Here is a recap of highlights, quotes, and comments from articles and discussions posted on the Applied Entrepreneurship group site on LinkedIn.
*Identifying and Reducing Cost Generating Friction In Business by Abe WalkingBear Sanchez
On average 25% of the Total Cost of Doing Business is tied to inefficiencies…the waste of time, energy or materials, and I’ve had many CEOs tell me that 25% is on the low end.
Before improvement/change for the better can take place two thing must happen; first there must be an acceptance or acknowledgment that a business doesn’t have to be sick in order to improve, there is always room for improvement.
The Five Organizational Ps:
- Purpose: Every business function must have a clearly stated purpose which answers the question, “Why incur the costs that go with the function?”
- Policies: Goal driven guidelines for each major component within the function.
- Process: The step by step method for achieving the goals established by the policies.
- People Requirements: The right people for the job based on the process.
- Process Monitoring and Performance Measurements: Monitoring key steps in the process to ensure quality and measuring against the goals established by the policies.
If the established goals are not achieved, either the process is wrong or you have the wrong guy in the job.
Financial profit is necessary for any business to stay in business and the best way to improve on profit is to do things as right as possible the first time. We will never achieve perfection because things keep changing and that’s why Policies and Procedures are never done and we need to place a cover sheet on them that says “UNDER CONSTRUCTION”.
*Lessons I Learnt From My Business Failures by Adam Khoo
I have lost a quarter million dollars in one year that was invested in an Interior Design Company. The whole business went bankrupt. One of the lessons learnt (sic) from this failure was in the choice of my partner. I chose the wrong partner.
It’s better to work with people whom you are not friends with in the beginning, but you become friends in the process. When you work with friends, you tend to be very similar. You tend to have similar interests, passions and hobbies.
I went into a business that I didn’t have knowledge about and it wasn’t within my circle of competence. I knew nothing about interior design. I had no passion for interior design. I just went in because I was greedy. And that’s what killed me.
The lesson is to not go into something you have no passion and interest for.
Presence in the business is also very important. Focus and Presence.
Someone must be able to be the leader and be able to be in the business 150% of the time and be really focused in that business.
One of the problems with my previous interior design company was this. My partner was not a businessman, he was a designer. He was a great designer but he couldn’t run a business.
And he expected me to be that businessman to drive that business which I couldn’t fulfill because I was running 4 other companies at that point of time.
So that’s why the company collapsed. So you need a key driver, you need someone who is business-focused, who knows marketing very well, who knows accounting very well, who’s very good at leading the team.
*Every Piece of Startup Advice is a Lie (including mine) by Tony Wright
I’m going to give you the two pieces of advice that (near as I can tell) EVERY successful founder has followed. Zero exceptions.
- Build something people want.
- Don’t stop. Persist. Keep going.
*Half-assed Startup – How to Start your Company and Keep Your Day Job by Tony Wright
It’s not always practical to dive in full-time. And sometimes when your idea is off-the-wall and also easy to build a prototype for, it’s smart to whip something out just to see if what you’re building is as cool as you think it might be before you take the plunge.
You need a co-founder and some cheerleaders… If you can’t find 2-3 friends who are really excited to be beta testers for what you’re building, ponder changing your direction.
Pick a day or two per week where you ALWAYS work, ideally in the same room as your co-founder(s). ALWAYS, no exceptions.
Have a boat-burning target. What will it take for everyone to dive in full-time? 5,000 active users? 10,000 uniques a week? Funding? That should be a shared understanding. You don’t want to have one founder ready to go full-time when another has reservations.
Pick an idea that is tractable.
Be prepared for a long journey and be surprised if your startup is an immediate hit
What I Think
I think I see a couple of major points in the articles today, aside from the fact that some of the articles were written by folks who skipped a few English classes in high school. Didn’t we all?
I like the “Half-Assed Startup” article because quite a few of my clients can learn a lesson from it. The common threads here are:
- start cautiously by testing your product or service on some friends before going too far down the road and jeopardize your existing job;
- leverage your business early on by convincing a co-founder to join you (if you can’t convince anybody else you have a good idea, how will you ever get customers?);
- work toward making this a full time job in a consistent, disciplined way, by spending a specific amount of time, at least weekly, with your co-founder and development team working in the same room;
- have the co-founders make the leap at the same time from part time to full time.
I would add to these points:
- make sure you and your co-founder have the same personal goals in mind, perhaps even going to the point of taking personality profile tests and comparing results. Better to catch divergent goals or philosophies at the beginning than to have to deal with them later; and
- make sure you and your co-founder(s) have complementary skill sets; and
- make sure you and your co-founder(s) have well designed agreements negotiated, drafted, and executed before starting. Examples would be:
- non-disclosure agreements
- non-competition agreements
- equity and control agreements
- financial commitment agreements
I think that if you do the things above, you go a long way to avoiding the problems Adam Khoo had in his business scenario.
Some other points from the articles today are:
- Challenge everything when starting a new business. Albert Einstein is credited with saying, the definition of insanity is doing the same thing over and over again and expecting different results. If you are building a business, don’t make any assumptions. Test everything to see if there is a better, more efficient, more direct way of doing things. Test whether the “thing” need be done at all or can be eliminated from the process. Test whether the “thing” gets you closer to your goals or further from them.
- Everything you do, step-by-step, must relate to your goals. You cannot manage what you cannot measure. Measure each step to make sure you know exactly how your progress is taking you closer toward your goals or further from them. Monitor every process and always find incentives for everyone to improve each one, or eliminate it if possible for a leaner, faster path to the goal.
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.