Focus

It is the secret to entrepreneurial success.

Focus enables the entrepreneur to align available resources on achieving initial success for their product or service.

During my current professional sabbatical I’ve been reviewing business plans through the CONNECT Springboard program, as well as catching up with a bunch of entrepreneur friends.  A constant theme that prevails with struggling businesses is that they fail to focus their energies on one key aspect of their vision that might enable them to achieve initial traction.

Recently I met with three entrepreneurs, all working with ideas that potentially could result in great businesses.

The first entrepreneur spent 30 minutes describing their vision, and then another 30 minutes describing how it could be cloned into other market segments.   I tried repeatedly to get him to stop talking and simply describe to me the one killer “thing” that they were going to launch to kick off the business.  The response was repeatedly a mix of features that surely “together” would get them traction.  I tried as tactfully as possible to help him understand that in this market you must quickly demonstrate your business model’s success if you are to get traction with angel / venture capital.  Sadly, my projection for this team is that they will “hit the wall” with their friends and family money long before gaining market traction and becoming attractive to smart funding sources.  Simple focus on the one killer service for their market would likely produce a much higher probability of success.

The second entrepreneur I contacted after noting some exciting progress with his online business.  I was surprised to hear him tell me to ignore the website, as here is the big vision…..and 30 minutes later I was more confused that when we started.  He finished describing his business by talking about how badly he needed to raise money to make it all happen.  If he simply focused on turning his initial website into a profitable business, he just might earn the opportunity to expand to a larger vision.

The third entrepreneur, experienced as he was, exploded his pitch when he included “we are going to do it all” for small business.  Ouch.   I countered with a focused aspect of their vision that might achieve success quickly.

Lack of focus becomes evident immediately if the entrepreneur cannot describe his business in one or two sentences.  To me, it’s the startup acid test.  If the entrepreneur cannot quickly recite a concise elevator pitch, then they have not committed to a core focus, need to do more business research, and certainly are not ready for investor presentations.

Questions to ask:

1. What is the single most valuable component of your vision for your prospective clients?
2. If you could do only one thing what would it be?
3. What could you deliver to market with the resources you now have?

With focus, startup success is possible.

Confession – I’ve been guilty of a lack of focus.  One incident cost my startup team and investors a ton of money. It is a preventable mistake.

Starting a business is now easier and cheaper than ever before.  Technology and the Internet’s enablement of the virtual company is a game changer for today’s entrepreneur.

Reflecting back to my first company in ’93, we didn’t have anywhere near the technology leverage available to today’s entrepreneurs.  There was a definitive and painfully expensive suite of business startup costs that were hard to work around.  Necessities such as phone systems, fax, e-mail server, offices, travel expense, premium legal expenses, local labor and technology infrastructure put a hefty price on most technology startups.  Everything we needed was essentially sourced locally, with very modest thought about the impact of globalization.

Enter 2011, starting a business has been changed forever with the constant evolution of technology enabling the virtual company.  Here are some quick examples of how globalization, technology, and outsourcing are helping entrepreneurs manage basic business startup costs:

Legal Services*

• Incorporation – legalzoom.com, incorporate.com
• Online contract signing – Rightsignature.com (SAAS)

For my last two ventures, the enablers above would have dropped first year business startup costs by at least $500,000, which changes the dynamics of startup funding options substantially. Outsourcing product development could triple those savings. It’s a game changer for today’s entrepreneur.

What’s also important is to understand that the virtual company is the new norm when angel investors are looking at how entrepreneurs are managing their business start up costs.  In starting a business, to be competitive, you must now effectively deploy these enablers.  Understanding Geoffrey Moore’s lessons regarding what is Core verses Content when it comes to business startup costs is key.  Simply put, you must outsource everything that is not Core to your ability to delivery highly competitive products or services.

How can you tell if a company is an virtual company?  Well, it’s darn near impossible.  You would have to visit to determine if there is actually a physical presence.  So don’t let ego impact your decisions. Manage your business startup costs. Let the numbers tell the story. Fancy offices and other symbolic symbols of success can come later, once the business model has been validated and profits are flowing.

It’s critical that you understand that this quick summary of business enablers are just the tip of the iceberg.  Understand that globalization and technology will continue to revolutionize the virtual company and reduce business startup costs, enabling others, anywhere to compete in your market. Companies like Google have embraced this new reality from their inception. You must understand and embrace it immediately should you be considering starting a business.

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* Certain startup services, although great for bootstrapping, will undoubtedly need to be replaced by more comprehensive options prior to professional investment, legal services being at the top of the list.

I have a theory….there are no unique new business ideas.

There is simply a God of Invention.  Unlike other more serious Gods (fire, earth, etc), he (okay she) has a strong sense of humor.

Every now and then this God takes a really novel new business idea, encapsulates it in stardust, and sprinkles it down broadly upon the earth.

Lucky entrepreneurs and other intellects occasionally find and  recognize these stardust encapsulated ideas as pure inspiration……ah….I could start a business or make a million with this idea and they are off to the races…

• Some cleverly find ways to bootstrap the idea into fruition…
• Some are rich and pour tons of money into it
• Other seek angel or perhaps venture capital…
• Some simply study the idea looking for flaws or reasons why it could not succeed..

Little do they know, the God of Invention is watching to see what will become of the idea, and secretly smiles as those unsuspecting entrepreneurs think their idea is unique.  Competition, what competition….???

Ultimately it is not about the idea, but who has the drive and ambition  to turn it into something really great, far ahead and faster than the others…

Remember, the God of Invention is watching….

Every entrepreneur and company CEO has tough challenges, not the least of which is deciding upon an exit strategy.  Go the home-run (aka Facebook, Twitter), or execute a good solid single or double strategy (Adscape, Bloggger, Picasso, Magento, etc).  Understanding the funding and exit timing implications of both is key to making an informed choice.

Early Exits is a great seminar to help business owners take an objective look at their exit strategy options.  It is based upon solid research compiled by Peter Basil, author of the book entitled “Early Exits”.  It is distributed by the Angel Capital Educational Foundation as part of the seminar series “The Power of Angel Investing” and developed by the Kauffman Foundation.

This seminar was delivered by serial “super” angel Bill Payne.  Bill’s vast experience and super presentation skills made for a very informative and lively presentation. Our audience was an equal mix of Angels and Entrepreneurs.

As an tech executive, the seminar was especially great, as it presented really solid insight into the thinking of the angel community.  Here are a few of the many takeaways that hit home:

• Entrepreneurs must clearly understand the exit implications of Venture Capital and Angel investments
• Exit strategies, defined early, will help guide the optimal business strategy and market focus
• Angel group syndications are now enabling much larger investments
• Selecting the right Angel, for syndication board representation is critical
• Start up costs have fallen dramatically
• Venture Capital investments are likely not the right choice for many early stage ventures
• Big businesses are just as likely to buy as build, fueling early stage acquisitions
• Exit alignment discussions  with your investors should start early and be refined annually
• Early investors may need to be bought out if exit alignments are not in sync
• Businesses are sold and not bought
• Optimal exits involve a well though out sales strategy and a solid team
• Selling a company is a viable option as soon as  the business model is proven
• Early, detailed preparation is key for a successful sale transaction

Entrepreneurs, if this seminar comes your way, I’d suggest you attend!

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More on Bill Payne – http://billpayne.com/

Books for the reading list -

Early Exits by Basil Peters

Strategic Entrepreneurism by Jon Fisher, Gerald Fisher and Wallace Wang

Ultimate Exits by Dr. Tim McKaskill

Twenty years ago the University of California at San Diego, local San Diego businesses, and the city government created CONNECT to transform San Diego based institutional research into a center for technological innovation commercialization. It’s been working ever since.

The first Executive Director for Connect was local San Diego entrepreneur, Bill Otterson. For those of us fortunate enough to have worked with Bill, we knew nothing ever got in the way of his relentless efforts to develop and fund the organization. One of the programs he launched within CONNECT was the Springboard program, designed to help early stage ventures get traction for their key initiatives.

Recently I’ve been volunteering my time as an EIR – Entrepreneur in Residence within the Springboard program. My first assignment, assist startup venture “Dasko Communications” prepare for a successful round of funding. For Dasko the Springboard program has provided CEO Ray Barger with the advice and business contacts of at least six key San Diego executives, who became intrigued by Ray’s vision.

Dasko is getting very close to the right equation for success, at which time the Springboard program volunteers will “graduate” Dasko and facilitate broad exposure for Dasko within the angle and venture communities.

Springboard does not guarantee funding, partnerships, nor even that the program can help the entrepreneur, but if they are determined coachable, at least 100 senior tech community will step up to help. What more could an Entrepreneur ask for?

Note – Dasko is pioneering an innovative, internet based, interactive video solution for sales and product training, initially focused on pharmaceutical and medical product sales. www.daskocommunications.net

Recently a friend loaned to me Seth Godin’s book "Meatball Sunday: Is Your Marketing out of Sync?" Within the book he speaks passionately about many online marketing topics and highlights several companies "getting it right" in the online world.

One company mentioned, "Etsy.com", provides an online marketplace for all things handmade. Bingo. This was exactly what my 14 year old daughter Kalei needed to showcase her art. Her mom has been helping her develop artistic skills, but attending local art vendor shows was not the right long term sales venue for her products.

Etsy turned out to be simple to use. Kalei and I spent no more than an hour getting her "Kalei Lani Ltd" store established and her first art card listed for sale. Kalei then enthusiastically took over and with a few more hours of work had her whole card collection online. Her first two product sales closed that first night. Kalei Lani Ltd was in business!

Kalei still has much to learn about promoting her products online. Perhaps she should invest some of her early profits in Seth’s books, or at least a subscription to his blog!

Go Kalei Lani Ltd!