worse.

Most likely, you will rely on the following for bootstrap financing of your new business: a) angel investors, b) family and employees, c) supplier or vendor financing (30, 60, 90 day terms), d) customer pre-sales, e) factoring, f) fixed asset financing (leasing), g) personal debt, h) credit cards, i) trading activity (trading up the food chain is a typical entrepeneurial strategy- start a business so that you have some 'chips at the poker table' then sell it before the peak of the market is reached and start the (bigger) one you really wanted in the first place- trade up to the Sens and the NHL, for example; always sell 'too soon' and leave something on the table for the purchaser- obviously, the purchaser needs some value otherwise why would they buy it in the first place?), j) strategic partners, k) employees, l) accretive selling (FKZ consulting assignment, for example), m) accretive selling with strategic partner (Ogden, the Sens and the OSHCLP), n) accretive buying (a homebuilder start-up, for example, or the purchase of a division of an (often large) company which division doesn't fit their model anymore. You use the assets of the targeted division to secure the debt you need to buy it in a classic LBO or MBO. Even after paying the debt, you are left with positive earnings, you hope. Accretive buying means that you buy when you are weakest and sell when you are strongest in a counter intuitive way. This is different from 'buy low, sell high', which is counter cyclical in a macro economic sense.) Investors are likely to come from a group that has an interest in your success- strategic partners, suppliers, family, employees, future customers. Even persons or organizations that are geographically tied make ideal targets for certain types of investments. Find out who benefits and sell them on your start-up. He/she who benefits, pays. He/she who pays, benefits.

(Trading activity includes such strategies as buying an option on a piece of land and flipping it (real esate speculators are professionals at it), buying stocks on margin, selling short, buying airplane options and selling them, LBOs, MBOs, arbitrage, and so forth. All are risky but can yield large sums in a short period of time, enough to give you a 'grub stake'. Even large companies do this- flipping electricity contracts in the California power crunch of 2000/01 was immensely profitable for aluminum producers. It paid them to shut down operations- they could make more money by speculating in the power market than producing metal. They bought power on long term contracts at $22 per KWH and sold it in the spot market for $430!)

Rememeber that equity is more expensive than debt. But equity is more patient than debt. Equity investors including angels and VCs are looking for returns in the 30 to 40% p.a. range. You, as the founder and key entrepreneur, should expect 100% p.a. returns on the total of a combination of your cash and sweat equity contributions. Bank debt will come in at prime plus one to prime plus three depending on your credit worthiness (currently in the range of 7 to 9% p.a., March 2001). Clearly, use of low cost debt increases your leverage and improves the IRR for equity (it also increases your risks). Shareholders are also frequently asked to provide the company with (relatively) low interest rate loans as well as make direct equity investments in company securities. Debentures are a common form of financing for start-ups and they are a combination of debt and equity. Typically, they have a coupon rate in the range of 8 to12% with an equity conversion privilege that ups the return to the 20 to 30% range.

It is important for most start-ups, even if they are not bootstrapped, to have at least one pre-committed client or customer before much else is done. This is now a requirement for most VC funding.

But probably considerably less than 1% of all startups actually ever get close to any type of VC money, which means that you are left to bootstrap financing and bootstrap (guerrilla marketing). That's OK though-- more than 990 out of every 1000 new businesses are in the same situation. Capital starved businesses are often hardier anyway, when they make it they know that every business (even IBM) is built every year, one client, one customer at a time.

There are no shortcuts, really. Terry Matthews once said after being congratulated on building a great new Company (Newbridge Networks): "It takes a minimum of 7 to 12 years to build a great Company and we still have a ways to go." And remember, this is from someone who had already done it (with Mitel).

When you read about someone building a company in 18 months and flipping it for millions, you are really reading about the lotter winners of life-- it isn't real, not for you. You can't plan on winning the lottery but you can plan on entrepreneurial success-- it just takes a generation of effort-- one customer, one client at a time.

The old Hollywood Studios amaze me. They spend incredible amounts of money in absolutely incredible, sometimes stupid ways. Yet they survive nincompoop managers and occasionally produce marvellous masterpieces. No startup could ever operate that way and survive. But the Studios have been around for 100 years, laying down deep roots and layer upon layer of relationships that bring the best talent on our Planet to Hollywood, California. Deep roots, many layers, it takes a long time to do that and then you almost can't fail.

20. Compartmentalize. Your ability to compartmentalize will help you achieve success more quickly. Successful entrepreneurs like Terry Matthews of Mitel and Newbridge fame are very good at keeping going even when they have many, seemingly insurmountable, problems to deal with. Most people just get overwhelmed and shut down. Don't feel bad if you are one of those, most of us have been there. People who can compartmentalize not only their business but also their personal lives tend to become more successful more quickly. As discussed above, if you can get the business model right when you start out (instead of twenty years down the line like most of us), you will obviously have a better chance of earlier success. This is what the "overnight' successful people do- they keep all the balls in the air at the same time while they are implementing the right b. plan. They are capable of multi tasking. they are comfortable with 'controlled chaos' and insufficient information.

Successful entrepreneurs must be capable of doing everything in parallel. In real estate, for example, the North American model is to do everything at once for a new office project- buy the site, rezone it, design the building, pre-lease it, finance it, even build it while building permits are pending (not recommended). The European model is an example of first order thinking and in series: buy the site then design the building then rezone the site then file for building permits then build it then lease it (after prior unknowns are removed) then finance it (after all unknowns are removed). Obviously, the NA model involves much more risk. On the other hand, the European model is so capital intensive that only large companies can play. This leads to an uncompetitive industry, much higher prices for clients and less flexible markets (25 year lease terms, for example, are common in Europe and obviously don't suit NA needs and especially SME requirements.) The NA model is much faster too. And that is a key difference between an entrepreneurial company and one that is not. Speed counts. For tech companies, do not let the engineers strive for perfection; perfection is not possible. A good product ready on time is better than a perfect one that is never ready for prime time.

21. I wasn't going to put anything in here about competition because I have a different view about competition-- I like it.

When one of my colleagues would come running into my office in the 1980s to tell me in a breathless, somewhat frightened voice that one of our large competitors was going to build a competing office tower right next to one of ours, I was secretly glad because I knew that: a. they did more marketing than we did, b. at least a third of the clients they brought to their site would walk across the street and check us out, c. by entering the market in this location, they were confirming what we already knew but the media and the public didn't-- that this was a good choice for tenants, d. we were smaller and could move faster. (In 1982, for instance, we purchased a dozen or so of these new fangled things called Personal Computers from Apple (they were Macs) and we could turn around a lease document with these in about a day. Our competitors, who were still using typing pools (although some had word processing pools), took six to eight weeks to get an Offer to a prospective client.)

I mean there has to be a reason why fast food emporiums and gas stations locate in close proximity. Could it be that there is some kind of synergy happening, that the market gets bigger and there is more pie for everyone as consumers' learned behaviour changes as they recognize this or that location as best for their purposes?

Terry Matthews has stated that he is glad he started most of his businesses before the web became the ubiquitous source for information about competitors that it is today. It is darned intimidating to think you have a great new business model, only to find out that there are a couple of others out there already operating with a great looking web site to boot. But Terry's comment might be: "So what?" And he would be right. It doesn't matter that there is competition. In the first place, if you think of an idea that no one has ever thought about before, maybe it isn't such a good idea. Maybe there is a reason why no one has thought of it before because maybe they had, and it is a bad idea. And if it is a good idea, why, you're going to have competition anyway as soon as people do a google search and find you.

I think there are only two things you need to worry about with your competition: a. is this market big enough to support more than one entrant, and b. can I execute the business model so I can compete?

Sometimes the answer is 'no'-- at the end of the 1980s, real estate became a game for the big to play-- penfunds, banks, insurance companies, publicly traded companies, all had access to capital at a cost which was less than a third the cost to smaller businesses. On a $10m project, this meant a head start of almost $1m per year in terms of cashflow and there was no way, SMEs could overcome that type of lead with clever marketing, fast response times, lean operations or anything else that entrepreneurial companies tend to do. It was over.

So most entrepreneurs in real estate went out of business (or at least out of the business of building large office or retail projects). They had to go into markets where they did not compete with large institutional money-- home building, mini offices, public storage, NHL Hockey (aka, the Ottawa Senators and the Corel Centre), whatever, wherever the huge, elephant-size players aren't. Here is a political cartoon I drew that kind of reflects my view of how Banks and large enterprises view competition from SMEs-- they don't want you to succeed. Why would they? You might steal away some of their customers. As Jerry McGuire said: "We live in a tough, competitive world."

Having said this, you'll notice that by moving out of large projects and into market niches, entrepreneurs in real estate did not rid themselves of competitors at all. It just was that in these niche markets (which are still big enough to create great businesses, btw), they faced competitors who were more their size and the playing field was a bit more level. Even in the NHL business, which is a legal monopoly (the NHL grants exclusive domain to operate a franchise within the City limits plus 50 miles or as otherwise provided for in the Franchise Agreement), you face terrific competition for the entertainment dollar from other professional, college and amateur sports as well as a huge menu of entertainment choices that the consumer now has.

In the cartoon, you'll see an equation. This is an equation I learned from my future spouse when I first called her up to ask her out to dinner and she said 'no'. I then asked her for a drink instead so she could tell me why. Over drinks she told me that she didn't really want to go out with a biznessman because, at the top, politics and business and the media are indistinguishable and dirty. I reasoned with her and tried to convince her otherwise (we now have five great kids). Years later, I called her up at home and told her she was right-- every country is controlled by a small power elite and they want to keep it that way. Sorry, Dawn.

That is why the best business to be in is ... the government business. If your costs rise, just increase your prices (aka, taxes). You get to keep all the best businesses (like the gambling business, which is by far the most profitable business on Earth) and you get to have no competition because governments don't let in any competitors (without even having to go to the bother of rubbing them out in, say, a gang war) and, if people don't pay you (i.e., default on your receivables list, i.e., don't pay their taxes), you get to enforce your rights and put people in jail with guns and police, if necessary.

For the rest of us, serfs, expect competition, even welcome it as long as the market you are entering is big enough, the playing field is relatively level, you have an ability to execute expertly, and you have some pixie dust in your business model that brings something new to the table. You don't have to be the first mover in a market but you would want to be among the first or at least bring something new to the table.

22. Keep your overheads down. No matter how successful you are as an entrepreneur (and that usually means that you spend most of your time on the revenue or technical sides of your business), your costs always rise to exceed your revenues if you do not exercise restraint and have proper controls in place. (You will find the same thing is true on the personal income side even if you are the CEO of a Fortune 100 company, for example.) Start-ups that invest in luxuries like triple A office space, leather couches, great company cars, ... will not be around long.

Having said this, don't be penny wise and pound foolish- do an excellent job on your accounting system, for example. Or get someone in part time at first to run this who is professional and competent. Don't make a mess of your financial statements, tax returns, minute book, etc. Hold regular Directors Meetings and Shareholder Meetings even if the only Director and Shareholder is you.

Do a thorough job on your compliance requirements- regulatory fillings, statutory remittances, tax filings and so forth. The moment you need a loan, guess what? The lending institution, the angel investor, the VC, your Rich Uncle Buck wants to see 'your books' as part of their due diligence; if they are a mess and horribly out-of-date, you're either toast (your financing application, for example, will be denied or, at least delayed, which is often the same thing) or you are going to have to go back and do it all again at a higher cost because now you have to recreate the past and it will take much longer than if you had done it right the first time. Make sure you protect, organize and file your valuable data. You will need to refer to it more often than you think. Make sure you have thought about data backup if your files are electronic- a loss of your e-data can cripple your company. The faster you go sometimes, the slower you move forward.

Nothing works against your success more than messing things up the first time through and having to do everything twice, or more.

23. There are no rules in a knife fight. (Remember Butch Cassidy in the film of the same name explaining the rules in a knife fight to one of the gang members who wanted to depose him as the leader of the gang?) One of the hardest transitions for would-be entrepreneurs is to understand that there are no preset rules in the entrepeneurial field. You set your own agenda; you make up your own rules as you go (subject to the rule of law, of course.) Entrepreneurs have to be able to deal with a rapidly changing environment. They must be level headed in a crisis. Crisis management will be a staple in most entrepreneurial careers. Crisis management requires that you are able to solve many problems simultaneously. Time dilation will help you; experience has shown that small teams of three or four persons can exchange as many as 50 to 60 'thought units' per minute under extreme conditions (such as an imminent plane crash). A crisis can force you to make huge leaps of imagination and give an impetus to technical and technological innovation. It is perhaps inevitable that excellent companies are produced through a series of trials and emergencies.

Capital starved businesses often make the best investments. It is a fallacy that undercapitalization is the single biggest killer of SMEs. It is bad management and under-revenued companies that fail most often.

I compare capital starved businesses with those that are funded by VCs and have access to millions or tens of millions of dollars in capital. The latter act more like lottery winners-- an amazing number of lottery winners have nothing left after five years. In fact, they are worse off than if they had never won-- they jave no job, no money, no spouse, no friends and no prospects. If you bootstrap a business, you'll build a stronger, better business layer by patient layer over a long period of time-- the same as someone who is rich, who made himself or herself rich-- they are much more likely to keep it than someone who won the lottery or had a VC drop a few million on them.

You need to get your PR right and media relations is a key to your success. Get it right and you will win the trust of the community, your clients, your suppliers, your bank and everyone else. PR is an art and it requires sophistication and experience. Seek expert help here!

Remember that trust in business (and life) is everything. If people trust you, they will loan you money; they will invest in your business; they will not criticize you when things get tough; regulatory approvals are easier; people will buy things and services from you and much more. Protect your reputation, build trust, reach out to the community.

24. Get your business model right. Every business needs to get their business model right; if you do that, it means that the harder you work, the more money you will make, rather than the reverse. And you need to know what business you are really in and what and where are the 'secret' levers in every field of endeavor that you need to know so that you get the business model right for startups.

You also want to be able to cope with failure. Failure in entreprenurship is inevitable. Sometimes despite your best efforts, you get the business model wrong. When this happens, you need to keep in mind the following motto:

The Motto is- "You can never go home again." That means when a business fails, you should spend a few days gathering your wits, trying to understand why you failed and learning from your failure. Then you should pick yourself up, dust yourself off and get ready for the next (ad)venture. Never try to recreate the business- if it failed, it did so for a reason. Even if you come to understand it, don't repeat the attempt. You can lose more years of your career and life fighting old battles again- DON'T DO THIS.

I once asked a leading executive I know how many of the emails he sends company-wide are actually read? They didn't really know but they guessed that pretty much everyone in the firm read them. We put tracking software on the next company-wide email and we found out that less than 15% of the employees bothered opening it; we have no idea how many actually read it. Email is a push technology and is probably less of a leadership tool than a phone call but there is no way busy executives can phone everyone he or she needs to deal with... so email is it, or is it? I have taught many folks that there is a better way-- set up your own Personal Web Site and pull people to you. Even top executives need to be able to build a basic web site themselves-- they need to disintermediate everyone so that when they have a great new idea at 3 am, they can upload it to their PWS and communicate it to the people who need to know what is in their mind by pulling people to their site. Professors do it, business executives can do it too-- it reverses out the work and is a far more effective means of communication. Executives can set up their PWSs with different levels of access too so that the right people are reading and seeing their thoughts. This is an important new tool for leadership never before available, so use it. Basic web skills can be learned in less than 90 minutes.

Team work even in the 10th Millennium B.C. was important-- all human progress or most of it comes from our ability to skill share and work well in teams. Morale and team building are key ingredients to success. Realistically, everything takes twice as long to do and cost three times as much as you originally thought. If we all knew how tough it would be to create the businesses that we do, no one would ever start such a journey. As Bob Seger said: "I wish I didn't know now what I didn't know then." On your journey there will be happy surprises and unhappy ones. Serendipitious events and synchronistic happenings will occur when you least expect it. The harder you work, the luckier you'll get. You must be open to opportunity and willing to change direction as needed. You will feel like Tarzan most of the time- when you get to the top of the arc, you hope there is another vine there so you may continue. Leadership is key in getting you and your team (your whole team including your employees, your community, your clients and your suppliers) from the starting line to safely across the chasm. Afterall, all human progress starts with an act of faith. No matter how much analysis is done before a project is started, at the end of the day there are still so many unknowns that ultimately we do what we do because we have faith and confidence in it.

Test Your Entrepreneurialist Culture Quotient

Entrepreneurialist Culture Front Page

getting the business model right for startups

art of pricing

'Zombie' Companies

litigous society

smart truth

positives and negatives

core competency

ordered thinking

guerrilla marketing

reverse marketing

media relations

data backup