Although we sold software, the majority of our revenues came from services, so we determined our budget based on how many hours we might bill and projected out from there. Borrowing or raising capital never entered my mind. Oh, I remember stating early on that I wasn’t looking to be the next Microsoft, but I also remember distinctly the reason: I didn’t want to lose control. Even though our company grew to multi-millions in revenues from what I considered being scrappy, I honestly think I was afraid of too much success.

I don’t know if I’ve always been that scrappy, but looking back I realized I needed to be to get through college. I had to work 3 jobs at one time to pay for college myself (eating Ramen Noodles in the tough times) because my parents didn’t have the means at the time. But at least then, I filled out every application for a scholarship I could find and opted for all the student loans possible. So why didn’t that translate into my business years later? In my first business, I never really thought about what I could do with someone else’s money.

Over the past couple months of co-founding a nonprofit, the Path Forward Center for Innovation and Entrepreneurship (the first nonprofit for both me and co-founder Renee Lewis), I’ve been building our financial models from what I thought we could make for our efforts – teaching the ACTiVATE program at UMBC, consulting, training, speaking, and license fees for rolling out the program. How can we make this happen by being scrappy? As we’re getting things moving, I’ve been working 24/7 and pulled in a million directions as happens in any type of start-up and have honestly never worked harder in my whole life nor enjoyed something so much. I can’t NOT do it. And then it hit me.

I was stuck in bootstrap mentality.

Although we have big ideas and visions for the Center, I kept coming back to ‘how can we earn the money to fund these great ideas?’ until I got my own boot in the butt. I kept seeing the signs – from the recent Kauffman study, to the Equity Matters seminar I helped run for Springboard, to the SBA focus group I participated in. This is also where it pays to hang around people smarter than you. All these events, the people around me, and especially the continuing success of our ACTiVATE participants and alum collectively and indirectly helped me realize that what we’re doing is SO powerful and the timing is SO perfect that it can’t wait to be bootstrapped. Bootstrapping isn’t good enough. We need to raise money from the outside.

I know this is contrary to what most people are thinking in this economy. And in fact, outside capital isn’t always the right answer for every business. But when the timing IS right and the idea IS powerful and the market IS ready, waiting to bootstrap can kill an opportunity’s momentum and chances for success as a result. It is a risk, though, as raising money isn’t easy and can consume a lot of time. It is an option that should at least be weighed by entrepreneurs when they start so they can build in the right infrastructure and value to get where they want to go. Neither fear of success nor failure should be among the limiting factors.

The transformation of my thoughts and, as a result, the vision for the Center was so incredible, yet so painful (as all growth is) I realized that many of the women who come through our programs are likely stuck exactly where I was. And now that I’ve gone through it, I am better at recognizing the symptoms in others and developing strategies to address this attitude head-on. If we’re ever going to help women reach the levels of success they are fully equipped to attain, this has to be a part of it (see friend Dr. Sharon Hadary’s recent article in the Wall Street Journal as backup!). And now I know better how to get there! I’ve always believed that pain can have an upside. And I know that ACTiVATE, the Center, and the women we touch will benefit from this pain of my thought evolution as well.

What the group lacked in size (there were only about 5 of us) we made up for with enthusiasm and diversity of perspective. The experiences varied from those of us with fairly low capital needs in the past (I had a line of credit in my first company that I only tapped into two or three times) to the real estate developer whose assets include more than one multi-storied building and borrowing needs well into the millions.  Without breaching confidentiality I can only say that it was a heated, animated discussion which, at times, involved more than one 4-letter word, which really

caused me to think: how many women believe or behave as if wealth – or even money – is a four letter word? Does a woman’s relationship with money impact her business approach and, ultimately, goals?

Over the past 5+ years of teaching in the ACTiVATE program, I’ve seen my fair share of women whose motivation for starting her own business is to change the world. I would say that a good majority actually fall into this bucket at some level or another. I am quick to relay to them, however, that it is easier to change the world when you have money, meaning to get them focused on the success of their business as a means to that end. Oftentimes, my bold statement is met with a skeptical or uncomfortable expression, which tells me more about their relationship with money than anything else. They believe, whether they recognize it or not, that focusing on money and wealth are bad.

Many books on entrepreneurship will tell you that starting a business purely to make money without following your passion is a recipe for lackluster or at least short-term performance or early burnout. The lucky folks are those whose passion actually leads them to a way to make money, which is exactly where we focus our ACTiVATE participants.  But we’ve found that unless they challenge their relationship with money and wealth beyond just a desire for nice material things and into a way to build value, they’ll never be able to cross that chasm so many businesses fail to get across: real, sustainable, profitable growth that can take them a long way to really making some lasting impact.

As I was musing over this phenomenon, seemingly from afar, I realized I had my own mind-shift that needed to happen. To learn more about that, look for my next blog on “Bootstrap Mindset.”

The E-Myth Revisited

We were talking about her business – a service many people could use – but I was (in my normal boot-in-the-butt form), asking who her target market was. Had she chosen a niche? What was her marketing strategy? The blank but overwhelmed stare told me what I suspected: she didn’t know. Now this is a really smart lady, but she was visibly frustrated by not having answers to questions that apparently nagged at her as well. What she had discovered is a trap many entrepreneurs fall into: shoot first, ask questions later.

I see it all the time. I have an idea/skill/talent/product. I think it is cool, that people need it. My friends and family see the need or the value, but that’s as far as I’ve gone to validate my idea or my fine tune my approach to the market. And when the capital requirements tend to be low, it is tempting to just quickly hang out a shingle and call it a business without doing any serious primary market research. In my experience, this can be deadly.

So my friend is commenting on how hard it is to get things set up while also delivering, and that she doesn’t have time to do any market research. The best advice I could think to give her: just listen. Talk to everyone you know about what you’re doing and then – and here’s the part many entrepreneurs miss – actually listen to the feedback you receive. Now I’m not suggesting you pay attention to the naysayers who tell you that you’re crazy (we all get that at some point). Ignore that, unless those naysayers are also your target customers. Actually going out and sharing your concept/product/service with potential buyers who have no reason to tell you they love it is the best way to get real feedback. You have to be open to what they say and fight the urge to defend or sell something, at least until you’ve fully explored their objective thoughts about it.

Even better than hearing from potential customers is to talk to existing or past customers. I’ve been surprised a number of times when I asked the question “Why did you buy from us?” and didn’t get the exact answer I was expecting. Where do you think the “Boot in the Butt” came from or how I came up with my title Chief Muse? Both originated from my clients and my students.
So many times, your customers can be the ones to provide you with better marketing copy than you could ever come up with because they talk about what they value. You see yourself through their lens, highlighting what is important to them. Their comments are likely to be about the benefits they receive, not the features you’re offering, which can be and often are different.

The more you hear your customers and adapt your products and services to match their needs, the you will come to actually meeting their needs. And if what you offer already provides that benefit they’re looking for, you might find an opportunity to tweak your message so that it is in their words, not yours, giving you insight future customers can relate to.

Our last speaker for Day 1 of the World Innovation Forum was Vijay Govindarajan from the Tuck School of Business at Dartmouth University and clearly they saved the most energetic, funniest speaker for last. I almost forgot he was an academic! J

He covered so many good ideas that they can’t all fit in one blog but one area I found particularly poignant was around segmenting a company’s strategic choices into 3 boxes.

Box 1 is managing the present – closing the performance gap between where you are and where you want to be with existing customers and products. Box 2 involves projects and initiatives that close the opportunity gap between what your company does and existing opportunities it could exploit. The third box is about creating the future – clearly the hardest one to capitalize on.

Box 1 initiatives, he recommended, should comprise about 60-70% of a company’s strategic projects given the current economic challenges. These are more tactical or shorter-term refinement of what you’ve already got. Think: restructuring. This is where you’re doing benchmarking looking for best practices in your industries and modeling those.

Box 2 initiatives focus on adjacent growth – pushing existing competencies into adjacent customers, products, or geographies. Under “normal” economic conditions, he recommends that these projects make up 10-20% of you strategy but in today’s environment, he suggested an adjustment to 15 – 30%.

Anything that launches into new territory would fall under a box 3 initiative. Along with box 2, this box ignores best practices and strives to find or create “next” practices. He gave an interesting story around this using the Olympic High Jump. Essentially the techniques that were used for the high jump were considered “best practices” only until the next style of jumping was perfected. Each time, experts said “this is the best” but when another approach was perfected, that became the best. The last one, which is called the Fosbury Flop (named, of course, for the guy who created it) redefined all the rules and is still the current standard.

How many of your strategic initiatives are Fos Flops? Better question: how well balanced are your projects between the 3 boxes? Another interesting point he shared is that projects in box 1 must be managed completely different from the projects in box 3. In box 1, you’re working 95% with knowledge. In box 3, it shifts to 95% assumptions. Clearly, the ways those projects are implemented must be completely different.

At the end of his program during the Q&A, he made the point that the 3-box strategy also works for individuals. He suggested putting your daily activities into one of the 3 boxes to see if you’re spending your personal growth time in the right places. Do you have enough Fos Flop opportunities on your horizon?

“Our success is built on a commitment to provide quality service, tailored to individual company needs. Our business is in providing high quality services in all areas of service we provide.

We are a team of highly skilled professionals with a proper blend of Experience, Reliability and Skill to provide high caliber solutions for a wide range of Industry challenges. We offer a variety of professional, affordable & personalized service capabilities and our commitment to reliability, quality & excellence is equal only to our dedication to our customer’s satisfaction.”

HUH!? Talk about CONFUSED! I’m not sure if I tuned out after the second sentence or the third. The only reason I lasted that long is because I really wanted to know what the company did. If you tried to rattle this off on an elevator you would have people looking at their watch even if they weren’t wearing one.

To be effective, your elevator pitch has to make sense and ideally get someone’s attention. It has to explain in plain language (English or whatever your native tongue is) what you actually do so that the person listening can relate to it. People are always looking for connections or they wouldn’t have asked you the question in the first place. It is highly possible that they can either make a connection directly with you or know someone else who can.

Here’s one of mine:

“Do you ever get stuck (no, not in an elevator, but in life or work)? I provide people and companies a “Boot in the Butt” to get them unstuck whether they’re trying to launch a new venture or take their existing company to the next level.”

That’s right – you read it right. ONE of mine. I actually have several that I pull out depending on the audience and my mood. Some are more playful, others more serious. All have one thing in common: they try to get your attention and give you enough information about what I do to warrant continued conversation if there’s interest. That’s it!

So what’s YOUR elevator pitch? Share it here and get feedback. You never know who might see and have a connection for you…

The more I talk to entrepreneurs and business leaders, the more I realize that so many of us share similar experiences. A dear friend recently received a call from her largest client – they were considering cancelling their contract with her firm. Nice timing – happy holidays. The frustrating thing was that it was a political decision, not a financial one. Ugh. Bad news that makes sense is a lot easier to handle. Getting kicked in the gut over political positioning within a company can be unbearable.

Her dilemma brought to mind a similar experience I had several years ago when my largest client lowered an equally devastating boom. I was actually out of town meeting with this client when the fairly-new manager (and career politician within the company) took me out to lunch. Just as nice as can be, he said “We’re replacing your software with our company standard offering…but we’ll give you a great reference.”  That’s like the dreaded I want to break up but we can still be friends.

This news was not a complete surprise to me. I had been part of the team evaluating our software against their corporate standard solution. The team had determined that the systems they were currently using (ours!) were better suited to their operations and switching offered no clear financial benefit, which is what made this so much more difficult. The verdict made no logical or financial sense.

In my friend’s situation, too, their program had recently won awards from the Chairman of the company and had documentation supporting it’s effectiveness. All of that didn’t matter – someone didn’t like it or didn’t get it. While it won’t be easy, this woman is one of the smartest people I know and I have no doubt she will come out on top. She might have to scale back and regroup a little, but she has what it takes to figure it out and weather the storm.

Every business experiences a gut-kick moment, potentially more so under current economic conditions. Knee jerk decisions are being made that don’t always make sense. But what do you do when things take a turn, other priorities take over, or politics trump logic? It is great to expect the unexpected but admittedly this sounds stupid because if you expect the unexpected then it’s not unexpected, right? However, there are things you can do to insulate your business from the unforeseen political and economic winds of change, such as: