Startups Should Focus

The definition of a startup means you have very few resources to employ and little time to get them to do something valuable. The clock is always ticking, and the money (if you even have any) is running out by the day. With so little to leverage, you need to make sure that the focus of your company’s product offer is as razor sharp as possible.

Don’t be all you can be. Be as little as you can be.

Most startup companies fail because they try to be too many things to too many people right from the onset. They think of every possible option they could load into their product offer. While this may give them the feeling of being one of the “big boys,” the grim reality is they are not. In fact by trying to be too many things from the start, these companies often end up delivering no real value at all.

Instead of trying to be all things to all people, try being one thing to all people. Think of PayPal, the highly successful startup that allowed users to e-mail money over the Internet to each other. PayPal could have chosen a million options for their offer. They could have become an on-line credit card company, an auction site, a loan provider and so on. But what made the company successful was their focus on only one offer – e-mailing money from one person to the other.

PayPal did one simple thing so well that the industry giant eBay purchased them for $1.5 billion in 2002, even after eBay had already built the same service themselves. PayPal is a great example of a company keeping a sharp focus one doing on thing right even when so many great opportunities could have easily distracted them.

Bite off less than you can chew

Delivering your product to market is an amazing feat to begin with. Even still, a common problem among small companies is their inability to predict what it will take to actually support a product once it has gone to market. It’s easy to conceive complex products with lots of features. But actually bringing that product to market and supporting its use with customers is a whole different story.

Instead of trying to roll out everything and the kitchen sink in your approach to market, just roll out the sink. If you find that you can support your product just fine after it’s been successfully selling in the first year, then go ahead and add to it. It’s a lot easier to add features along the way than it is to support features you don’t have the resources for to begin with.

You have ten seconds to get it right

Your customer has a life, even if you do not. They are being constantly bombarded with marketing messages from the latest movies releases to the newest type of shampoo. They don’t have the time or energy to stop their entire day to focus on just your product. So if you are lucky enough to have ten seconds of their attention, you had better make good use of it.

The exercise of developing your value proposition in ten seconds is a great way to distill down your feature set to those items that will get people’s attention right away. If it’s not going to add value to the ten second pitch, it’s not critical to your product’s success. If you can’t get your customer’s attention with the one key benefit to your product, the rest of your features will never see the light of day to begin with.

Stay on target gold leader

Your product launch is just the beginning of keeping your focus. Once you have brought your product to market and enjoyed some early success, it may become even harder to stay focused. Now you have customers calling you and recommending (or demanding!) features to be added and services to be provided. All of these distractions make it even harder to keep you and your team focused on a single goal.

Fortunately the process of keeping your resources focused post-launch is entirely the same. You need to pick your battles and allocate your resources toward the few initiatives that will be best served to do the one thing right that is truly driving your company. Serving the needs and whims of every customer sounds great, but it can also be a terrible detour when trying to keep the forward progress of your company moving.

If at any point during your journey you’re unsure whether or not you’re spending your time and resources effectively, just ask yourself one question, “Is this driving the core benefit of our product?”. If the answer is “yes”, you’re headed in the right direction.

About The Guest Author

Wil Schroter is a serial entrepreneur, author, and public speaker. His latest book “Go Big or Go Home” was available in 2005.  Will is the founder of Go Big Network.

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Thanks to Will for this article. What do you think? Should a startup be absolutely lazer focused? Getting your feedback would really help us to focus in on what you want to see. What is your one question on startups today?

Consider joining my email list for more startup tips and help.

Andrew

Related posts:

1. Product Development: From Winning Idea to Startup (Step 3)

I came up with the idea for the World’s Smallest, Safest, Strongest Fire Escape ladder and brought it to market with Kevin Dodge and Aldo DiBelardino.

Here’s a video about the company and the experience…I decided to move on after the battle but Aldo stuck around…

Let me know what you think….

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1. 10 Things to Remember When Starting A Business

I don’t know the answer to this post yet or really understand where it will go but perhaps, through the act of writing it…I’ll figure out the right answer.

So…what’s the question?

You have started a business….Yippeee!  It’s the earliest days of a new baby venture.

So here’s the question – when do you stop what you are doing and determine what kind of business you want to build?

Maybe that sounds like a stupid question to you – maybe you want to create a products business, a software company, a recruitment agency – whatever your heart tells you to go out there and build. But that isn’t quite what I mean…

What I mean is – what are the core values of your company?

Core values – what are they?

Good question Batman – my personal definition (and I’m sure everyone has their own…) is the core values are those beliefs that help to structure the culture of your business and how it treats its employees, its customers, partners, the locality it’s a part of and perhaps, even the world.

And the second part of my question for you and myself too is ‘Can a company afford to have strong core values until its has cash in its bank account?’

Does a business have a responsibility to have a strong set of core value no matter what or is it all about the money at the beginning?

I.e. is it possible, smart or insanity to be concerned about being ‘Good’ when you have little money coming in to survive?

Is it only the rich who can truly afford to support a charity or do we all have to do what we can?

If you are starting a business, do you start off with little core values…maybe recycling the coke cans or do you go for the Big, Hairy, Beastie Core values and hope they don’t tank the business?

Do core values have to have a negative effect on a business or are their important principles all businesses can adopt that should be core to their culture no matter what?

If so – examples please…

Do you business have core values in your business? And if so, are they just words on a page or do you and everyone in the company live by them? How do you make sure that happens?

Really….how?

If you were to start a business, when would you create your core values and when would you implement them?

My hope – my personal hope, is that I would have the smarts, the conviction and the courage to create them from day -1 but if I cared passionately about the business – I don’t know how I would do actually living them…especially when the shinola started to hit the fan…

As an example – I’ve thought about being a vegetarian – but as long as bacon sandwiches with HP sauce exists – that will never happen.

So I could have the principles, but living by them is a near impossibility for me.

Can core values pay for themselves through your market or does it never really pay off?

Any examples anyone?

I wish I had the answers to this one – all I know is that core values are important to creating the right culture…but if you don’t survive then neither does that oh so good culture.

The trick…if there is one…is probably to find a way that they are not mutually exclusive.  Is that possible or just wishful thinking?

Should companies, like people, have a higher purpose?

Can a startup afford to have core values or can it afford not too?

This is one posting where input would be extremely appreciated…

Bacon Sandwich with HP sauce

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Huge swaths of new businesses don’t get past their first Anniversary, not one candle on the cake to be blown out.

And it doesn’t matter how great your business model is or how passionate your first few customers are, much of the early success of a start-up can be put on the shoulders of a company’s early founders.

If you have to be passionate, driven, nearly manic, sometimes to the exclusion of what most would consider logical or any degree of common sense. Even people that love you (the girlfriends, boyfriends, wives, husbands and parents) will not be shy about telling you how crazy you are and how unlikely it is that you and your baby business will be anything more than a complete and abject failure.

And despite it all, you, the founder need to have a supreme confidence, deep in your gut and your chest, even when almost everything (and everyone) seems stacked against you.

Any of this sounds familiar?

Now here’s the one caveat when it comes to being passionate and confident, manic and closed minded about your new business “Be Confident, Not Stupid.”

Huh?

Let me explain what I mean…

Be confident, know that some way or another, you and the people that decide to come on this startup journey with you will overcome the challenges and obstacles until you create something of which you can all be proud.

Did you notice the most important element of that sentence?

You will overcome the challenges and obstacles…

Being the founder of a startup is NOT ignoring the weaknesses in your own business, it is not being blinkered and unaware of the challenges and the obstacles, I’ll write that again – being a founder is not being blinkered and ignoring the obvious issues, if anything, it’s being SO self aware that you know exactly what the business suffers from even more so than all those nay Sayers on the outside who are telling you, you’re going to fail.

You know even better than those doomsters, just how close you are to failure and what you need to focus on to be able to overcome these challenges and obstacles.

So, as a founder, be passionate, be focused, even be a little blinkered, but just as long as you are self aware and know exactly what you need to do to take a potential catastrophe and convert it into a real business. Like I said in the beginning,

Be Confident, Not Stupid!

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Supposedly, it’s body is too big and its wings too small to keep it vibrating in the air.

How ever you look at a Bumble Bee, it shouldn’t be able to get where it wants to go, unless its prepared to walk.

But, stop working on your startup for a few moments and look outside and during these bright days of summer, you’ll see small miracles occurring all around you.

Start-ups are not too dis-similar from this humble but miraculous insect…you start a business and in the beginning its little more than a concept in the heads of a few people.

In fact, its probably not well designed to do what its supposed to do either and do you know how you get where you want to go?

Every day you make incremental gains, small beats of fragile weak wings trying to raise an entity into space and you keep beating those wings, until you get some momentum.

In fact, in the very very beginning you don’t even really have much in the way of wings.

In the beginning (and here’s a small secret)…you fake it!

But even though you do fake it, you still believe one day you’re going to fly and one day, those slight wings make the body shake, they cut through the air just a little bit better than moments before and then they get some small degree of strength until, to your and everyone elses surprise, you don’t need to fake it anymore, you beat them against the air, not moving but never giving up….and then, one day…

…You’re FLYING!

Bumble Bees and Startups

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1. Start Your Company for Under $87 Bucks

So who is Yaro and why am I a fan?

Well, Yaro can do a much better job of telling you who he is – in fact, that’s one of Yaro’s things, he’s open about who he is and what his motivations are – he’s a refreshingly regular guy that has worked every day for the last four years plus to learn and navigated his way through and over the hurdles of building a business on the internet within the blogging community. Yaro is slowly and surely deploying those lessons to grow his business and help others do the same.

I would really check out his blog – it’s got some great information if you are interested in building a blog, traffic or online business (or all three at once) but one point that Yaro made which resonated more than any other for me was to think about how you can create value in your blogs – don’t go out there trying to make money from day 1 but focus instead on giving your readers (even if there are only five of them ) a reason to keep coming back, give them VALUE!

For that reason, I thought I would create a blueprint showing people how they can create a company for under $87. Why?

Because you can go online and spend anything from $$$ to start your own business if you use a lawyer or an online service (assuming they do a good job?) and many people starting companies for the first time will think that the only way to do it — mainly because they’ve never done it before and setting up a company sounds daunting and complicated. Let’s face it – anything you’ve never done before often sounds daunting and complicated but after you’ve done it a few times — easy!

So, the “Start-Up Launch Blueprint” brings a number of resources together to help the first time entrepreneur to start their own company, simply and with little fuss.  I also included access to a number of free resources such as online books to help entrepreneurs determine what kind of company – LLC or Corporation — the pros and cons of both; finding a good accountant; attorney; bank; licenses and permits requirements and other key elements necessary to successfully start a business.

 If you are interested in Starting Your Own Business – read “Start Your Company for under $87 Bucks – A “Start-Up Launch Blueprint”

And how do you get a copy?

Well, for a short time only, I’m giving it away FREE if you sign up to my mailing list.  I don’t want the ‘ad’ for this blueprint to clog up my blog for long, so I can’t guarantee, if you don’t get it today, that you’ll be able to get it tomorrow.

So, sign up to my mailing list and get “Start Your Company for under $87 Bucks – A “Start-Up Launch Blueprint’ NOW!”

Thanks Yaro and thanks reader!

Andrew

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Is it tough to set up a wordpress blog? Absolutely not – it takes, from start to finish, probably about 30 minutes but that’s not the point – the point is, the barriers you believe are stopping you from starting your own business are more inside your head than in reality, especially if you consider starting small and growing it over time.

Now, in fairness, I don’t know what this kid being thirteen has to do with anything – except that starting a business is first and foremost a ‘mindset’ thing which may (?) be rare in thirteen year olds…

But given the shaky economy – its an ideal time to start pursuing your dream to start a business, whatever your age.

Here’s the article:

http://uk.techcrunch.com/2009/01/05/if-a-13-year-old-can-launch-a-startup-you-have-no-excuse/

Let me know what you think and consider joining my mailing list if you would like more.

Here’s to your Start-Up Success!

Andrew

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If that was the case then there wouldn’t be McDonald’s AND Burger King selling hamburgers, in other words, don’t wait for the lightening to strike before you seize the day and begin your entrepreneurial journey. You’re idea does NOT need to be unique but how you execute should be – better?  faster? Cheaper? more bells and whistles? Less? Ideally find and focus on a real difference that your customers or prospects will care about then tell them over and over again, in as many ways as you can. 

2)  You do NOT need to quit your day job to be a true entrepreneur…

We would all love to write that resignation letter and tell the MAN where he can put his ‘stinking’ job (Read with Tony Montana Scarface accent)….but everything about starting a business takes, at best, twice as long as you expect to get every task done.  If you can slowly gain momentum with your business, test it out, get a few happy, reference-able customers without giving up the pay check then you may want to think seriously about biting your tongue until your new business can keep you in the style you have grown accustom.

3)  You do NOT need to spend a fortune to test a new business idea or product…

If it’s a physical product, create a prototype, find some would-be-customers and ask them what they think…believe it or not, prospects LIKE being asked their opinion – especially before all a products features are locked in. And if you’re lucky, those discussions will help you find something unique that none of your competitors have which will really increase interest and demand. It will also help you understand the mindset of your prospective customer and what do I mean by that?  A few things – what is important about the product to them and how they talk about it – this will help you understand what elements you need to focus in on when marketing your product and how to communicate about those elements in a way that resonates with your prospects. 

Blatant example – surfer dude product, pitch using the latest phrases and terminology of the target customer. Without spending the time to get into those conversations, you would probably resort to throwing in a few ‘Dudes!’ and hoping for the best… 

If it’s a website or software then consider finding an inexpensive freelancer from elance – they often have people who can create a cheap testable version of a site or software without requiring a second mortgage on the family pet.  Make sure you take a good look at the reviews from other folks who previously used their services.

4)  You do NOT need to use an expensive lawyer to create a legal entity…

First there are many low priced options found on the web but even better (in my opinion) is to go directly to the source.  In my case I found the New Jersey local government website and used their pretty easy to understand website – establishing a business in a State brings revenue so you’ll find most States are very helpful when it comes to helping you establish your business.  You can spend a fortune or even a few hundred bucks to a lawyer – but it took me about an hour to do online via my States site and all I paid was the regular registration fees via credit card.

Worth considering.

5)  You DO need to go that URL or web address…

Go to a site like  www.GoDaddy.com and use their web address search capabilities to find the ideal url (web address) for your business and register it. This matters whether the business is web or product or service based -

6)  Consider protecting your business by registering a Trademark, Service mark or Patent.

I’ll write a more in depth post on this area but consider if you need protection for your new business, especially if it’s unique or if you intend to build some kind of brand image around the product, service or website.  The core reason for considering something along these lines is to ensure no one comes along later and capitalizes on your hard work in building the customer recognition in your particular business.   If you decide to explore this, here’s where you go -

http://www.uspto.gov/

Again, you CAN spend a fortune on a lawyer but again, online resources of this government agency is getting better and easier to understand than a year or two ago – so you may find you can do some or all elements yourself. This obviously depends on your time and comfort level.  Take into consideration a couple of things: a) registering a patent, trademark, service mark etc is a process and takes time and money b) if someone infringes your patent or trademark – do you have the sums and the focus required to defend it?

7) You do NOT need others to give you the Confidence you need to pursue your idea…

You don’t NEED to have people tell you your business will be wildly successful, do you?

Sure, it would be nice to have a whole group of friends, relatives and better, angel investors, tell you YOUR idea is the next world changing business but their fond wishes (alone) and claps on the back will not move your business one inch closer to being a reality.  What you need, more than anything else (even cash) is the passion, commitment and just plain grit to make your business a success.

When talking to others about your business ideas – you may want to consider the following:

a)  Often, feedback from others can be inversely related to your relationship. Huh? What do I mean by that? It’s simple, those people without a stake in your future will probably tell you how great the idea is and how you should tell your boss where to get off tomorrow…your husband or wife will probably not, the reverse in fact. Inverse – see? Few will give you feedback on your business idea in a vacuum so, do yourself a favor and talk to the people who really matter – prospective customers.

b) If people you speak with input into the idea or product concept or prototype then they may have a legal stake in your company’s future. True!  With my first company, my partners Father helped him out when my partner was working in his workshop – throwing in some ideas. He then talked about suing the company for some degree of ownership once the business was worth something until he received a significant amount of equity. Money makes people do some pretty strange things, so be careful about working with others on your prototyping, concept development etc.

You don’t HAVE to have a Business Partner…

With the first few companies I started, I was nervous. Would it take off? Would people buy? Could I get everything done? Frankly – the questions and fears seemed endless. One of the first things I did was find someone to talk to about my ideas as a way of getting alternative opinions and one person in particular seemed enthusiastic about my concept.

“Hey X – why don’t we do it together?”

…it seemed so natural at the time. Like lemmings, there seemed to be a reassurance in numbers, ‘cos if two people wanted to pursue the business idea then maybe it wasn’t so crazy after all…makes sense right?

Wrong!

Being in partnership in a Start-Up is TOUGH! There is stress and pressure involved in starting a business and you need to know what roles each partner will be responsible for delivering – ideally, your partner’s strengths should match your own weaknesses. Also consider ego – can you guys work together for 18 hours a day without ego getting in the way? How will you run the business? Will one person be the ultimate decision maker or will you run everything by committee? Sure, committee, why not? – It worked for early twentieth century Russia didn’t it? (Is the sarcasm coming through?)

So by all means get a business partner but make sure you both do your due diligence and consider ‘dating’ for a while before you commit to full on marriage.

9) Write a Business Plan and develop Financials EVEN THOUGH they’ll be WRONG!

I guarantee you your business plan and financials will be WRONG!

It will (if you are lucky) take you twice as long as you expect to get everything done – from product or web development…all the way through to getting your first customer or your first five thousand customers. 

It will (if you are lucky) cost you twice as much as you put into your initial business plan financials to do pretty much everything.

And there are so many unforeseen costs and challenges that as soon as you press ‘SAVE’ on your final business plan and their financials – your plan is already likely to be wrong.

So why do it?

Because by going through the process of thinking about your new business and all its dimensions, you WILL spot challenges, issues, opportunities and you will probably have quite a few ‘A HA’ moments that could save you pain, time and money and point you towards some other exciting short and medium term ways of improving your business. It’s a process that should also help you determine timings of your business roadmap – i.e. when you will need certain resources such as people, additional funds, office space and so on.

Yes – your business plan will be wrong but it will be a good guide – without it, you are shooting from the hip and hoping for the best. Fun but riskier than it needs to be.

10) Create and prove Value BEFORE you raise money (if possible)…

The more value you can create and prove before you ask people to invest, the more of your own company you will probably be able to keep. It’s a simple equation – if you prove value then you are proving your company is more ‘valuable’ – therefore you get more dollars for a slice of the business than you would before proving that value.

An idea is worth something…

An idea with a prototype is worth X more…

And idea with a paying customer isn’t an idea – it’s the beginning of a business…

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I hope these points have been helpful. Let me know and consider joining our mailing list if you would like more.

Here’s to your Start-Up Success.

Andrew

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1. The Joys & Pain of Starting a Business…

The first two companies I started began with Angel Investments – for the first start-up, where I had designed an award winning fire escape ladder, the angels cash allowed me to quit being a minimum per hour waged Consultant (given I was working 100 hour weeks…) and pursue my passions to start and build this business.

So – a few moments ago I Googled ‘Angel Investors’ and most of the results focus on what Angels are (broadly) and where to find them…all good points but much too ‘money-centric’.

Huh? You are probably thinking…isn’t that what Angels are all about?

Well I’d like to offer you a different way of thinking about it. 

It’s true that Angels tend to get involved in very early stage companies and often look for a high rate of return on their cash…let me explore that for a second…

“Angels tend to get involved in very early stage companies…” – in my case, the first $XXXK of funds were raised while I was still an employee elsewhere – at that time I had…a business plan and a prototype. THAT WAS IT~!

No customers, no employees, and no office – literally just a stack of pages I’d sweated blood and tears over and a prototype of a product that would go on to look very different.

What these angels were really investing in was ME! And I would guess that most Angels who go ahead and invest in a business ultimately make the decision not because of the business plan, the prototype or even the first few customer endorsements but because of the person with their hand out…

So – back to the money.  Angel investors get involved at the RISKIEST stage of a start-up – most start-ups don’t go anywhere and their money goes POP! Now even if Angels are people with a high net worth – they still (probably) worked hard to make it…so as, in the investor community, the angels tend to take the most risk – they also look for the highest multiplier on their money.

Multiplier?  Whassat? So – for example, they give $10K – if they get $100K back when there is some form of liquidity event then they have made 10X on their initial investment of $10K (i.e. $100K divided by their initial $10k).

As a for instance – I have heard of angels looking for 20 times or even 30 times of their money back. So, for that $10K, they would hope to get $200-$300K back from some form of liquidity event.

Liquidity event? Whassat? …that’s basically even that allows the investors to get some or all of their cash out. (Example – IPO, acquisition etc)

Bringing this full circle – So why Andrew – do you think that the Google results were too ‘money-centric’? Isn’t that what angels are all about?

Yes and No! In my view, the money you get from Angels tends to fall into one of three categories.

Either CHEAP MONEY, EXPENSIVE MONEY or just, plain old, MONEY!

Am I talking about the multiplier again? Absolutely not! The amount of multiplier you, as the entrepreneur, can guarantee to the angel investors is zero! You can guarantee absolutely nothing.  You business might go gangbusters and someone could come along and buy you for a fortune. Likewise, your business could go gangbusters and you could IPO – the multiplier the angels get could be very different…you have no way of predicting what it will ultimately be…

Let me explain what I mean by cheap and expensive Angel money…it’s quite simple…

When I took angel money for my first start-up, it became obvious, very early on, that I had three types of investors:

1)  The Value Add Investor:

This is the investors that calls you up occasionally and is looking to help…they are opening up their contacts database and connecting you with other angels, advisors, entrepreneurs, suppliers or whomever…to help you and your business grow.

Money from this kind of Angel – I call “Cheap Money’ – because you get much more value than just the cash – it makes their money really worthwhile so whatever multiplier you ultimately pay, it was partially because these value add angels helped you every step of the way – their payout is cheap money. You get me?

That leads us to the other kind of Angel…

2) The Pain in the Ass Investor:

There are some investors who, as soon as they give you the check, become an absolute pain in the rear.  From that moment forward, they believe they own you…no, not just a piece of your business (which they have)…but YOU!  They will call you 24/7…they will ask you to jump through hoops that may have very little to do with the businesses immediate needs and, they will tell you, loudly and often how bad a job you are doing and how you should be doing it some other way. And do they open their contact database to help out? Rarely if ever.  Their function is to become a complete time sink and a constant annoyance.

I consider money from this kind of Angel…”Expensive Money”. Wouldn’t you?

The third type of angel is just plain, old money – they give you the cash, you put it into the business and they are happy to get the monthly or weekly updates about how the business is going – their value was limited to the initial cash they may put in.

Now – before I finish this post – I want to leave you with the challenge the above creates…and tell you that over the next few postings I tell you the technique I eventually discovered to ensuring you only EVER get cheap money i.e. Angel Investors who bring a considerable amount of value – perhaps enough to really make your Business the success it is destined to be.

So here’s the challenge – “You can’t tell which angels are going to be in category 1 or 2 or 3 until AFTER you have taken their cash and they’ve signed on the dotted line.”

Its true – you can interview and screen angels (if you have choices…and you ALWAYS have choices…even if its to bootstrap and use your credit card while working at a day job) and it’s tough to tell if they will add value or be the bane of your existence.

I hope the above has given you a few things to think about. And come back so I can take you through how I managed to have a higher chance of picking the value added Angels and getting ‘Cheap Money’.

Please join my mailing list if you would like additional information .

In the meantime – here’s a video with some key intial points regarding angel investors – worth watching:

Here’s to Your Entrepreneurial Success!

Andrew

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