Category: Business Planning

Organizing the Chaos of an Entrepreneur’s Life

Entrepreneur getting organized
Image by StartupStockPhotos from Pixabay

I often hear first-time entrepreneurs fret about structuring their workdays and organizing their work.

If they came from the corporate world, their employers had already structured their work. These entrepreneurs talk about being shocked by the chaos of starting a business. It is even more challenging for entrepreneurs who have never had a full-time job. Those fresh out-of-college entrepreneurs talk about feeling lost, lonely, and overwhelmed.

If you are a first-time entrepreneur, take a breath!  There are many resources to help you organize your business and your job as founder and CEO.

Getting Organized

Entrepreneurs often use the excuse of, “I’m an entrepreneur. It’s not my nature to be organized.”

Without organization, your productivity suffers. Without productivity, your company’s performance suffers. Without company performance, your bank account suffers.

Peter Strack, Founder & CEO of The Strack Group, argues that organization is a habit, not a character trait. Stack recommends creating a habit of being organized by addressing all aspects of your everyday work.  Map out your week, manage your days with to-do lists, and organize your digital work life, including emails, files, and passwords. It may take practice, but with a persistent and dedicated approach to work, even the most disorganized entrepreneur can control the chaos of a startup.

Neil Patel recommends batching your tasks into everyday activities to aid in productivity. He also says that the most successful, organized entrepreneurs focus only on the tasks that actually move their businesses ahead. Many entrepreneurs spend hours on things their business will not need for a long time or may never need.  Your job in a startup is to find your market and ensure you give them what they want. Period. If you can’t build sales, nothing else matters!

Your calendar is a critical tool to help you get more organized. Jeanne Rossomme recommends finding a calendar tool that enables you to structure your time and organize your workflow. Here is a review of many popular calendar apps that work well for entrepreneurs. I am an Apple guy. My calendar of choice is BusyCal. It integrates my to-do list into my calendar and allows me to manage it across all my Apple devices. Ultimately, it is a personal choice as to which app works best. Don’t just look at the free options; spending a few dollars a month is worth getting a system that works well for you.

The Need for Speed

Kartik Mandaville, Founder & CEO of Springworks, says that the market conditions of many startups demand that they organize for speed. Mandaville says:

“Startups invariably face competitive pressures from both incumbents as well as other startups. To get ahead, they have to continuously crank up their speed of decision making, product development, distribution and iteration.”

Many startups have a narrow window of time to launch and establish market share. This adds even more urgency to the need to get organized and productive.

It’s All About Time

Our phones and computers are full of apps that are rabbit holes that eat up your valuable time. Jen Glantz, founder of Bridesmaid for Hire, describes it like this in her article at Business Insider:

“Whenever I felt anxious, overwhelmed, or became eager to procrastinate, I’d pick up my phone and scroll through social media. When I took inventory on how I spent my time during the day, I realized I was spending 90 minutes of my workday wasting time on social media.”

Glantz says she puts her phone out of reach during work time and only brings it out three to four times a day during the fifteen-minute breaks she builds into her day. She also has scheduled time during the day to read and reply to emails and limits each time to about twenty minutes.

David Lavenda, VP of product strategy at Harmon.ie, suggests that entrepreneurs are well served by starting their days with “me time” in his article at Entrepreneur:

Hannah Rodriguez, Founder of Dream Daily LLC, describes her approach to creating “me time” as an entrepreneur in Entrepreneurial Voices:

“I like to have a start and end to my workday. I wake up, and before I start work and I journal. I have my coffee, read my Bible, and walk outside to get some sunlight before I’m in my apartment all day. And then, towards the end of the day, I’m ready to turn it off. I know a lot of entrepreneurs like work late into the night. I’m done by 5 or 6 p.m. Even though I love what I do, I’m ready to have my night routine and read, watch TV, talk to friends, or whatever. I’m trying to build those boundaries.” (“Hannah Rodriguez” from Entrepreneurial Voices)

Find Well Organized Mentors

Entrepreneurs always benefit from hanging out with other entrepreneurs. They provide both practical advice and moral support for each other. They also help mentor each other.

But be careful who you hang out with. Good habits and bad habits can picked up from your peers. I would make sure to hang out with some entrepreneurs who are already well organized and manage their time effectively. They can serve as role models as you build your business and offer a wealth of handy tips to help organize the chaos of your life as an entrepreneur.

Expand Your Dashboard

A financial dashboard is an important tool for business entrepreneurs.  The dashboard provides a quick overview of critical metrics that summarize the health of a business.

Standard ratios derived from financial statements serve as the foundation of most dashboards.   However, relying only on financial statement data means the entrepreneur is managing the business using numbers based on past performance.

Lessons from a Parking Lot

Many years ago, an entrepreneurship professor shared an exercise he used with students to teach them the limitations of relying only on historic data in their financial dashboards.

He would have his students meet him in a commuter parking lot on campus on a Saturday morning (when the lot was empty).  When they arrived, there was their professor standing next to an old car.

The professor set up a simple course for the students to drive using orange cones.  When the first student got into the car, he realized that the professor had blacked-out the front windshield and side windows.  He was told he must drive the assigned course going forward.

“But I can’t see where I’m going!?”

“You can only use your rearview mirror,” said the professor.

The result was hilarious.  Student after student careened through the parking lot,  driving over cones along their path.  Most thought their professor had gone mad.

Eventually, one of the students would understand the point of the lesson.

“This has to do with financial dashboards, doesn’t it.  We don’t know where we are going because we can only see where we’ve been!”

Lesson learned.

Finding Ways to See Where the Business is Headed

Although I have never actually used this exercise with entrepreneurs I work with, I do often share this story.  I challenge entrepreneurs to find ways to “tear away the black paper” so they can see the road ahead for their businesses.

I give them an example from our healthcare business.  We monitored various metrics related to inquiries and referrals, which proved to be good predictors of future revenues and helped us time the hiring of new staff more effectively.

My rule of thumb is that no more than half of the metrics on a financial dashboard should come from historic financial statement data.  The rest should be specific numbers for the business that indicate where it is headed.

Aging Baby Boomers Need Two Exit Plans

As baby boomer entrepreneurs age, many more of them are moving toward an exit plan for their business. One of the biggest mistakes an entrepreneur can make when engaging in exit planning is forgetting that there are actually two exit events.

The first exit involves the business itself. This is the exit that gets most, if not all, of the attention.

The entrepreneur begins to prepare the business to be sold. To increase the value of the business, the entrepreneur works to maximize cash flow, develops a strong business plan to make a case for its future value, and tends to any parts of the business that might cause concerns to a prospective buyer.

When we sold our business, it reminded me a lot of getting a house ready to sell — only a lot more complicated and much more stressful. But the goal was the same: Make it look as attractive as possible to a buyer and help the buyer imagine what it would be like to own it.

The final piece to put in place for the first part of the exit is a team of experts in this type of transaction — attorneys, accountants and business advisers with expertise in the exit process.

But none of this preparation work, and most often very little of the attention of your team of experts, addresses the second exit event. While the first exit event is about the business, the second one is about the entrepreneur.

While the entrepreneur may play some transitional role in the business after it is sold, at some point he or she must personally exit the business. This is that second exit event.

For many entrepreneurs, this can create an unexpected emotional response.

The business that had become so much a part of their life is no longer theirs. This can create a tremendous feeling of emptiness inside the entrepreneur. Owning a business consumes every waking moment of your life and can in many ways define who you are. But suddenly, it is now gone.

I had this feeling after we sold our business. I tried to fill up this emptiness the only way I knew how: I was already planning the next business as we were winding up the sale of our current venture. Thankfully my wife slowed me down and helped me take time to discern what to do with the next stage of my life. That is how I got back into teaching.

Baby boomers who are working toward their exit events need to not only attend to the plan for selling their business, but also make a plan for what they will do once that business is out of their life.

“I will spend more time with my family” or “I will play more golf” is not a plan.

Baby boomers currently developing their exit plans can expect to live 15 to 25 years after they sell their business. Find a purpose and a passion. Then put the same level of effort and thought into planning the next stage in life that you put into planning your entrepreneurial journey.

 

Fresh Start

belmont_campus_sunset.jpg

Today is the first day of classes for me here at Belmont University.  I love the rhythm of the academic calendar.   The start of a new academic year offers a sense of renewal.  But, there is something special about this one.

As those of you who are regulars readers know, 2010 has not been the best of years for me personally.  Early in the year, my wife and I lost our oldest dog Keb, who died much too young at the age of eight.  Soon came the loss of my father to a stroke, which happened at the same time as our daughter and her husband had been flooded out of their home in the Great Nashville Flood of 2010.

While life seems to be getting back to normal, we can’t help but being haunted by the ghost of “what’s next?”

So the fresh start that comes with every fall semester is particularly welcomed this year.

The fresh start is also exciting to me as after many years of teaching entrepreneurs, I am in the middle of a renaissance in how I help my students learn about planning for their entrepreneurial ventures.

Unlike many of my colleague around the country, I have not completely abandoned the good old business plan.  I am simply in the process of relegating it to its rightful place.  Business plans are certainly useful tools for certain situations, such as raising funds or selling a business.

Business planning is a critical activity for any entrepreneur, but we seem to have gotten lazy and assumed that learning the process of writing business plans is the be all and end all of planning.

This laziness has included entrepreneurs, investors, and those of us who teach entrepreneurship.  We are all guilty of a misguided understanding of what is essential about planning for a new and growing venture.

Enter a small, but growing body of work on business modeling.

Business modeling is a way of conceptualizing and planning for a venture that looks at it as a whole.  Business plans, on the other hand, are much more like a series of short stories that may or may not loosely hold together.

Business modeling is all about the integrity of the planning process and the importance in internal consistency among the moving parts that make up a successful venture.

As with any new way of thinking in business, there is no clean and simple text for us to teach from.  What we are learning about effective business modeling comes from a variety of places and disciplines, each of which is shedding a little more light on what makes a successful business model.

Some of the best work out there so far includes:

Johnson – Seizing the White Space: Business Model Innovation for Growth and Renewal 
Osterwalder et al – Business Model Generation
Mullins & Komisar — Getting to Plan B

None of these works offer a complete view of business modeling, but each offers insights on part of the process.

Well, it is time to get ready to head for campus.  More than most years, I am truly thankful for the fresh start this new semester offers.

Business Plan Matters, But Other Steps Come First

When an aspiring business owner decides to move ahead and start a new
venture, conventional wisdom says the first thing he or she needs to do
is write a business plan. But research on how to plan and my own
experience suggests this isn’t usually very effective.

In fact, writing a formal business plan should be the final step in a
three-step business planning process.

Step one is to assess your idea to determine if it is
actually a viable business opportunity. Is there a large enough market?
Can I charge this market enough to make a profit?

Is the concept something I can personally pull off?
Do I have the experience, knowledge and access to the necessary
resources to make this business successful?

This first step should not involve that much detail.
It should be a quick-and-dirty first assessment of the concept.

Step two is to develop
the business model. A business model adds more detail to the evaluation
and begins to make sure all of the moving parts of the business work
together.

What is
the value that is offered to the customer and what is it worth to them?
Who is my target market? What do they expect out of me as a customer?
How do I get information to them and how do they want to get the
product? What are the key activities to make this all come together and
what will they cost? What are the resources I need to make this happen
(money included)?

There
is a great resource available to help would-be owners develop a
business model: www.businessmodelgeneration.com. This Web site
contains a large amount of free information on business modeling and
links to an excellent book to guide you through the process.

Now, it’s time for the plan

Step three is to write an actual formal business plan.
The business plan details the elements of the business model. It helps
organize what can become a complex and overwhelming array of issues.

The business plan puts
everything down on paper to make sure that we have thought of all of
the important “must-dos” that go into a successful startup.

Understand that the business plan is just a map, albeit a map into an
unknown territory. The actual path the business takes will almost always
be different from the original business plan. But the plan can help us
think through the details.

It helps us understand how all of the parts of a business fit
together to make a whole venture. It helps prepare us for our journey
and makes us better prepared to adjust to all of the surprises that we
will face almost every day we’re in business.

However, this final step of writing a formal business
plan is not always necessary. I know many very successful entrepreneurs
who never wrote a formal business plan for their ventures.

But almost all of them
understood the importance of business planning. While they may not have
written a formal business plan, they did take the time to go through the
first two steps of business planning.

While a formal business plan may not always be
necessary, sound business planning will always improve an entrepreneur’s
chances for success.

(This post ran as my column in the Tennessean this morning).

The Importance of Balance

One of the joys of teaching at Belmont is that I get to keep in touch with so many of our alumni.  I offer my students a life time warranty on their entrepreneurship education, which translates into my willingness to continue to help them out on their entrepreneurial journey after they leave our campus.  We have made a policy in our program to never charge for consulting with alumni businesses and to never take an ownership stake in their firms.

I met for lunch yesterday with my former student Adam Wynia.  Adam was a member of the Belmont golf team.  His final business plan in our program dealt with becoming a professional golfer.  He has been working to implement this plan by playing the developmental professional golf tours since graduation.

Adam also is doing some golf teaching.  He is part of a program that teaches golf in a rather unconventional manner.  It is an approach that takes a rather holistic approach, focusing less on the technical details of the golf swing and more on how the body works together to get a natural, consistent, predictable swing.

The philosophy they take is that the golf swing starts with the ankles, which must work with the legs to help open the hips and get the proper shoulder turn.  The arms and hands are just an extension of the proper movement from the rest of the body.  Too many golfers focus only on their arms and hands.  It takes the whole body working together to get a consistent swing.

Adam said that by focusing on the golf swing this way, the golfer is able to focus on balance.  With the body being balanced, the body can swing naturally and consistently.

I know….this is supposed to be a blog about entrepreneurship, not golf.  But, this has been such a long winter that spring fever has hit me hard and it seems that I can’t get my mind off of golf!

As I listened to Adam describe how they teach the golf swing it dawned on me that this is how I am trying to teach entrepreneurship.

The proper golf swing begins with the ankles, which provide the proper foundation needed for balance.  A new venture needs to start with a solid foundation, which comes from proper fundamental assessment of the opportunity — Is this idea a real business opportunity? 

With a proper foundation, the legs, hips and shoulders can all work together to get the proper swing while staying in balance.  In a new venture, it is the business model that defines how all of the parts need to work together — in balance, if you will — to meet the needs of the market.

If you do everything in balance with your ankles, legs, hips and shoulders, your arms and hands will follow.  The result is a consistent, predictable swing.  Think of your business plan as your arms and hands — it is the natural extension of getting the opportunity assessment and business model right, thus ensuring that all parts of the venture are working together.

Adam said that only focusing on your arms and hands will not lead to a consistent swing. 

Likewise, focusing only on the technical details of the business plan will not lead to a predictable entry into the market. 

The Missing Step in Planning

I have tried a different approach to business planning with my students this semester.

While I have defended business planning in the past, I also recognize that it is often not used effectively.  People rush into planning without making sure they are writing a detailed document about something that can actually make it in the market.  I also see that people who move into writing a business plan too quickly can get lost in the details.

It is this second issue that has led me to add a new step in business plan development for my students (and with the alumni I work with, as well).

I have integrated a step between the cursory opportunity assessment process and developing a full business plan.

The step is based in large part on the ground breaking work of Osterwalder and Pignuer on business modeling.  It has proven to help them see how the moving parts of the business fit together and work (or don’t!) before they dive into the details of planning. 

Here is the assignment (this can serve a s good outline for anyone planning a venture):

1- Mission Statement (25 words)
2- Business Concept (1 page max) – 5%

  • Additional description of the concept beyond 25 words in mission
  • Key values entrepreneur brings to the business
  • Key goals and objectives, including personal financial and non-financial goals

3- The Value Proposition (2 pages max)

  • Based on industry research, why is this an opportunity?
  • What are the macro trends that support this opportunity?
  • What are the more focused localized trends that tie into industry trends above?
  • What is the “pain” in the market does the business address?
  • Cite evidence to support

4- Target Market (1 page max)

  • Who are they?
  • Why are they your target?
  • What are the key attributes that drive their decision to purchase?
  • Who are your main competitors and how well do they address customer preferences above?

5- The communication and distribution channels (1 page max)

  • Where do your customers get their information to make a purchase decision?
  • What form do they prefer this information in?
  • How do they want you to get the product or service to them?

6- The relationships established with clients (1/2 page max)

  • How important is customer service in the business?
  • Do we need to deal with each customer on a personal basis?
  • Do they just want us to get them the product and leave them alone?

7- The key resources needed to make the business model possible (1 page max)

  • People – estimated cost for each
  • Equipment – estimated cost for each
  • Inventory – how much to start and how much on hand (if applicable)
  • Physical space
  • Operating cash on hand
  • Suppliers

8- Key Activities (1 page max)

  • What are the “must do’s” to get this ready to launch (Feasibility Plan)?
  • What are the “must do’s” to get the first customer (Feasibility Plan)?
  • What are the “must do’s” to keep customers coming in the door and to keep them from leaving us?
  • What are the “must do’s” to support growth?

9- Key Stakeholders (1 page max)

  • Who are your most critical stakeholders and what will get them to work with you?  (This included sources of outside funding, if needed!)

10- The revenue streams (1 page max)

  • What generates revenues for the business?
  • What will pricing strategies be?
  • What is our pricing structure?

11- The cost structure (1 page max)

  • What is the cost per unit?
  • What is the overhead cost to operate?

12- Breakeven  (One sentence max)

  • When will we breakeven based on these initial estimates?  (More precise figures will come in the business plan)

To Compete or Not to Compete

I was sent a post about business buy topamax in canada plan competitions written by Lora Kolodny from the You’re The Boss blog at the New York Times over the Holidays.

It poses a question that we really know very little about — are business plan competitions a good or a bad thing?

Kolodny offers a variety of opinions on the topic from various academic-types, but does not draw a firm conclusion.

Here is my take.

I think business plan competitions serve some useful purposes:

  1. They force entrepreneurs to carefully think through their plans.  Knowing experts will scrutinize their business models and financials forces entrepreneurs to take a few more important steps to validate their business plans assumptions.
  2. They give entrepreneurs experience in selling.  Whether it is to a panel of judges, a group of investors, or that first customer, business plan competitions put the entrepreneur in the position of having to see their product or service to a skeptical audience.  The more practice at selling the better!
  3. They expose the entrepreneurs and their ideas to a wider world.  I have seen many an entrepreneur connect with people who eventually help them with money or a wider network through participation on plan competitions.
  4. They can put some badly needed cash in the bank accounts of start-up ventures.  Joe Keeley, one of my former students, funded much of his start-up period of College Nannies and Tutors through the prizes he won in various business plan competitions. 

There are some downsides to business plan competitions, however:

  1. Some entrepreneurs get so wrapped up in competitions that they take their attention away from what needs to be done to create a successful launch.  In some it is as if they see winning competitions as the purpose of the business.  It is not unlike entrepreneurs who get too fixated on raising money and not building cash flow through sales.
  2. Business plan competitions can also create too much emphasis on the plan itself.  While I am not one who thinks business plans are unimportant, I do think that we worry about the finished plan all nicely bound with a pretty logo on the cover more than planning process, which in the long run is what really matters.  By only working toward a really killer plan, we can create a static document.  New ventures are dynamic and so should the process of planning that supports their creation and the management of their growth.
  3. Competitions can also create a short-term mentality tied simply to winning the competition, rather than the long-term focus on building successful businesses that create jobs and wealth.

Are business plan competitions overemphasized?  Yes.  But, I will continue to encourage my students to compete in business plan events. 

However, for our students business plan competitions are only one small part of a much more comprehensive set of activities and experiences that will better prepare them as entrepreneurs.

(Thanks to Tom Swartwood for passing this along).