Archive for the ‘Startup’ Category

Entrepreneur Grows Up To Be Kid Again

Posted: September 9, 2015 by Jerry Malsh in Culture, People, Startup

“My name is Dan Berger.” “My name is Dan Berger.” “My name is Dan Berger.”

jerry-malsh-2015When asked to tell his senior class at Denison University about himself, Dan Berger mimicked the format of “To Tell The Truth”, a popular TV game show of the 60’s, by standing up and sitting down three times … each time describing a different aspect of his life.

First, there was Dan Berger the serious student. Next, there was Dan Berger the not so serious guy who loved to drink beer and play his guitar. Finally, there was Dan Berger who today has honestly forgotten whatever the third aspect of his life actually had been back then.

Yet what Dan didnt say about himself that day actually said more about who he already had become.

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aviramLong ago in the dot-com era, business models were the rage. But along with other questionable notions like cost-per-eyeball and stickiness, the concept of business models has fallen into disuse. It’s now time to revive this powerful shortcut to profitable thinking.

What is a business model and why would you need one?

A business model succinctly describes how your business will make money. It is shorthand, a model–insuring that all your business bases are covered, detailing only the essential elements: how you produce a product or service people need and want, how you put that product in their hands, and how you make a profit.

That seems simple enough, doesn’t it? But have you actually gone through this exercise?

Have you taken the time to consider the critical factors for your business success, making sure you have adequately addressed each one?

Suppose your business is already generating a profit. Do you need a business model?

Consider this: If you can’t describe–briefly and to the point–how your business performs each critical function, you are probably not earning the most money possible from the opportunities available to you.

But a business model is more than just a list of the essential elements–it is a cohesive narrative which you can communicate easily–to customers, vendors, lenders, investors, employees, anyone…

And just like a financial model–which allows you to identify and tweak various components like lead conversion rates or the cost of money–a business model helps you identify, then tweak, individual components to increase your profit.

There are four key parts to a solid business model:

The Value Proposition

Your value proposition links the individuals and organizations in your market segment to the products and services you offer, via the unique constellation of ‘value elements.’ Your value proposition answers the questions: who are they buyers, what will they buy, and why will they buy it.

The Production System

Some people call these operations. We like ‘production system’; it states clearly that this is about producing value. Your production system is the way you deliver your company’s unique value to your customers, in the form of products, services or both. It could involve creating something in-house or outsourcing. It could involve manufacturing from raw materials, assembling components, or even buying finished goods for resale. It could involve providing services with your own staff, using outside contractors, or assembling a team of virtual contributors.

The Distribution System

Your distribution system includes those parts of your business which identify potential buyers and helps them buy your product or service. This is what people traditionally think of as marketing and sales. It also includes logistics decisions like format, packaging, and delivery mechanisms.

The Profit Formula

This is how your company is going to make money. As it is said, do the math! You cannot buy high and sell low expecting to make it up on volume, regardless of what people hoped in the dot-com era.

Buy low and sell high will make you money, but unfortunately that little bit of info that doesn’t tell you quite enough to get rich. You must buy low, make whatever you buy worth more via some kind of added value, and then sell high enough, over and over again. Your profit formula describes how you are going to do that.

Of course, there are numerous other secondary components to running a business, but your business model will only include them when they are pivotal to your particular business design. For instance, a company which provides on-call engineers would include its special method for recruiting qualified engineers, which in most companies would be considered part of the HR function.

If each element works well on its own, the value proposition is sufficiently unique and compelling, you can economically and reliably produce value for your market, you have a repeatable and cost effective way of identifying and selling to customers, and finally you can sell things for more money than they cost. You will make money. But if any part of the model does not work, in the long run, and the long run could come quite quickly, you will go broke.

Your first step to profiting from a business model is to describe your own. List each of the four headings on its own fresh sheet of paper. Then write, in narrative form, how each works in your business. This may take one paragraph, it may take a page. If it takes any more it is likely too complicated.

Make sure you can describe each clearly and simply, value proposition, production system, distribution system, and profit formula. If an area is not sufficiently clear to you, it needs work, immediately. Because this area is holding back your business and costing you money.

Avi E. Ram

www.Araytha.com

 

Tom Heuer, Miami University Center for EntrepreneurshipRecently, I was thinking about the people who really made a difference in my life. A few mental pictures popped into my mind. As I remembered these individuals, one very important ingredient emerged – humility. All were individuals of the highest character. Their personal character was why I listened intently to and believed their message. As I matured, character was also the reason why I chose not to be mentored by certain people. It was difficult to embrace their message when I experienced their self-serving attitude in every situation. Their life motto was “my way is the right way.”

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Think Big and Change the World

Posted: July 12, 2015 by Bill Cunningham in Innovation, Planning, Startup

bill-cunningham-sc“Whatever you are thinking, think bigger” – Gaye Crispin

Entrepreneurs love to think big. Go big or go home. Life is too short to think small things. And so on.

Of course the first spark, that twinkle in your eye may be small at the start. Taking your idea to a full-blown entrepreneurial rocket ride to Mars requires big, big thinking. Look back at “really cool” ideas that have changed the way the world works.

The music business has gone through tumultuous change since Edison figured out how to record sound and play it back. From the first 78 rpm record which begat the LP Vinyl record which begat the infamous 8-track tape player which begat an even more convenient cassette player which begat the CD and DVD revolution all leading up to a totally digital downloading economy. And now this is birthing the streaming economy so that you can have 14 million songs at your fingertips.

Did Edison even have a clue of what was to come. Of course not, but he imagined great futures with his technologies.

Uber is transforming the transportation (and logistics) business in many ways. Whenever a discussion about Uber occurs, people talk about how they ambushed the taxi companies — they had no clue that competitive force was growing. Look deeper into how Uber is becoming part of our urban fabric and you will find more industries for which Uber is becoming a competitor. First of all, there is the automobile industry — many Uber riders say they leave their car home on weekends and party on down to Over-the-Rhine so they don’t have to worry about having that extra drink. So if you use your car two fewer days a week, your car will last longer — and you won’t buy as many cars in your lifetime — completely changing the car industry forecasts.

Many Uber drivers earn a decent living driving revelers back to their cars the morning after a wedding reception or big night on the town. So the number of DUI’s and police required go down. There are fewer life threatening injuries — so emergent health care population reduces. Fewer court dates, attorneys and doctors out of work and safer roads are all a result of Uber’s enabling people to be more responsible — and it is economical — so the market forces are driving this new-found responsibility! Imagine that.

As Uber expands it reach into new markets, (now funded by Google to the tune of $225M investment last year) more changes will proliferate naturally through these market forces. Buying groceries, picking up kids after school, and filling up space on tractor-trailers will benefit from Uber and Uber-like startups. The impact gets magnified and duplicated across many market segments.

One of the key elements to success in your startup is the belief that you can create big ideas. If you are not creating big ideas, then you won’t get the time of day from investors. Dean Kamen, inventor of the Segway, raised the first part of a $100 million round without showing anyone a business plan. Why did those investors invest? Because Dean Kamen  was a big thinker — he had a track record to doing big things (Like inventing the mobile insulin pump when we was a sophomore in college — and that was before he dropped out.)

Swing for the fences, throw the long ball, skate to where the puck is heading and go for the gusto!

 

An Entrepreneurship Revolution

Posted: July 5, 2015 by Chuck Matthews in People, Startup

Dr. Chuck Matthews“I wish to have no connection with any ship that does not sail fast; for I intend to go in harm’s way.”

                     — John Paul Jones

On a recent trip to Philadelphia as I toured Independence Hall and stood in the very room considered to be the birthplace of the United States, I was reminded of the inseparable connection to commerce and the inevitable revolution at hand. In 1775, a host of economic, policy, and political issues fermented and festered until the colonists clamored for independence from the United Kingdom. It culminated in a secret vote by the Continental Congress declaring independence from Great Britain on July 2, 1776, quickly followed by the formal publication of the Declaration of Independence on July 4th with delegates stepping up to boldly sign their “treasonous” intentions on August 2nd. Commerce in the colonies was under attack often embodied in repressive taxation that limited both business and individual freedoms.

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Have your Ark Ready

Posted: June 28, 2015 by Tim Metzner in Leadership, People, Startup

TIM-METZNER-BWAs I was reading one of my favorite business/leadership books, The Bible (seriously, you’d be amazed how much relevant and insightful stuff there is for entrepreneurs), the story of Noah struck me as particularly relevant today.

There is no shortage of articles out there today about what Millennials are looking for in work/life, so let me summarize it for you: they want to do stuff that matters. This statistic from a CNN Money article is pretty telling: “A full 60% of 2015 grads — and 69% of 2013 and 2014 grads, who were also surveyed — said they’d rather work for a company that has a “positive social atmosphere” even if it means lower pay.”

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Running a Tech Company without the Tech

Posted: June 21, 2015 by JB Woodruff in People, Startup, Technology

JB-WOODRUFF-BADGEMy job is to help entrepreneurs.  The majority of businesses I encounter have technology-based solutions in the form of a consumer app or SaaS (software as a service) product.  It’s not surprising that we see a lot of founders of tech startups given the media attention and big payoffs. What is surprising is the number of founders that aren’t technology people.  This led me to ask the question, what’s it like to run a tech company without the tech? In the context of this article I consider tech to be a team member with developer skills that includes coding and infrastructure knowledge.  Instead of pulling solely from my own experiences, I decided to reach out to a few entrepreneurs to get their thoughts.  Here’s what I learned:

“How do I find good tech for my team?” You can never start looking early enough for tech on your team.  It can be a lengthy process that involves a lot of networking, referrals, dead ends and reboots. The difficulty is finding someone who has the skills, reputation and equal or greater passion for your business.  Amanda Kranias (Hello Parent) highly recommends, “talk to other companies/teams and listen to what others experienced using the developer.”  Casey Williams (Linkedü) offers another opinion, “I got burned by hiring someone based on a recommendation.  The two developers I’ve hired from within my own network have worked out well.”  Moral: You need to do your homework, meet a lot of people, trust your gut and move on when it doesn’t work out. (more…)

When Bee Met Evan and “Loyalty Capital”

Posted: June 14, 2015 by Jerry Malsh in Money, Startup

jerry-malsh-2015Meet Bee Roll, entrepreneur, founder and owner of Beezy’s Café, a small, growing and community-oriented business in Ypsilanti, Michigan.

Now meet Evan Malter, entrepreneur, founder and CEO of ZipCap, an innovative San Diego-based lender of low-interest loans to small, growing and community-oriented business owners that are financed by the customers who choose to patronize those businesses.

This emphasis on local businesses is reflected in the fact that ZipCap is actually the abbreviated version of the company’s more formal name, Zip Code Capital, Inc.

Bee and Evan met when she wanted to expand Beezy’s by offering more products and services to her customers and her community yet couldn’t secure a loan from traditional banks because she didn’t have sufficient collateral. Evan’s business model, based on the concept of what he calls “loyalty capital,” seemed to be an ideal fit for both of them.

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An Entrepreneur As Catalyst

Posted: May 24, 2015 by Jerry Malsh in Culture, Ecosystem, Innovation, Leadership, People, Startup

jerry-malsh-2015By now you’ve probably heard about the young Seattle entrepreneur who recently raised the minimum wage for all 120 employees of his firm to $70,000 per year (phased in over the next three years) while lowering his own salary to $70,000 from its previous high of nearly $1million.

Why?

  1. Because he wanted to help the people who have helped him grow his business by making a positive, significant difference in their lives. Not just the difference between falling behind and catching up, but the difference between catching up and moving ahead.
  2. Because he knows how out of whack CEO-to-worker pay ratios have become. The ratio of CEO-to-worker pay has increased 1000% since 1950, according to data from Bloomberg.

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Small Business and Innovation

Posted: May 17, 2015 by Chuck Matthews in Innovation, Startup

Dr. Chuck Matthews“There’s a way to do it better – find it.” – Thomas Edison

In recognition of National Small Business Week earlier in May, small business owners were celebrated for turning their innovative ideas and passion into successful business ventures. It is richly deserved recognition. In fact, research by the US Small Business Administration Office of Advocacy and others suggests small business owners outperform larger companies when it comes to driving innovation. Specifically, considering patent issuance as a measure of innovation, it is estimated that small businesses produce sixteen times more patents per employee than large firms. While small firms’ cumulative patents account for only eight percent of total patents granted, they contribute a fourth of the patents in the top 100.

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