Here is a recap of highlights from articles and discussions posted on the Applied Entrepreneurship group site on LinkedIn.
*Draft Your Competition by Wil Schroter
If you have a brilliant idea for a new product or service area your company can exploit, but after a little digging, find other smart people have had the same idea and already launched companies to take advantage of this opportunity, how do you use their first-mover advantage against them?
Schroter thinks you have to learn how to “draft” your competition, like they do in a NASCAR race, to take advantage of their lead until you are ready to pull ahead. Let your competition take the immediate hits and focus your attention on capitalizing on the wins that they find, by quickly introducing your product right behind it.
Being the first requires far more energy and risk than being the second. Your competition assumes a good deal of risk by riding out in front. Get to the “Next In Line” slot.
The first step in business drafting is to take a baseline inventory of the competition’s offering. If you even want a shot at making their customers your own, make sure you’re taking them something comparable. Your single best source for evaluating baseline features is your customers. If they don’t need it, neither do you.
All of those ideas you had about your competitor’s shortcomings and all of those suggestions the customers gave you can become the new features that you implement with your reserves to catapult you around the business you’ve been drafting. Use this strategy to climb, feature-by-feature, customer-by-customer, all the way to the front of the pack. Then your goal is to keep your eyes on your customers’ needs and your competition, and keep innovating to stay out in front of the pack.
*Compress Time by Wil Schroter
Compressing time in a business means reducing the time between two salient points of development, such as reducing the time it takes to acquire a customer, service that same customer, or even to get paid by that customer.
Most business plans fall into the rut of doing what seems obvious, such as by creating a sequential and time-intensive approach to growth, but Google and eBay took a different approach. They realized that, in order to grow fast, they had to acquire customers at an alarming rate and had to acquire millions of free customers in order to get hundreds of paying customers. Their business models basically gave services away to compress the timelines of customer acquisition. Now that they have a huge network of customers, they can spend their time servicing the remaining paying customers.
Get rid of the bloated, sequential processes that keep companies from growing faster. The fastest growing companies have earned their positions by concentrating on being fast growth companies. The beauty of compression is that it eliminates time wasted on those tasks, which are not moving you toward your goal quickly.
Compressing timelines just for the sake of speed isn’t always in your company’s best interest. Some aspects of your business, like your corporate culture, benefit from developing over time. With each decision to speed things up, you must recognize which aspects of the organization may be strained as a consequence.
*From Rags to Riches – The Levi Roots Story by Matthew
This is a nice story worth reading. It can take several years of dedication and hard work to make an idea you truly believe in a reality, but it sometimes only takes a single day to turn everything around. Roots immersed himself in what he loved. He got a break and wowed them. He diversified. He continues to come out with new ideas, services and products.
*The Small-Business Balancing Act by Dileep Rao
Focus on building a sustainable business and treat the money you raise as lovingly as your spouse by keeping overhead low. Get a solid toehold in one market segment, and manage your cash by demanding faster payment in return for better service. Dominate one segment, generate some profits and then look to expand.
Finance your growth in stages.
Always have a Plan B.
*Wooing and Choosing the Right Backer by Jim Casparie
Not all funding is created equal, even in tough times. You should jump at any angel willing to scratch out a check, deep pockets notwithstanding. Some angels are more intractable and demanding than others, but bring less to the table in terms of expertise and guidance.
Dismiss the notion that the choice of an angel is totally up to you–ultimately (and especially in this environment), angel investors choose business owners. Also, try to remember that desperation–the kind that kicks in when your young company’s very survival is at stake–chokes off all vestiges of sanity.
Whip up excitement about your prospects, by sequencing your presentation so it progressively builds your story. The elements are:
- A 15 to 30 second verbal summary covering the essence of your business proposition, also called an “elevator pitch.”
- A one page plus, executive summary that captures the one-of-a-kind investment opportunity you are offering.
- A clean, clear, 10 minute max, Power Point presentation, that answers questions like who you are, why you are special, how you will succeed, what you need to ensure success (besides money), and finally, when and how much the investor will get paid back.
- A comprehensive business plan that expands on the questions in your Power Point presentation but still comes in at under 25 pages.
What I Think
I think this may be one of my favorite selections of articles since I refocused this blog. I also think I see yet another string emerging, which is interesting to me, and hopefully to you, because these articles were picked pretty much at random. I was not trying to pick articles that fit a theme. I do that sometimes, but this was not one of those times. It started out as day #2 of Will Schroter
The string I see here relates to leapfrogging over the competition. The drafting article gives us one strategy. If you have a great idea but others are ahead of you, work you way up just behind them by watching what they do well and poorly. Take them apart, capitalizing on your ability to slightly improve what they do well, avoiding what they do poorly, and capturing what their customers (and your prospective customers) want but are not getting enough of from them. Wrap that up with a bow (i.e. your branding) and give it to your customers, incrementally.
I have never driven a NASCAR vehicle. I have run track, done a little downhill slalom racing, and participated in some other sports where wind and resistance can be a factor. Letting the leader break the resistance for you, so the leader is doing more work than you, gives you an advantage at the end of the race. In a slalom race, for instance, if you go second, the course is often faster and you can see dangers the leader hits, but you can avoid. In NASCAR you actually get a little pull, as well as avoiding the push of resistance. Why not use this same principle to your advantage in your business?
Levi Roots jumped ahead of the pack in a different way. He basically had no chance, according to conventional wisdom. That perseverance we often see in these articles, however, became mixed with simply immersing himself in two things he loved. He got a big break, but that was not responsible for his success by itself. Lots of us get a break and never even know it. Lots of us get a break and squander the opportunity.
Levi Roots apparently saw the opportunity and capitalized on it. Not only did he take advantage of it, he maximized the ROI by expanding into a number of relatively diverse markets, while staying within an area of expertise and passion. He continues to expand the ROI by remaining creative and building upon the resulting energy and synergy.
Perhaps my favorite article in this group is the Compress Time article by Will Schroter. This is probably partially true because as I was reading it, a client called, and I was immediately able to suggest a way my client could leverage what he was working on to get one customer, but instead potentially get many customers out of nearly the same effort.
Since that episode, I realized that many of my clients could use the same thinking to leverage their efforts to achieve a multiple of the ROI they had been working on, while expending nearly the same amount of their resources for this greater reward. We can’t count on getting a break like Levi Roots, nor exploiting it as successfully if we do. The Wooing and Choosing the Right Backer by Jim Casparie gives a very nice set of rules to follow when talking to an investor. The Compress Time article, however, gives us a paradigm shifting strategy, which I, for one, will now have in the back of my mind when looking at every business deal. How about you?
If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.