When problems arise, we often are not sure how to address it. Common pitfall include getting stuck with an emotional reaction, leaving the problem to escalate, or deciding haphazardly. There are easy steps to fix that.read more
Your stars… top dogs… numero unos… aces in the hole… big guns… elite team… top performers. You know who they are!
Knowing how to keep them can make the difference between success and failure (or worse: mediocrity) for your business.read more
I have been working with a lot of accomplished executives and entrepreneurs. They varied in age, cultural background, education, interests, personality types, religions, beliefs, industries, and in many other ways. Despite all the differences, I noticed they all had one thing in common…read more
As a manager, I have always wanted to find balance. On the one hand, I want to be nice. I want my team to trust me, like me, confide in me, and enjoy their time around me and around each other. On the other hand, I want to deliver great results. I want to continually improve and over-achieve as a team and as individuals in the team.
Finding this balance is tough. Here’s a tip.read more
“Did you try harder?!”
That was my favorite response when someone on my team came for help solving a problem… especially someone new. The response initially gets a surprised pause followed by a smile when she realizes it’s a joke. Eventually, people would start by “Yes Noor, I tried harder…” and continue with the issue at hand.
Little jokes like that lightened up the mood and added a little fun in our workplace. It was a piece of a puzzle of creating a great working atmosphere where people actually enjoyed coming to work. I loved it.
Here are some tips for injecting fun into your workplace… and improve performance while you’re at it.read more
I was in a shop the other day watching the manager give heat to one of his employees. As soon as the manager walked away, the employee started complaining to his colleague. As I watched the employees robotically do their work, it was clear they were unhappy. I started thinking about how important it is for managers to treat their teams well. Many companies preach about how important their employees are. Some deliver on that, but very few go the extra mile for their employees and do something extra ordinary. Some companies like Zappos built a culture that helped them become a billion dollar company. For me, treating my team well was a priority. I always told my team that I would bend over backwards for them as long as they meet me half way and put an honest effort into their work. That was nice, and the team appreciated it as I delivered on that promise through actions. But still… that wasn’t really extraordinary or unique. One time though, I learned how great it is to go the extra mile. I did something for my team that creating a lifelong memory. The year was 2008 and the month was April (insert suspense music in background). We embarked that year on an ambitious plan for the team. The plan would stretch the team with tight deadlines and a major promise that would help the company leap forward in delivering a great product to customers. We finished the first quarter on target. It was tough and everyone on the team worked hard to reach that target. I decided that I wanted to show the team my appreciation for their hard work. Since I couldn’t get a budget approved to pay for this, I decided to pay for it myself. We had a great office manager, Darine, who had a lot of experience and connections in the hotel industry. When I asked her to recommend restaurants to take the team out to, she gave me a few options then she said “why don’t you do something a little more special and make it really memorable?!“. She suggested I take the team on a road trip to somewhere special for the day. I loved the idea. Darine graciously arranged booking a great restaurant at with a sea view in a beautiful picturesque town (Byblos). She negotiated a price way better than I would have ever got. She also set up a bus to take us around for the day (there was 20 people on the team at the time). I kept it as a surprise from the team. I just told them to make sure there are there for that Friday to celebrate as a team. They were all expecting a team lunch at a nearby restaurant. But on Friday morning at 9:30, I stood up and announced to everyone that a bus was waiting for us outside and that we will be taking the whole day off. I gave them 20 minutes to get ready, wrap things up, and call any family to inform them we are going on a road trip. That day was one of the most memorable and fun days I had. We sang and danced on the bus… like teenage kids going on a school trip. We...read more
I worked with a lot of young people in my career. I lectured to over a thousand university students and later managed a large team of people, mostly in their 20’s. I noticed that these young professionals made one mistake more consistently than any other. This meant I ended up giving one piece of advice more than any other. This advice, in my opinion, is one of the most important lessons any young professional needs to learn for his/her career.read more
Every manager has to eventually deal with an overly emotional angry person on his/her team. Here is a step-by-step guide on how to handle them.read more
“This is the second month her performance has been poor. She seems to be bored and unmotivated, so I’m thinking to put her on a special project to get her excited about work again. What do you think?” That is what my assistant manager told me while we were discussing the team’s progress. He was referring to a team member who was a good performer, but had a sudden and sharp drop in performance. “No. That’s actually the opposite of what we should do.” I replied without hesitation. As a perplexed look started to take shape on his face, I explained that “we would be rewarding underperformance by putting her on a special project”. The message we would be sending is ‘slack off and get rewarded with working on cool projects.‘ His predictable reaction was “we can give her a strong word of warning and clarify that this is not a reward.” “Actions speak louder than words” was my prepackaged, generic, buzz-wordy, cliche, yet appropriate response. It won’t matter what we say because she would be getting rewarded and everyone else on the team will see and make their conclusions based on that. The intention is a good one, but its a mistake that is easy for managers to fall into. Fortunately for me, I learned this lesson years earlier from a friend who shared with me a similar story from his work. I preempted the assistant manager’s next question “what should we do then”. I told him we need to address the project and the individual separately. For the person, we have to sit with her and address the issue that is causing the drop in performance. If it’s something we can help with, then we will work with her to improve. If it’s a lack of effort, then we need to make it clear that she has to get her act together and improve her performance… or else. As for the project, I told him we have to make sure we pick someone suitable for the project to start with, otherwise we would be setting him/her up for failure. More importantly, we should pick someone who has been performing well for the project. That way, we would be rewarding good performance rather than the opposite. Keeping a on the “line” work to maintain high productivity punishes strong performers, which is another side to the same mistake. The problem with this mistake is that it yields results that are the opposite of what is intended. It’s not just managers who can make this mistake. Parents can be victims also. My cousin was a reckless driver as a teenager. One day he lost control of the car and drove into a street garbage bin. His mother covered things up for him so he doesn’t get into trouble. Obviously she was protecting her son, but the problem is that she was rewarding bad behaviour. When I told her that, my cousin got very angry at me. Of course she rationalized her behavior. A few years later, he had a more serious accident. Luckily he survived it with no harm, but that experience made him a much safer driver… maybe a little too safe. Do you have experience with rewarding the wrong behavior? Share your experience with us and readers in...read more
Instead of secluding yourself figuring out how to solve major team problems, you can leverage your team’s abilities by sharing the problem with them and opening the door for them to contribute to solving it.
It’s time for internal crowdsourcing.read more
I was in the meeting room with one of my team members. She had a look on her face that combined surprise and delight. It was her monthly performance review, which I started off by apologizing to her for being a little harsh on her during the team meeting earlier that day. I explained that I wanted to encourage other people to contribute, but I was wrong to shut her down when she wanted to contribute. I assured her that I appreciated her contribution and wanted to encourage it. She said she was not bothered by the interaction, but appreciated my apology. That interaction crystallized a lesson I had learned from managing people. One of the most important things a manager needs to have is his/her team’s respect. It is an important catalyst that allows the manager to lead a great team. It cannot be bought. You cannot fool people into respecting you (not for long at least). Respect is earned through actions you take, especially in tough times when the “right” choice is a hard one. Of course there are a lot of things you can do as a manager to earn your colleagues’ respect. One of those is admitting your mistakes and living up to them. It goes without saying that if a manager expects employees to acknowledge their mistakes and learn from them, then the manager should lead by example. Yet it surprises me how many people don’t acknowledge their mistakes. Some managers avoid admitting mistakes because they feel it makes them feel weak in front of their employees. They feel they need to always be right for people to look up to them. They might think they are too busy for it. Some even think they are immune to apology since they are the boss after all. All that is nonsense. In my experience, admitting mistakes the right way (more on that later) is one of the best ways to earn people’s respect and trust. That applies to your employees, colleagues, and boss equally. Here is my approach to admitting mistakes: – Acknowledge your mistakes when you make them. If it caused a problem, admitting the mistake will save everyone’s energy from pointing fingers and instead gets everyone to focus on the solution. Sometimes you are not sure if its a mistake or not. For example, my team and I used to get complaints from customers (sometimes from the CEO and colleagues) about “mistakes” in our product. My process was to acknowledge the complaint by telling them we will look into it and get back to them. We would investigate the issue. If it was not a mistake, we would clarify to the complainer how and why it is not a mistake… all that is done politely of course. If we did in fact make a mistake, we would acknowledge it, fix it, and assure them we will prevent it from re-occurring. – Learn from your mistakes: Do your homework to find out why you made the mistake in the first place. It might have been an assumption you made that steered you the wrong way. It might have been fatigue from overworking. Most of the time, it’s a crack in your system. Identify and eliminate the root causes for your mistakes. – Tell people when...read more
A lot of obstacles pop up as you start a business and work to make it successful. You have competitors, required capital, self-limiting habits & beliefs, and many others. All of them can be overcome. However, there one obstacle that is the toughest of all. It will stop you from starting your business and cloud your judgment as you build your business. It can also sink your business.read more
Have you ever felt like reaching over and hugging the person behind the counter? Have you felt like reaching over and beating the person up? We all have our good and bad customer service stories. Below are real life examples of a good and a bad customer service encounters. Then the conclusion of what makes a company provide either the good or bad experience to their customers.read more
Picking a business partner is one of the most important decisions an entrepreneur can make. That’s why you should pick you partner the same way you pick your spouse.
Here are 10 tips for better results:read more
A friend of mine resigned from his job to take a new position with another company. Interestingly, his boss immediately counter-offered with a higher salary, approved a special project my friend was pushing for, and promised other improvements. The counter-offer made my friend pause and think for a bit, but it was a little too late. This scenario has happened with a number of people I know and most of them got “upgrade” offers when they resigned.
It always makes me laugh when I hear such stories. I find it silly for a manager to make those upgrades AFTER a resignation instead of before. It just seems backwards to me.
Let me explain my logic using gardening.read more
Starting and growing a company is very similar to having a baby. If you are, or want to be, an entrepreneur, you can learn a lot from mothers.
Here are 14 tips:read more
One of the things I struggled with when I started managing is delegation. I had a tough time finding a balance between stepping back and taking charge of the work to be done.
Here is what I learned.read more
Once in a while, we come across words of wisdom that seem to fit perfectly with your situation. For me, I came across this one a few times before. All were tough times. However this one applies to good times just as well.read more
I wrote before on when to fire someone, which is a difficult topic for most managers. One of the readers later told me that he would not fire the “diva” employee (has great output, but bad attitude). The reader has this brilliant technical employee working in his startup with a “personality problem”, but is holding on to the employee because he is critical for the startup’s success.
I couldn’t disagree more! And I will tell you why.read more
My wife and I received an email from our son’s nursery that delighted us and taught me an important business lesson. The email was informing us that they will be carrying out a fire drill the following week. This was just one of the many initiatives they have been telling us about that are delighting us and reassuring us we made the right choice.read more
Years ago, I was in a boxing class learning how to slip punches. My trainer Richard Dimitri gave me a simple tip that turned out to be a valuable life lesson. It influenced how I approach life.read more
Here is a list of common signs you can identify that someone is about to resign. A good manager will be able to read these signs and take action to preempt instead of fighting fires.read more
One of the many amazing things about children is that they are free spirited. They do what’s on their mind without worrying about what others think about them.read more
How do you become a leader? Put your brain on steroids and put it to work.read more
Pitching to investors is a frightening thing for most people. There are a million possible questions investors might ask you. Here are the three things all the investors’ questions are trying to get to.read more
Once in a while, you come across a quote that makes you step back and reflect. I came across this quote from Bestselling author Marianne Williamson, which was used in the movie “Coach Carter” starring Samuel L Jackson. The quote moved me because it touched on the inner struggles and fears we have as individuals. We have them as children and as adults.read more
When you’re putting together a business plan to present to potential investors, you will be inclined to do almost anything to improve the odds of getting them on board. Adding a SWOT analysis is a mistake.
Here’s why.read more
Firing someone is one of the most difficult things a manager will do. On the other hand, not firing when you should is one of the biggest mistakes a manager can make. One of the challenges is deciding if its better to drop the axe or give the person another chance. Three Subjects To help us make the decision, lets imagine you have three people on your team. The first, lets call her Diva, is very smart and gets along with most of the team. Her performance charts, however, are like roller coaster ride. She performs great when she feels like it, but she has been “unmotivated” lately and her performance has taken a dive the last few months. Facebook even reported a 1% increase in traffic due to her contribution alone in the past quarter. Next up is Hope. She’s is a hard worker, gets along well with the rest of the team, gladly puts in extra hours to get work done and help the team when needed, never complains, and has a very positive attitude. However, she does not achieve her targets despite putting the extra effort. Last but not least is Jack. He is one of the team’s strongest and most consistent performers. However he frequently clashes with a few team mates and is usually complaining about what is going wrong. Oh yeah, and he… like… gossips a lot. So who stays and who goes? The Decision So let start by looking at people who are under-performing. The first question is why. In Diva’s case, she clearly has the skills and capability to perform since she achieved great results in the past. She is not putting in the effort. Here’s what to do. Sit Diva down and discuss what the issues are. If there are issues you can address, then resolve to do that and follow up to show that you do your part. At the same time, you have to establish that Diva’s performance should not be conditional. Instil a sense of urgency and importance that she keep her performance up regardless of what issues she has. Conclude the meeting by setting your expectations for her performance. If Diva picks up, then all is glittery great. If she doesn’t, then Diva needs to find another stage (i.e. it’s time to fire her). If we look at Hope, the effort is there, but there is a shortage of skill. It might be a simple skills such as time management she’s missing. Here you have a decision to make. If you believe there is hope for… em Hope… to develop the missing skills that will get her to perform and you are willing to dedicate resources (coaching and training), then go ahead. You can do the coaching yourself or assign someone else who is capable to do so. Everyone is happy when Hope picks up. You will have better performance and a loyal happy camper who is full of hope (I know… I’m stretching the name thing a little). She will also be happy to be performing well. If she doesn’t improve, and then the sad news is that you have to cut her loose. You can shift her into a different position that will fit her better if there is something else available....read more
What will you regret when you look back at your life towards the end of it?
A palliative care nurse called Bronnie Ware listed the five regrets of the dying based on the time she spent with people she cared for in their last days:read more
We relate to people and businesses better when they stand for something we identify with. According to Simon Sinek, the author of the book “Start with Why”, people don’t buy what you do, they buy why you do it. A good way to express your beliefs is a manifesto. I was inspired by the manifestos of Holstee, Expert Enough, and a number of other manifestos. So I developed a manifesto for ThinkDoBusiness to share some of my thoughts and beliefs relating to business and life. So here it is: Business can be good… and it can be fun. ThinkDoBusiness is here to help people new to management and non-business entrepreneur do business better. We will be sharing articles, videos, tips, interviews, and many more to stimulate your mind and help you do business better. We would love to have you a regular reader. Just enter your email address...read more
Have you ever had a “deer in headlights” moment? You know when you have that blank, confused, motionless look after someone points out something you did not realize before. You just stand there like a deer staring at an incoming car’s headlights on a highway… clueless. Most of the time, this happens when someone challenges an assumption you had.
Think of your assumptions like talking to three types of dudes in a party:read more
Managers often complain that no matter what they do their teams always find something to complain about. The interesting, and strange, thing I noticed is that team problems seem to pop-up out of nowhere and they have momentum. A lot of focus is placed on urgent and tangible things (i.e. get the targets), but things that are important are left ignored until they become urgent problems.
Dentists can help us understand this better.read more
Great career advice from 21 successful icons who reached the peak of their domain. They include Jeff Bezos, Oprah Winfrey, Richard Branson, Muhammad Ali, Michael Jordan, Micheal Dell, Michael Bloomberg, Dr. Jane Goodall, Adriana Huffington, T Boone Pickens, Sheryl Sandberg, Jeff Weiner, Eric Schmidt, Indra Nooyi, George Clooney, Seth Godin, Ginni Rometty, Tony Hsieh, Steve jobs, Meg Whitman, and Guy Kawasaki.read more
There are seven ways everyone cashes out for the work they do. Here is a listing of the seven ways and advice on how to use them to generate better income.read more
So you hired the right people and you are managing them like a champ. Now you want to take the team to the next level. You want to develop the team to be better than it was the year before. Here are 10 tips to to help you along the way: 1- Curate and Orchestrate: Attract people that compliment each other to achieve great things. How you ask. LinkedIn CEO Jeff Weiner gives five tools (or skills or abilities… whatever rocks your boat): (1) Vision to see what the future will have (2) Product sensibility to devise a solution for customers that works (3) Business acumen to build a business model that works (4) Leadership to communicate the plan and attract the right people (5) Resourcefulness to get things done Take a look at your team, including yourself, to ensure your have these five abilities. Add or train people to fill in missing abilities. Orchestrate your team so each can deliver his/her ability effectively (i.e. unleash people who get stuff done on execution, visionary people in brainstorming, etc). 2- Train and Develop: Its up to you to train each individual to grow as a professional and deliver better results. The onus is on each individual to do the legwork to actively learn and apply it to their work. This learning can be on the job (through experience, shadowing you, etc) or through training sessions. Remember to train people for their next step before they get there. 3- Involve Them: You will face a lot of challenges and obstacles on your way. I experienced great results when I involved my team in the process of addressing these issues. One way I did that was to frame the issue clearly and briefly, formed groups of four people, gave them time to discuss, gave each group five minutes (uninterrupted) to share their solutions with everyone, put everything together and filtered it into the best solution. Its amazing how much energy this exercise released from everyone. They had a clearer understanding of the issues, felt more involved, and had more buy-in during implementation. I also assembled a follow-on team of people who get things done (see tip #1 above) to workout the details. 4- Let Them Breath: Everyone has to deliver results. At the same time, they should be able to take a breather and like where they work. Celebrate success (individual and team success). Connect with people on a personal level and get to know them. Some people have limits on how much of their personal life they share at work, but you can still connect with people as individuals. Smile, crack a few jokes, and/or talk about their hobbies. I had a game of hiding or placing people’s stuffed animals in the office. I also discovered for example one person who had a passion and talent for photography. I still follow her work and she follows my blog (Hi Lara:D). “People will forget what you said, people will forget what you did, but people will never forget how you made them feel” Maya Angelou 5- Hands On/Off: Running your business is like flying an airplane. If you are on your way to your destination and everything is working the way it should, hand over to the co-pilot. However if plane is losing altitude, it’s time to take over and steer the plane...read more
Is there a “best way” to manage people? No, but there are a lot of great examples to learn from. Managing people is an art form that will exhilarate and frustrate you equally. Here are 23 tips to be a superstar manager.read more
One of the most important decisions you will make is who to hire into your team. Having the right people on board can make or break your company. Here are six tips to get the right people on boardread more
10 Inspiring Quotes from Some of the Greatest Minds to Inspire You to Persistread more
As a business owner, you are constantly working to use the limited resources you have to achieve the best results and highest possible returns. You have to be effective (i.e. get things done) and efficient (i.e. get things done with the least resources). It’s an ongoing effort rather than a one time “mission” to accomplish. The Japanese concept of “Kaizen”, which stands for constant improvement, allowed Japanese companies to add incredible operational innovation to the world. When business owners and managers are faced with tough times (e.g. economic crisis or lagging profits), they naturally take a closer look at their company to see where they can cut the fat to ensure the company’s longterm survival. The Plot Lets imagine you run a company that sells two products. Each of Product A and Product B sells for $100 with $50 cost of material. Now after years of being in business, your company is breaking-even (i.e. zero profit) while competitors are profitable. That’s annoying because your quality and sales are the same as competitors. The Usual Suspects So you look at your expenses to find the fat eating up your profits. You explore the three usual suspects: Suppliers: You bargain to drop their prices or find cheaper suppliers. You conclude that you are getting a fair price from suppliers. Non-essential expenses: You look at cutting travel costs, employee fringe benefits (free snacks, etc). You find a few items you can cut, but they are too small to make a difference on your bottom line. Also, you believe employees like them, which improves their productivity and loyalty. Staff: It’s your company’s biggest expense, so you look to cut unproductive or nonessential employees. You conclude that all your employees are actually as, or more, productive than the industry average. Also, they are all working at full capacity so dropping any of them will be hurt your sales. What to do? There is another type of waste in your company that is more costly than these three combined. You will not find it by looking at your financial statements, but it’s there. Easy As ABC Activity Based Costing (ABC) from managerial accounting comes to the rescue (insert Mighty Mouse theme music). What we want to do is take all the activities (i.e. time in production, selling, travel, design, selling, clean up, etc) and allocate them to their products. Lets say your employees spend 3 hours making product A and 7 hours making product B. Assuming you pay employees $10 per hour, that means product A is costing you $30 per unit while product B is costing you $70 in activity costs. This means you Product A is giving you $20 margin ($100 price – $50 material cost – $30 allocated production activity = $20 margin) while Product B is taking $20 ($100 – $50 – $70 = -$20) from your profits. There it is! Product A is subsidizing Product B. If you sell more of product B, you will lose money and if you sell more of product A you will make profit. By having your activity costs (e.g. salaries) as a fixed cost, you will assume it is allocated equally between your products. That’s a mistake. Knowledge is power and now that you know, you can take action to improve your profitability. You can increase the price on Product...read more
The people you will surround yourself with will either make or break your company. You might have the privilege of picking your partners and employees and you might have to inherit others. When hiring people or picking partners, most focus on the other person’s technical abilities and track record. When it comes to personality, most of us go only as far as evaluating how likeable the person is or how well we think we will get along with him/her. There is a better way to pick the right personality. Let’s start by defining personality. The American Psychological Association defines personality as the individual differences in characteristic patterns of thinking, feeling and behaving. There is a branch of psychology dedicated to personality and plenty of attempts that apply theories to the workplace to help companies be more effective. In general, most of these theories will present four personality types at work using different labels: 1- Thinkers: They are intellectuals that value exploring new concepts, breaking the status quo, and charting new directions or better ways to do things. They value knowledge, enjoy discussing and debating ideas, analyze things thoroughly before taking action, and want things to be done well. They take their time before taking action and are annoyed when rushed. 2- Doers: They are action oriented, energetic, and playful. They hit the ground running, take risks, are competitive, have a heavy bias towards action, and like solving problems to achieve results. They are disorganized, get bored easily, and have low tolerance for long discussions and theory. 3- Organizers: They are the neat freaks who are very organized and strict about following the rules. They are dependable, loyal, stable, consistent, hardworking, and punctual. They don’t like change and prefer to stick to the rules. 4- Feelers: This is the “people person” type. They are emotional, expressive, sensitive, sincere, and entertaining. They care about other people’s feelings, add the “human touch” to the workplace, mediate in conflict, and are great at building a team spirit. They can walk into a room full of strangers and walk out as everyone’s friend. They take things personally and find it difficult to discipline people around them without hurting their feelings. What you should know about and do with personality types: 1- A person will have different degrees of each personality type. Some will be dominated by a particular type while others will have a balance between two or more. – Identify which personality type(s) you are. Rank yourself on the four types by splitting 100 points on the four types (e.g. You might be 40 Thinker, 30 Organizer, 20 Doer, and 10 Feeler). 2- There is no “good” or “bad” type of personality. Each personality has unique attributes that make them special and capable in certain circumstances. – Figure out your strengths and match your work to leverage them. Identify the attributes you need and pick people that have those strengths (e.g. Hire an Organizer if your processes need to be organized). Make sure you give everyone an equal chance to leverage his/her strength rather than fit them to your style. For example, my dominant personality type is equally Thinker & Organizer while my wife is mainly a Feeler & Doer. We have a constant struggle where she wants to get things done while I want...read more
The skill of giving presentations is a very important one for your career. Whether you are a fresh graduate, a middle manager, a senior executive, a salesperson, or an entrepreneur, you need to be able to give good presentations. You might be presenting to your customer, supplier, boss, team, board of directors, investors, or even a public official. The ability to deliver a solid presentation is a critical skill to help you make connections, get people to buy-in, and convince others to do what you think is the best course of action. However, most people are afraid of public speaking. In multiple surveys and polls, the fear of public speaking consistently shows up as one of the top things people are afraid of. For example, a poll conducted by Gallup in 2001 showed that 40% of people are afraid of public speaking and, interestingly, that number is higher for women (44% of women vs. 37% of men are afraid of public speaking). From my experience presenting in the corporate world, lecturing, and teaching people how to do presentations I realized how quickly people can improve their presentation skills by following a simple guideline. In some cases, it was a single session that gave people a major improvement in people’s presentations. I want to share with you the three main steps you can use to deliver a great presentation. Hey, you might even enjoy doing presentations: 1- Set your “Take Home Messages” (Your Goal) Before you start any presentation, ask yourself what the purpose of the presentation is. What do you want the audience to get out of your presentation? Pick one to three messages you want your audience to take away. Don’t do more than three points otherwise you will dilute your message and people will not remember anything. Once you set your key points, you have a direction for your presentation. You now can determine if the presentation was a success or not. If your goal was to get your audience to take action then you can see if they take that action after the presentation (e.g. buy, invest, change behaviour, etc). Your goals can also be simply to inform people about something, which you can measure. Example: I once made a presentation to the senior management team of a company where I had taken over a lagging division. The issue at hand was “what can we do with this division to grow it significantly and make profitable?”. I presented my vision for the direction I wanted to take along with the action plan, resources needed, and projections. I knew the presentation was successful because all the managers in the room were very engaged asking questions and contributing ideas to the plan. To put the cherry on top of the cake, the CEO told me after the presentation that he wanted to approach the board of directors to secure money to accelerate the division’s transformation. If you don’t set your take home messages, you will end up doing a “spray and pray” approach hoping that your audience will like something from what you throw at them. Not a good strategy. 2- Build Your Storyline (Behind the Curtain) Your next step is to decide how you will deliver your key message(s) to the audience. This is where the bulk of the work is,...read more
A lot of buzz has come out recently about crowdfunding (it’s also called peer-to-peer funding). I expect it will get even more in the coming year as new laws go into effect and more success stories emerge. Now, before I go into explaining what Crowdfunding is, let me wet your appetite by telling you that a few companies so far have raised over $1 million through crowdfunding. A media darling example is the 26 year old Eric Migicovsky who had an idea to make a smartwatch that works with smartphones (i.e. iPhone and Android). Working out of his apartment, he was running out of money and investors were turning him away. He put up a campaign on kickstarter.com to raise $100,000 for the Pebble smartwatch, which eventually raised $10.2 million from 69,000 people. There are other success stories. I included at the end of this post a two-minute video that explains crowdsourcing using whiteboard animation. In a nutshell, crowdfunding is when someone raises money from multiple people through a single campaign (i.e. 1-to-many). This is different from the “traditional” way of raising money pitching to banks or investors one at a time (i.e. 1-to-1). Some call it funding on steroids. THREE TYPES OF CROWDFUNDING FORMULAS: 1- Debt: People (funders) extend loans to a the fundraiser. For example, someone in Germany can give a $10 loan to a woman in Ecuador to expand her family farm. 2- Equity: Funders give money in exchange for ownership in the company (equity), which makes them investors. This act is expected to increase the activity in this segment when the JOBS act goes into effect in January 2013 and removes legal barriers in the U.S. 3- Contribution: Funders contribute money without taking equity or repayment (i.e. not an investment or loan). Some are pure donations while others offer gifts to the contributors. a) Donation: This formula is similar to charity where people donate for a cause with no tangible rewards for the contributor. GiveForward.com helps people raise money to pay for medical expenses. b) Gift (pre-order): Funders contribute to a campaign and receive promised rewards in exchange (tiered rewards for different levels of contributions). So if people contribute to an artist’s campaign to produce an album, they get a copy of the album, autographed poster/t-shirt, dinner with the artist, etc. Kickstarter.com and indiegogo.com are the most notable players in this category. DIFFERENT FUNDING MODELS: A) “All or Nothing” model: The fundraiser only gets the funds if they reach the desired cutoff point (set by the fundraiser). So if the pebble watch raised less than its $100,000 target, the funders would have kept their money and campaign would have ended as unsuccessful. B) “Take What You Get” model: The fundraiser takes whatever money is raised even if it falls below the target amount. HOW DO CROWDFUNDING SITES MAKE MONEY? Crowdfunding sites take a commission (typically 4% to 10%) off the money raised through their platform. The payment processing fees charged by third parties like Paypal (2%) are usually included in that commission. ADVANTAGES AND DISADVANTAGES Crowdfunding brings a lot of advantages for the fundraisers and funders. These include: Provide small businesses access money when other sources don’t Provide access for the “average” individual to access a new stream of investments or early access to rewards (e.g. pebble watch funders receive a watch before it’s out on the market) Taps into the average...read more
In a previous post, I talked in length about the financing sources available for startups and small businesses. I discussed the type of financing (debt vs. equity), the typical stages of growth the company goes through (idea, start-up, early-stage, expansion, and maturity), and the options available for financing (founders’ savings, family & friends, loans, credit lines, credit cards, crowdfunding, incubators/accelerators, angel investors, special programs and competitions, and venture capital). I discussed the advantages and disadvantages of each option with a brief summary of when it makes sense. Here I want to add an infographic that summarizes how the three dimensions work together. So it becomes clearer which financing options fit at which stage and whether the financing will come in the form of equity, debt, or both. Enjoy!...read more
I was playing with my one year old son the other day and it occurred to me that he was behaving in a very similar manner as many successful entrepreneurs I have been around. First let me introduce you to the little guy Kareem. Here are some of the behaviors he exhibits that he shares with successful entrepreneurs: 1- Sense of Purpose: From the second he wakes up, he gets going. He plays and explores the world around him. He is supercharged with this incredible energy. A few times in the day he will need to refuel and recharge. Believe me, when he’s hungry we have to feed him immediately! Entrepreneurs are driven by a vision and are known to have an incredible drive and energy to realize that vision. Many are known to see well beyond what everyone else sees and are willing to live through the ambiguity of how to get there. Look at Amazon’s Jeff Bezos, Virgin’s Richard Branson, Apple’s late Steve Jobs, and many others that are radiating energy as they move towards their visions. 2- Persistent: When he sets his mind to something, he does not let any obstacle get in his way. Even if the obstacle is an “authority” figure like his mom or me. If resistance doesn’t change our minds, he will switch to charm and before we know it, his mom and I are standing there laughing at how cute he is while he victoriously doing what he wanted in the first place. If there is one thing entrepreneurs need to succeed, it’s persistence. Many obstacles come up such as shortage of cash, people, competitors, and many other set backs that will test his/her commitment. 3- Picks his Battles: He lets go when it’s not worth it. If he doesn’t manage to get the toy he wants despite his persistence, he will smoothly switch on to something more interesting. Entrepreneurs have an overwhelming number of decisions to make, things to do, problems to solve, and opportunities to take. A key skill they need to have is to prioritize what to focus on, what to leave for later, and what to let go of. 4- Takes Risk: Risk is not in his vocabulary, literally. That’s why he has parents as advisors and bodyguards protecting him from getting himself into too much trouble. To succeed, an entrepreneur must take risks. A smart entrepreneur is not reckless with taking risks. S/he takes calculated risks that help him/her move towards his/her vision. S/he will listen to advisors, but will make up his/her own mind on whether to go ahead or not. 5- Takes Action: When he wants something, he goes out and gets it. He doesn’t procrastinate or wait for someone to get it for him or complains that he doesn’t have it. He just sets his mind to it and goes to get it. To succeed as an entrepreneur, you must have that internal locus of control. You will need to make decisions with limited information and clarity on what waits ahead. They prefer to take action rather wait. 6- Delegates: When he can’t get to the toy he wants, he will effectively recruit his mom or I to get it for him so he can play and explore. He communicates his needs clearly...read more
You might call it money, cash, dinero, masari, grimata, para, soldi, argent, dinheiro, moola, or something else. Whatever you call it, you need it to start and run your business. Many entrepreneurs don’t know where to go, are overwhelmed with the choices, or are unaware of some of the options for financing their businesses. Here I will list and expand on the funding options for your startup. To better understand the different sources of financing, lets first break them down by type and by stage they fit in. Then we will put them all together to make sense of it all: Type of Financing: Generally, financing comes in the form of Debt or Equity. Debt means you borrow the money from someone and agree to pay it back at a certain date, or schedule, along with interest. The lenders make their profit from the interest. The riskier your business is (i.e. chance of you not paying back the loan), the higher the interest rate they will charge you. This is why lenders check your risk level by looking at your track record, assets you can pledge, and potentially someone to vouch for you and pay them back in case you don’t. Equity investments is when someone gives you money in exchange for ownership in your business. The more developed your business is, the more they have to pay you for that ownership. There are other types of financing that are a hybrid of equity and debt financing such are convertible debt where the investor lends you money that can be converted to equity later on. For the sake of this article, we will stick to basics. Funding Stage: Businesses go through different stages from startup to maturity. The stage your business is in will determine the type of funding you will be looking for. You have four main stages of funding: i- Idea: At this stage, you have an idea for a product/service. The main priority is to validate that there is demand for it. Some people do that by getting pre-orders, expression of interest, research that supports the need for it, survey results, online registrations on a pre-launch page, etc. Most would-be entrepreneurs don’t move past this stage. ii- Start-up: At this stage, you barely have any customers or revenues. You are setting up shop and your main focus is on building a product to satisfy the market demand. Your main focus is to build something people want (i.e. your product matches the verified demand). iii- Early Stage: At this stage, you have an initial product and initial customers bringing in some revenues. The main focus is on growing the business to become profitable and self-sufficient. You will be aiming to grow your customer base, revenues, profitability, and your team to handle the work. iv- Expansion: This is the stage where your company has an established product, a sizable customer base, growing revenues, some profits, and an established team. The main focus at this stage is usually to expand the business to breakthrough from being an SME (small & medium-sized enterprise) into being a large, mature business. This is done by expanding the product line, moving into new markets, and/or taking market share from existing players. v- Maturity: At this stage, the business is a well established entity...read more
In a previous article, I talked about the 8 habits that hold corporate warriors back from entrepreneurship. Now, I want to talk about an external obstacle holding people from starting up. If you ask people why they don’t start-up a company for their idea, eight out of 10 will tell you “no money”. This is a formidable obstacle especially when you have financial obligations (e.g. family to support, debt to pay off, home to pay for, etc). However, many entrepreneurs started and succeeded despite having very little money to start with. Take Apple, which was started by Steve Jobs and Steve Wozniak who both had very little money and were working for large companies (Wozniak for HP and Jobs for Atari). They ended up starting and growing one of the world’s most valuable companies! There are plenty of other examples such as Mark Zuckerberg with Facebook. What is more encouraging is that it is easier to start a company today than it was before. The cost of starting a company is much lower than it used to be; it actually is approaching zero with all the new technologies, crowdsourcing, open source software, and cloud-based services available for entrepreneurs. I will cover this in more detail in another article. For the sake of argument, lets assume your startup will need money. Lets also assume that even if the startup costs are low, you will need to leave your job and focus on the startup. This is an opportunity cost since you will be giving up the salary you can make from the job. This means you will need some seed money to start and sustain your company until either it’s self-sufficient or you can get more funding to grow it. Lets take a step back first and list the main sources where you can fund your business. The options are: Your Savings Your family and friends (either gift, investment, or loan) Angel investors Bank loan Credit card Special grants (e.g. government SME program, business plan competitions) Incubators/Accelerators Each of these sources has its requirements, pros and cons. I will cover them in more detail in a separate article. Now, lets focus on how you can save to finance your startup. Pick up three buckets and manage your money like this: Bucket 1– We will call this the “Minion” bucket. Put 10% of your income here first. Use this to invest in safe long-term investments. This money should work for you like tireless minions to generate even more money for you. And the money they generate should also work for you so they all keep multiplying exponentially over time. Bucket 2– Let’s call this the “Play” bucket. Put another 20% of your income here next. This is money you will save for your startup capital. You can alternatively use the money to pay off your debts if you have a crippling amount. Bucket 3– We will call this the “Living” bucket. Make do with the remaining 70% of your income. Arrange your life so you can live off this 70% of your income. You will probably have to give up some of life’s luxuries to fit into this budget, but its worth it if you really care about your startup. Whatever you do, do NOT spend above the 70% with the...read more
I first learned about the theory of evolution when I was a psychology student at university. I took a class on motivation with a professor who was a die-hard believer in the theory, particularly on its effect on our motivations (naturally). Charles Darwin introduced the theory of evolution to the world with his book On the Origin of Species. An essential part of the theory was the idea of natural selection, which is commonly referred to as “survival of the fittest”. Before I go on, I am aware that the theory is controversial, but its irrelevant to this article whether you agree or disagree with it. So hold back your punches and bear with me. Briefly, the theory of natural selection proposes that members of a species or population have mutations over time. If the members with the mutations adapt to their environment better, they are more likely to survive, reproduce and pass it on to their offspring. Over time, this mutation becomes “standard option” since the members with it will out-survive others in the population. As this process happens repetitively over time, the species evolves and adapts to its environment better (this is called “selective adaptation”). So if we take rabbits as an example (no rabbits were harmed in the making of this blog): The rabbits that developed a strong sense of hearing were able to hear predators approaching earlier and were able to avoid them better than other rabbits. Over time, the rabbits with better hearing survived and reproduced while their hard-hearing cousins ended up as someone’s lunch. So strong hearing became a “standard option” for rabbits. So what does this have to do with business? I read an interesting book recently called “The Lean Startup“. The writer proposes running startups by using a process similar to Toyota’s Production System. Briefly, the lean method proposes that you should apply your resources (time, money, people, attention, etc) only on things that deliver value to the customer. Anything that doesn’t deliver value should be eliminated. So, the way I see it both theories are proposing the same thing. On one hand, Natural Selection says: Species + “good” mutations in traits = adaptation & survival as a species On the other hand, the Lean Method says: Companies + “good” use of resources = value to customers & survival as an entity Hey, you can get excited about this and apply it to yourself as an employee: Employee + “good” application of self = value to company and survival/growth in company So if it worked well for our species, we can make it work for our work and companies. Here are six steps to apply this to our work (be it a startup or an existing company): 1- Launch with something that delivers the bare minimum of what customers want. Avoid the temptation to add extra stuff (e.g. features) you assume customers want. 2- List the items you think will add value to customers (new features, design, price, promotion, etc). Prioritize them based on how much value they will add to customers. 3- Experiment: Behave like a scientist (lab coat optional) and treat each of these items as a hypothesis (i.e. feature X will give value to customer). Add each of these items to your product, starting with the highest priority...read more
I have come across many people who have been working for a long time in large companies, had plans to start their own businesses, but sadly most don’t make that leap. My father, may he rest in peace, was a corporate warrior. For the bulk of his career, he worked for a large firm as head of personnel and administration. He was very good at his work and had a great deal of experience. I frequently went to him for professional advice when I was grappling with an issue at work. Each time revealed to me the depth of his experience and wisdom. For a very long time, he had plans to start his own business. He had many ideas that included setting up a farm, a restaurant, chocolate shop, apparel store, and many more. He was a very meticulous man with great attention to detail. He put together business plans for each of these ideas, but never pulled the trigger to start any of them. That got me thinking how I too had business ideas and, like many other people, did nothing about these ideas. Why is that? After a lot of introspection, observation, and reading, I concluded that such corporate warriors have habits that get in their way of taking the leap into entrepreneurship. So, here are the habits (drum rolls please): 1- Need for Permission: When you work at large entities long enough, you get used to living in a hierarchical structure where there is always someone to give the green light before you make big decisions. It becomes a habit for you to look for that approval, or confirmation, to go ahead. It becomes unnatural to just leap forward without that approval. It almost feels like you’re committing a crime. 2- Too zoomed in/out: Many corporate warriors develop in-depth experience in a single field such as marketing, human resources, finance, etc. As they take on more senior roles in companies, they become more focused on their field and are less exposed to the others as others lead on them. When they decide to take the leap into entrepreneurship, or plan for it, they tend to zoom into the fields they are familiar with and spend too much time addressing every single detail. This would be fine, but it comes at the expense of everything else. They either ignore the other parts of the business or brush over them too vaguely. I experienced this on a consulting project I was working on for a group of scientists planning a biotechnology start-up. I had a very interesting debate with one of the founders about whether they should have any marketing for the business. The founders were scientists with very impressive knowledge and experience, but no business background. Marketing seemed too superficial and a waste of time for them. They wanted to focus on the operation section of the plan since they knew a lot about it and felt it was their differentiator. I eventually managed to convince them that they actually have to think about how they will sell their services. I think the magic words that got them to listen was “you could end up putting all this work and spending your life savings, but fail because you don’t have enough customers”. 3- Focus: this...read more
Read enough about business plans and you will eventually come across someone who will tell you that a business plan is a “living thing”. I’m surprised how few people understand what this means. First, lets clarify that your business plan and your business plan document are two different things. Your business plan is the analysis, decisions, and expectations you have for your business. The business plan document, on the other hand, is a way to capture all that. Bear with me because it’s important to understand the difference between the content and the document. You can extract an entrepreneur’s business plan by asking him/her enough questions about the business. A business owner, over time, will develop an understanding of customers, the industry, and competitors. S/he will also have plans for how to market, sell, produce the product/service, and manage money. The entrepreneur will also have expectations (financial and non-financial results) for his/her business. Over time, the business owner will better understand his/her business and will then adjust the plans and expectations. This process is the “living” part. It’s like a child that learns and adapts to life as s/he grows into an adult. It helps to document it, but it’s the process of learning, doing, and adapting that we need to focus on. Join us to get a more detailed business plan template with a checklist of key points to cover while building your plan. It’s...read more
Working on a business plan can be an intimidating thing the first time. To many, it feels like an obstacle in the way of getting straight to business, literally. It’s tempting to skip it when you hear a lot of entrepreneurs brag about not having business plans. Before you brush past it, know that these same entrepreneurs actually do have plans; they just didn’t put them into a document. They all have an understanding of their businesses. They have plans and expectations for their businesses. Some are better than others, but they all have plans nonetheless. Business plans come in different forms, shapes and sizes. To demystify the business plan, here are the three key ingredients of every good business plan: 1- Analysis: This is where you make sense of your Market, Industry, and Competitors. By the way, many people confuse the market with the industry. Think of it this way: having a sandwich shop on a university campus means you are in the restaurant business (industry) and your customers (market) are primarily students. Understanding your customers is perhaps the most important part of your plan. The more you know about them, the better you will be able to deliver something that solves their problem and makes their lives better. That’s why many entrepreneurs were on the customer side before they started-up their businesses. Perhaps the most important part of the plan is understanding your customers. Find out everything about them (who are they, how many of them is there, where they are, what they need, etc). Note: I will discuss in another post how entrepreneurs today can understand their markets faster than was possible before. For your industry, you need to know what it takes to work in your industry (key suppliers, technology, regulations, etc) Of course, you also need to know what your competitors are doing (their prices, strengths, weaknesses, etc.) Do your homework here and you will do well. 2- Action: This is where you lay out how you will run your business based on what you know about your customers, industry, and competitors. You will decide on sales and marketing (what you will sell, for how much, how you will promote it, and how you will distribute it), operations (what needs to get done), people (who will do what), and financing (how will finance and how much). These plans have to fit well with your analysis. So for example, when your customers are students, your prices have to fit their budgets. 3- Results: This is where you show and forecast results of the business based on your analysis and decisions. Your results will be financial (income statement, cash flow, balance sheet) and nonfinancial (number of customers, average spend per customer, repeat customers, customer defects, etc). It is VERY important to list your assumptions when you get to this part. You will be surprised how many assumptions you will have in your projections (e.g. how many customers you will have over time). As you get traction and feedback with your customers, you will validate and update these assumptions. The rest of the business plan works around these three building blocks. The other sections will include your executive summary, business description, risk analysis, appendices, etc. Start with a good base, and the rest will...read more