Make it Happen

When you start a new business, it is tempting to pretend you live in a competitor free environment. It is frightening to think you have to recognise other businesses who are big and successful and dominate the market. Even if you secretly keep an eye on them, you’d NEVER tell potential investors… would you?

Well… if you don’t you’re doing yourself a disservice.

If you pretend they aren’t there, they wont go away.

A common complaint of investors I’ve heard is that companies down play their competition. This doesn’t make them look like a secure investment, it makes them look like they haven’t thoroughly researched their market. Listing every competitor (even the big ones) and having a sound plan of attack leaves potential investors far more impressed!

Defining your competition

They aren’t necessarily who you think they’d be. Competitors are businesses that are filling the same need, not necessarily providing the same solution.

For example a gym on the surface is in the business of fufilling the need to go to the gym - therefore their competitors would be other gyms. A lot of gyms, however are actually in the business of filling the desire to look better and thinner. This widens their competition to ‘weight loss’ companies like Jenny Craig, other exercise equipment, sellers of diet books etc etc.

A business that simply listed gyms as their competitors would look a little under researched… So who are YOUR competitors?

Climate change offers only one good thing to the planet… The opportunity to be part of the solution. If you have a business idea for a product or service that embraces a new, greener lifestyle AND a solid plan for making it happen within the next 2 years , you could win 500,000 euros…

If you entered the Cable Car Challenge, you are pretty much ready to go… If not, get started now because entries close on 30th August.

The Picnic Green Challenge is open to any individual from any country, companies, businesses or any other institutions are also eligible. You submit your entry online, in english, but you do have to get yourself to  Amsterdam on September 29th if you are one of the 5 finalists - And I’d say the publicity alone would be woth it.

So Act Now and submit your entry… Good LUCK!

Wil Schroter from the Go Big Network just asked a very good question. A lot of business, especially web based startups have a revenue model of selling to a large company and taking their place at a big dinner table. Wil has asked whether this is the right thing for you to do and has come up with a list of well reasoned points to consider before taking the plunge:

The Control Issue

“When you owned the majority share of your company, you may not have had the brightest future, but it was your future to determine. Now you’re talking about putting your future in someone else’s hands indefinitely. Selling your company is like joining the mob – once you’re in, you’re not getting back out.”

The exponential outcome issue

It’s far more likely that you’ll sell your company for $10 million with 100% ownership than that you will sell your company for $100 million with 10% ownership. That’s because the bigger the pie, the fewer the people that can eat it.”

The faster growth issue

“it takes exponentially more effort to double the size of a big company than a small one.”

The Pie thats “Just Right”

“In a nutshell, the timing is just right when the big questions we’re asking here don’t seem so important. If you think that the management in this new company is just right, the likelihood of a sale is around the corner, and your individual gains could never outpace what this new venture could yield, by all means go for it.”

Read it here

We’ve just this week closed off entrants to the Wellington Business Plan Competition - The Cable Car Challenge and received around 370 signups, around half of which got their entry down to the 2 pages required to get to the 1st round of judges for initial screening.

The competition is really just getting going at this point, and it’s been brilliant to meetup with some of the businesses on the challenge over the last couple of months, this is all about the people and their businesses making it happen, and there appears to be no shortage of this around Wellington right now.

If you didn’t complete your initial plan for the competition, I’m sure you started off because you’ve got a good idea and you want to see it become real, so don’t let the fact that you didn’t get your plan into the competition stop you progressing, you’ve obviously got an idea, now all you have to do is make it happen.

If you’ve never traveled the investment road before, you may find it ridden with potholes. In this half hour presentation delivered by Tim and edited to perfection by our superb Videographer Pattara (no more shaky film!!!), you can glean some simple but vital ways of filling in the potholes and smoothing the path to investment utopia.

Part one takes you from the groundwork you need to do BEFORE starting discussions, through to the introduction and how to gain initial trust

Part two walks you through doing the deal, from convincing investors this will be a mutually beneficial relationship, through to negotiating the deal and avoiding 11th hour surprises.

Part three explains some common and easily fixed ‘things to avoid’.

I spent the morning at a workshop on ‘the peculiarities of marketing software’ run by Melissa Clark-Reynolds at The Business Centre. It was fascinating. There were about 20 of us there and the first thing she asked us to do was introduce our businesses by answering four questions:

What is the problem you solve?

It is amazing how hard it is not to launch straight into your solution, and several people got caught out blatantly doing just that, while several more were borderline. We naturally are ‘me’ centric and it is very hard to realise that the person you are pitching to doesn’t actually care how great you are, they only care about whether or not you can help THEM. Imagine two different companies pitching to an investor:

• One talks solely about the solution they offer (the parallel was drawn between this kind of conversation, and the conversation you have with a date who INSISTS on filling you in on their life story)
• One explains succinctly the problem in the market that they have identified.

Which is the more powerful introduction? Which is the more common?

The lesson here is that no one really CARES what you do, part from you. What they do care about is whether you are solving a valuable problem.

Who else has the problem?

Who are some of your customers? Melissa, once again asked us to identify specific customers - i.e. large companies who, by becoming a customer, offer a sense of security for other potential customers.

Imagine, once again the same two companies pitching to an investor:

• One says “Our customers are all small businesses”
• The other says “We target small businesses and have the Local Council as a key customer. They offer our solution as part of their Small Business Package.”

One company sounds like it hasn’t actually got any customers, nor put any time into researching exactly who they are targeting. The other sound slike it has a clear strategy.

Melissa advised us to focus on one target at a time and really focus on their particular problem.

How did you solve it for them?

Now you can talk about your solution. What have you done that solves the problem you identified above? This should be a short overview of your product and service, using little to no industry jargon! The same two companies:

• “We solve your communications problems using a technology solution”
• “We build software that helps your communications department easily and efficiently deliver the same message to all 1,000 employees”

Company one is way too vague… What exactly is a ‘communications problem’? Melissa said she has offered the same course before and was almost driven insane with the number of people who ’streamline resource allocation’. That description effectively means nothing and is the fallback for anyone offering anything remotely connected to the area. We are all guilty of it without realising it, but an investor will see right through your jargon and think you don’t understand your own product.

What ROI did you deliver?

How do your customers get a return on their investment in your solution? Melissa wanted numbers and only about 4 of us could offer them. When you explain how your solution makes people’s lives easier, using case studies of specific examples of how you saved/made them MONEY. We meet the 2 companies one last time:

• “We will help you increase visitors to your website”
• “We increased customer X’s revenue by $20,000 a year by driving more targeted leads to their website, which turned into sales”

The focus here on specific numbers was key. A dollar figure in a case study is infinitely more powerful than a vague description of how your product will offer a return on your customer’s investment.

Get Practising

It’s a very difficult thing to be able to offer a quick succinct pitch that clearly explains what problem you are solving, how successfully you are solving it and who you are solving it for.

It really pays to get this down, and for most people it wont come naturally. Practise, however makes perfect and it’s really good to do it with other people so you can learn from each other’s mistakes and good points.

Last night was the launch of a competition that ALL Wellingtonians should take notice of. The Cable Car Challenge has a $50,000 prize up for offer to anyone who can come up with an idea for the next ‘billion dollar business’. While big cities and countries may be used to this sort of thing, and You Tube look as though they are starting their own, this is a pretty unique and exciting opportunity for Wellington (And only for Wellingtonians FYI).

All competitors can sign up to the competition for free here, which is, of course, run on PlanHQ

I don’t see any reason why anyone in Wellington who has ideas floating round the space between their ears DOESN’T give this a shot… At most you’ve got a massive kickstart to a life of excitement building your own business, at the very least, you’ve got an opportunity to formally practice getting your ideas into a business plan.
What makes this even cooler is that you HAVE to get your idea into a succinct pitch: If you are a finalist, you have the total length of the cable car ride (4.5 minutes) to give your pitch to the judges and the return journey to answer their questions. For the often rambling entrepreneur, this is great training.

Find out more and check out Tim’s portrait at Stuff.co.nz

I spend a lot of time wandering the web, looking for people talking about business planning. The biggest question that seems to arise is “Why do I need a business plan?”

1. A Business Plan Keeps You Focused

The easiest way to waste time and be unproductive in business, is to not know what you should be focusing on. Is it better to spend your time marketing, working on your solution, going to sales meetings? All these need to be done, but finding out which one gives you the most benefits at each point in time is key.

A business plan is a place where you set goals and track what you’ve been doing. If you can quickly see what’s falling behind or the biggest opportunity on your plate, you can stay focused on the right things much more of the time.

2. A Business Plan Makes you More Profitable

When we pick projects to take on in our web design business, we know that the most profitable ones are those that fit our skills or build our skills in an area we are trying to expand. While other projects can seem lucrative on the surface, it doesn’t matter how much they are paying, if it involves work outside our general scope, or a lot of investment into learning skills we wont need again, we generally make less money.

A Business Plan that clearly states what you do, helps you quickly match up projects with your business and see if they’re worth accepting. It also helps you identify potential partnering opportunities with business better suited to the discarded projects and therefore creates potential lead sources.

3. A business Plan Makes you more stable

If you ever want investment, advice or a loan for your business, the single best thing you can do is have a long-term record of your business history. How well you perform meeting targets, how your sales have risen and costs covered, how well you understand your competitive environment.

If you keep an up -to-date business plan instead of whipping one up at the last minute, you seem much more stable. A side effect of this is that you will BE much more stable - knowing where you’re at and where you’re going ALL the time.

There’s Business Plan and a ‘Business Plan’

The reason people don’t automatically see the benefits of a business plan, is because the static document version doesn’t really provide these benefits. In my web travels, I’ve seen people who have post-it notes business plans, whiteboard business plans, ‘Elevator Pitches’ and all sorts of other ways of making and maintaining a dynamic plan.

A business plan full of well-written sentences that is accurate at one point and one point only, has its place… but so does a business plan full of jotted down ideas and information that you keep updated as your business and your market move around you. And everyone who can’t see the need for a business plan is lying. They have one, they just haven’t discovered the right tool to take it our of their head and into a viewable format.

It’s been a great week for PlanHQ, heaps of new customers bringing their plans to life, and we’re just 10 days away from a major new release after months of feedback and insight thats going to bring your business plan even further into your everyday. To top it off today has been a extra special day for our awesome chairman and angel investor Rod Drury who has just completed a successful IPO of his main new business Online Accounting Software provider Xero raising $US 11 million.

We met Rod and began coming up with PlanHQ around the same time that he started kicking off Xero, and in the first conversation we had he said he was going to list a company of his own creation on the New Zealand Stock Exchange (NZX) in 12 months. Rod is one of finest example we know of someone who brings plans to life, when he makes a plan he makes it happen. The Xero business is at an early stage in their journey, but as the first IPO for the year on the NZX, its a great milestone.

Big congratulations to the Rod and the Xero team, it’s great to have PlanHQ located so close to and being able to work increasingly closer with an amazing team and brilliant web business like Xero. We’re finishing a long week with a quiet drink, and having a special cheers to Xero and Rod.

People who build successful business know its about your ability execute, to take great ideas and turn them into reality.

Investors look for executors

Smart investors know this too, and back people who are good executers. I’ve been reading the redeye VC blog of Josh Kopelman quite a bit recently, and Josh a serial entrepreneur and early stage VC offers up invaluable advice to help you hone your abilities as an entrepreneur, build a more successful business and be more attractive to investors like him.

Getting better at execution

Josh mentions a few key points in his article on the ability to execute, including building a good team, Focusing on core business, and building a culture of accountability where everyone is aware of their commitments and can track their progress. Here’s his comments:
“Is there clear operating plan with monthly/quarterly/annual goals/milestones?  Does the CEO hold him/herself and their team accountable for commitments?  Is there a dashboard to track key metrics? Are they disciplined about forecasting” I think Josh is spot on, and reminds me of how we help you execute PlanHQ style.

A Dashboard to track key Metrics

Being Accountable and achieving goals

Executing on PlanHQ

What’s clear in traditional business plan software is that it’s focused on helping you create a document and a spreadsheet, it helps you make a plan for one-off purposes, but it doesn’t help you make it happen and track progress. As people who have built businesses before and now, we know that the real value of a business plan is that it’s happening, it’s getting achieved - You’re executing.