Elie Kochman on Business and Networking

A question was recently asked on answers.onstartups.com as follows:

How novel does a startup idea need to be?

There were several answers provided, and I obviously like my own the best:

Even if your idea is novel, within days of your site going live, there will be several imitators out there hawking a similar product. You have to do the best job you can to make your product provide as much value as possible. Thus, the issue of being novel is [almost] irrelevant, since even if it is novel today, it won’t be tomorrow, so why worry about that? Instead focus on being better than whatever competition is out there!

Thinking of a novel idea?

However, in looking at the question, there really is more that can be said about this. An idea for a startup needs a few components in order to be eligible for success, and novel is not one of them:

1. Is there an unfilled demand for this idea?
2. Who will pay for developing this idea?
3. Can I do this, or can I recruit someone who can?

Is the idea original? It doesn’t really matter if the demand is not being filled currently (question 1). If I can fill the demand (question 3), and someone will pay for it (question 2), then my idea has the potential to be a success. If any of these questions cannot be answered satisfactorily, then it may be a good idea for someone else, or it may not be a good idea at all.

As a hopeful startup founder, what you need to do is be aware of how unique your idea is, because it will help you pay attention to the appropriate competitors. If there aren’t any at the moment (which in general demonstrates that you haven’t done your research properly, but occasionally might be true), then as soon as you launch, find out who started right after you. There is not a single niche market for which there is no competition – and I challenge you, my readers, to show me an exception. No, the competition may not be exactly the same as you, and they may not be at the same level as you. But they exist.

If you can understand who your competition is, and how you and they differ from one another, then you’ll understand the being novel is not that important. What is important is to be as good as possible at whatever it is you do.

Recently, I wrote about various questions to keep asking your business, and asked my readers for their take on the questions, and suggestions for additional questions. Here is an extract of what they had to say. The list was actually a fair bit longer, with over 30 additional questions. What I provide here is a sampling of those answers, grouped by focus point.

Customers and Clients

• How do I win more customers? (James Wilson) This is one of the biggest questions to be asking yourself, because your existing customers can only bring you so far, and if you want your business to grow, you will need to find new customers.
• What is the profile of my best customers? (Mike McRitchie) In order to attract new customers, you need to know what kind of customer is ideal for your business.
• Am I looking after my existing customers? (Michael Greenwood) We are often sidetracked by growth, and forget to take care of those who made the growth possible. Don’t forget about your current clients when searching for new clients.

Products and Services

• How do I create excitement for my product? (Dave Maskin) If your product is boring, you’ll have a hard time selling it. Make sure that you know how to spin your product or service so that it looks interesting and exciting.
• Are we delivering value consistently? (John Cameron) Make sure that as your company grows, you continue to deliver the same or better quality that your customers have come to expect from you.
• How should I price products? (James Wilson) Profits are a function of having the right price and keeping your expenses down. Make sure that you spend enough time figuring out the right price, and that you adjust for changes in your costs on a regular basis.

Metrics

• What are my benchmarks and how do I actually stack up against them? (Shelly Searcy) How do you measure your success, or advances? Where do you stand at any given point in time?
• How do my numbers stack up to the past and others in my industry? (Mike McRitchie) It’s important to know where you stand in terms of your history and your competition. This information can help you plan for growth, and to determine how best to capture more of your market segment.

Growth and Goals

• Am I really being realistic in each of my business assumptions? (Wallace Jackson) You can only grow if you are honest and truthful with yourself. Make sure that any assumptions made about your business are as accurate as possible.
• Are the values and purpose and vision clear for my business? (Steve Rucinski) Your business will grow in the direction you desire only if all the people involved understand what it is your business stands for.
• Where and to whom can we profitably deliver more value? (John Cameron) Growth is done by expanding either your services or products, or by expanding the size of your portion of the market. Do you know what your options are?
• How much growth can my cash handle? (Mike McRitchie) The most limiting factor to growth is likely the money you have on hand. Make sure you know how much cash you have available, and what your options are for acquiring more cash, either via an investment or as a loan.
• What is keeping us from achieving our most ambitious goals? (Adrienne Creger Jandler) You haven’t yet reached your goals, but if you understand what it will take to reach those goals, then you can and will succeed.

In summary, you can reduce all these questions to just four, as phrased by Karen Sherr:

1. What am I doing that I should be doing?
2. What am I doing that I shouldn’t be doing?
3. What am I not doing that I should be doing?
4. What am I not doing that I shouldn’t be doing?

All the questions about your business come down to those four, to ensure that you’re doing the right things, none of the wrong things, and you haven’t missed anything. The rest is just details.

With all the buzz about entrepreneurship, and running your own business, many people are getting ready to succeed at starting a new business and working for themselves. However, all the effort they are placing in preparing for this may be for naught – as George Bernard Shaw said, Those who say it cannot be done should not interrupt those who are doing it. The effort put into getting ready to do anything is not nearly as useful as the effort put into doing it.

Chris Brogan of social media fame writes:

I think we’ll see more solo people tucking in with bigger organizations. I also think we’ll see smaller groups banding together to form stronger groups, not just in marketing, but in any of the newer businesses out there.

This is reality. There is safety in large companies, in that they are better equipped to handle fluctuations in the market, in the demand for their products. A small business which does $50,000 in sales per month is going to be much harder hit by a 20% reduction in sales one month – a large business can absorb that more easily (at least in the short term).

What does this have to do with preparing to succeed? The fact that many people (myself included) do not want to live under the fear of their business going under. We like the security, we like shifting the risk to someone else. Therefore, before we dive into a new venture, we will work as hard as possible to reduce the risk as much as possible. But as Robb Sutton says, ‘One Day’ is too late.

At some point, you need to jump, you need to take some risk. All the time spent preparing could be better utilized by doing. Take the following as an example:

On the CBC show Dragons’ Den, Claire Copp of Vancouver, BC came on the show looking for an investment in her software product, Trader II. One particular point that Claire made was that she had been working on this program for 20 years and had yet to sell a single copy. Now, there are a lot of lessons that can be learned from her presentation, but I’m just going to talk about one. Claire Copp had spent 20 years preparing to succeed, instead of going out there, finding out if there’s a real demand for her product, how much people would pay for it. (As a side note, if you search for “Trader II” Claire Copp, the first two results are Dragons’ Den, and my other blog where I posted a review of the episode.)

Of course, Claire is an extreme case, but the lesson remains. If you want to succeed, then you need to act now. If you keep waiting until all the risk has been removed, you may find that you’re left with nothing at all.

It’s that time of year again. With the holidays fast approaching, it’s time to think about where you’re going in life, whether that be personal, professional, or any other aspect of your life. Many people make New Year’s resolutions, but how many of you actually follow through on those resolutions?

Some people dream of success, while other people live to crush those dreams.

What I did last year was to post some of my professional resolutions for all to see. Whether or not that was a good idea is debatable. There is a study that shows that the more you share, the less likely you are to do. I don’t agree completely with that study, and so I’m going to do it again.

First, however, a follow-up to the goals for 2009:

• Only one of my contracts from the start of 2009 is still in development, and it is scheduled for completion with two weeks.
• I have not picked up one new contract per month, however, the past 3 months have been very good to me with 2 new clients and one returning client.
• I haven’t taken any courses this year, but am in the process of learning PHP and the Zend Framework.
• I have continued to use C# for some development, and am increasing my level of proficiency.

All in all, I feel good about what I’ve accomplished in 2009. While I haven’t met all my goals, I did strive to do so, and had I met all my goals, it would be an indication that I had not set my sights high enough. So, without further ado, here are my goals for 2010:

1. Learn PHP and Zend to a degree of proficiency whereby I can construct an entire website based on those technologies in a reasonable amount of time (i.e. in under 250 hours for a fully-functional site, and not including the design of the interface).
2. Launch the product I’m currently working on, Client Data Tracker, to beta in January 2010 and live to the public before the end of March 2010.
3. Continue developing my consulting to the point that I am putting in 30+ hours per week in billable time on various projects.
4. Complete the work required for KNIRL.COM and get the site up and running.

These are my goals that I’ll be using to measure my success against in 2010. What are your goals? How do you intend to measure success?

Since this morning, I have seen several posts on Twitter in regard to the Forbes list of 10 Questions You Should Never Stop Asking published on November 20, 2009. A summary of those questions is copied below, for the full commentary, I recommend you read the original article.

What is our purpose for existing?

Who is our target customer?

Why does anyone need what we’re selling?

If there is a need, is it enough to support a profitable business?

What were our competitors up to?

Can you reduce expenses–without harming the product?

Do we have the right leadership?

Do we have the right employees?

How will we continue to drive revenue?

How are your employees holding up?

Courtesy of Flickr.com by misallphoto

This list, however, is targeted to a business of a certain size and upward. What should you be asking if you are a one-person shop? To complement this list, I’ve prepared some additional questions that you may find useful, that will hopefully lead you to being in the position to use the list from Forbes.

1. What am I trying to accomplish?
   Similar to the first question on the Forbes list, this question makes you look at your goals. If you don’t have any yet, then you should sit down and write a few down. It’s hard to get somewhere in particular if you don’t know where you’re going. Alternatively, the answer to this question might be “nowhere in particular” and “let’s see where this takes us”. Both of these are valid, but you should be aware of the answers.
2. How am I going to reach my goals?
   This question addresses both short-term and long-term goals. If the answer to your first question was to build an application soon to be included on all mobile devices, then the answer to the second question will include points such as:
   • Develop the key components to the application
   • Contact mobile device manufacturers
   • Monitor available applications for those devices for possible improvements
3. Do I have all the skills needed to reach those goals?
   No one person is perfect for all tasks involved in running a business. You may be really business savvy, but lack some technical skills, or you might be an expert salesman, but don’t know how to deal with copyright laws. You’re either a Jack-of-All-Trades, Master of None, or, more likely, you are the Master of One. If you don’t have a needed skill, how are you going to fill in the gap? (The answer might be that you’ll hold out for a little while.)
4. Who will pay for my skills or product?
   This corresponds to questions 2 and 3 on the Forbes list. Your idea might seem to be really good to you, but do you know whether or not it’s viable as a business? Have you spoken to any potential clients about it?
5. Who am I competing against?
   If you don’t understand your competition, then you might not understand your own product. Be aware that your clients will know about your competition and ask you about them. You can demonstrate your expertise by being aware of the differences between what you offer and what your competition offers. If it’s exactly the same as what the competition is offering, however, most potential clients will prefer the business that’s been around longer. Which leads to the next point:
6. How do I expect to succeed against them?
   This is also known as your Secret Sauce by some business writers. This is the factor that makes you, or your business, different. It might be a customized algorithm. It might be a new approach to an old concept. Whatever it is, this is what will set you apart from your competition.
7. How am I spending money, and can I reduce that?
   It is incredibly important to keep track of your expenses and revenues, and to constantly review that record. You should know where every dollar is coming from, and where it’s going. For example, if you have a small office with a coffee urn, do you know how much it’s costing to run it? How much did you pay for your business cards? Who owes you money, how much, and for how long? What does it cost you to keep your website running? Are you getting good value for your dollars?
   Only by keeping track of your budget can you hope to keep your business profitable, and be able to grow. How else will you be able to reduce your expenses without compromising your product?
8. Is it time to hire someone?
   Hiring your first employee can be an extremely difficult decision to make. You become responsible to pay them, and they will get paid before you do, always. In order to make your first hire, you should know what it is that employee should be bringing into the company. Do you want someone with the same skills you have, or do you want a specialist? If you find yourself spending excessive time on administrative tasks instead of working on your clients’ projects, your first hire might be an administrative assistant who can do most of that work for you.
   What’s important to remember is that the hire needs to be worth the investment. If you pay them $40,000 a year, then they need to be adding that much value to the company and then some. In other words, you should see as a result of hiring that person your revenues go up by more than $40,000 per year. Some would say that this number should be around 3 times their salary, or $120,000 per year. The exact number is not relevant, though, but what is relevant is that the employee be worth their salt.
9. What are my clients saying about me?
   In the age of social media, word about you and your business can spread extremely quickly. It’s important to be listening to what your clients are saying about you. This will let you address issues before they become problems, or to head off potentially damaging rumors (which are not, in fact, correct, or at least, not correct anymore). Gone are the days where customers and clients could be treated with impunity, as they now have outlets to vent against individuals and companies. Make sure you’re listening! (Chris Brogan talks about how to do this.)
10. Am I balancing my work life with my personal life?
    Too often overlooked, it’s important that you don’t lose track of the bigger picture. Are you spending some time on your family and friends, or are they all forgetting about you? Yes, you’re busy running a new business, but remember to set aside some time on a regular basis to keep those aspects of your life strong.

This list is by no means complete, but hopefully, it will give you a start on keeping your business strong and growing. If you have a question that you think belongs here, please let me know in the comments. I would love to hear what you are doing to ensure that your business is on track to success!

Recently on LinkedIn I asked a question about business cards and etiquette – do you always reciprocate handing out a card? That is, if someone gives you their card, should you give that person one of yours? If you hand someone your card, should you request one in exchange?

Before going any further, one thing needs to be clarified. I was asking the original question for a particular reason, and it was not so that I could write this article. I’m planning on attending a speed networking event next week, in which participants are seated at tables with five other people and get two minutes to make an introduction. The last time I attended, before anyone spoke, I had 5 cards in front of me, one from each person. After the introductions, however, I only really saw value in 2 or 3 of the connections.

The second half of the issue is that I did, at that event, reciprocate the handing out of my card. I ended up on 3 distribution lists as a result, and it took a while to get taken off one of those. All three people who put me on their mailing lists had something in common – they were all mutual fund salesmen. The question I was trying to get answered was whether I could [politely] refuse to give my card to the mutual fund salesmen at the next event.

I got many answers to my question, some of which addressed my concerns, others which seemed to ignore that aspect of the question. However, I did learn a few things about such events, and the ramifications of sharing a card.

1. Speed networking events are of limited value, because, while they allow you to meet many people in rapid succession, they often do not allow you to establish a solid connection with any one person.
2. Given then I will be attending this event (although this may be my last such event), sharing my card is considered to be a necessity. That is, I cannot politely decline to share my card with any one person or group of people.
3. I can control when to share my card – I can wait until it’s my turn to introduce, thus linking my card to my introduction.
4. I can make mention that I do not wish to be placed on any distribution lists – while I welcome networking opportunities, please keep my e-mail off any type of mailing list you may have.
5. When receiving cards, make notes on the back regarding the person who gave me the card, and any other information that may be relevant.
6. You never know where your next successful connection will come from, so don’t try to guess. Instead, hand your care to anyone who will take it, but always include a brief summary of what it is you do, and what it is you’re looking for.

What do you think about sharing your card? What value can you find is such events?

I just bought a copy of The Web Startup Success Guide by Bob Walsh. It was an impulse purchase – I was actually looking for a book on PHP and MySQL and the cover caught my eye. I never heard of Bob Walsh, but I had heard of the guy who wrote the foreword – Joel Spolsky, CEO of Fog Creek Software, and author of the blog Joel on Software, among other things.

The book, according to its back cover, claimed to provide all the answers to build a successful web startup. Joel Spolsky, in his foreword, claimed he learned something new on every page (there are over 400 pages in the book, which works out to about 5 cents per lesson. Considering I’m in the middle of developing two ideas into potential businesses, I figured this was the book for me.

I’m now reaching the end of the first quarter of the book, and already I’ve learned enough to write a review. The book was worth the money spent, even were I to read no further. So far, I’ve learned something about the history of creating software companies, the various ways there are to start a company, and what the pros and cons of each are. I’ve learned some questions to ask myself when looking at a potential idea. I’ve learned to be critical of my own initiatives, and to separate emotion from keeping ideas alive long after they should have died.

Bob mixes his lessons with interviews with various people. Don Dodge, Director of Business Development at Microsoft, discusses the differences between starting a company now versus starting one ten or twenty years ago. Rick Chapman of Softletter discusses the business model of Software as a Service and various billing systems used. These are just a few of the many (I counted 36, but I might be off by a few) interviews and e-mail exchanges recounted throughout the book.

The book is divided into 10 chapters, each of which focuses on another idea crucial to the success of a web startup. The first chapter looks at the history, which has shaped how such companies are built today. The next chapter focuses on the ideas that build your company – filling a need (and where those needs come from), having a new way to solve an old problem. The third chapter looks at platforms, and the various places you can put your idea (SaaS, PaaS, Mobile, and so on).

The fourth chapter discusses support groups and tools for founders. The fifth looks at money and financing. The sixth looks at how social media impacts your business (and it does, whether you realize it or not). The seventh chapter discusses the importance of clarity in your business. Chapter eight is about how to get all the pieces in place, and how to turn an idea into a business.

Chapter nine suggests several people you should listen to, who provide advice that can be invaluable to a new business. Chapter ten is all about where to go from here, now that you’ve read the book.

I’m not done the book, as I pointed out above. But Bob manages to deliver his points about starting a business in simple language, with relevant examples scattered throughout the book.

If you are thinking about starting a company, or already have, which has as its business model the sale or distribution of software, whether you’re a site that facilitates the use of a service, or selling desktop software directly, this book is for you.

Oh, and I did find a book on PHP – it was called PHP, MySQL, and JavaScript by Robin Nixon, and seems to be quite a good book as well. So now I’m two for two on Friday’s book purchases.

While these two concepts don’t need to be at odds with one another, I’m curious to know how people perceive the difference between networking online versus in person. Most people do both, whether consciously or not, but what’s the difference between the two?

One answer is that our online networks tend to be a lot more widespread than our in person networks, including a lot more people. However, when we connect with someone in person, we tend to create a stronger link on an individual basis.

What do you think are some of the differences between online and face-to-face networking?

This post is a little different from my normal posts. All I’m going to do is ask a question, and I’m genuinely interested in your opinions on this.

Where and how do you network? Why do you network that way, and how could your existing networking be improved? What changes might you make to your networking activities, if you were able to?

To start, I will provide my answer:

I network primarily on a variety of websites, such as Facebook, Linked In, and Twitter. I try to participate in those communities, and interact with the people I’m connected with. I also have a regular networking meeting about once every 5 weeks with several people working in similar fields to my own. On occasion I will attend a business card exchange event. Ideally, I would like to spend more time in face-to-face networking, were time and distance not factors.

I recently came across a blog called Bell Business Reports while browsing through questions on Linked In. (The blog itself can be found here, or find it later listed in my Blog Roll). Laura Bell, author of the blog, was requesting a link exchange, but once I read through some of her articles, I realized that here was yet another opportunity to connect with other people sharing similar types of information (but not the same, as I’ll describe in a moment).

Her most recent article, at the time of this writing, is about a show called Shark Tank, which is aired on ABC. This is the American version of Dragon’s Den, a show which has versions running in over a dozen countries. The premise of the show is simple – entrepreneurs pitch their products and companies to a panel of wealthy investors, who then choose whether or not they want to invest in the company. The precise rules, as well as who is on the panel, varies between the shows.

In Laura’s review of Shark Tank, she discusses several mistakes being made by entrepreneurs when pitching their products, from failing to have a realistic valuation for their company, to being stuck in the prototyping stage. She brings  examples from the show of each type of error made.

For an entrepreneur seeking venture capital, such reviews are extremely valuable, as they assist in creating realistic goals in the quest for money, as well as provide a critique of potential pitches.

Having enjoyed the first article, I decided to read more. Her article on the importance of networking () struck home, as this is a topic that I have discussed at length on this site (for a list of some of these articles, click here). Laura did an excellent job of summarizing many of the same issues, as well as some novel issues.

Overall, the writing is very clear, easy to follow, and covers interesting current topics. While you do need a membership to read all the articles at once, you can get access to some of the articles for free. If you have the time, it is definitely worth spending a few minutes browsing to get a better feel for the site.