Up and Running Blog

January 2011

Interactive Map: Where We Move When We Move

by Tim Berry on January 31, 2011

This is cool, and maybe even useful. I caught Map: Where Americans Are Moving yesterday on Forbes.com.

The map is interactive, so you can click on any county and see movement in and out during 2008. The view I chose above shows how people move into Santa Clara County, CA (Silicon Valley) from the north central areas, and from there they tend to move out to the West Coast and Texas. What does this tell us about entrepreneurship and the Silicon Valley.

Then I did it from my home county Lane County OR, which is where we moved to from Silicon Valley 18 years ago. The patterns are radically different. People move here mainly from the west, and especially California; and it seems they leave for the west too, mainly Washington. Does this look like a gradual shift northward?

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Five Solid Startup Lessons from Box.Net Founder

by Tim Berry on January 28, 2011

This is a good less-than-four-minute reminder of Five Solid Startup Lessons, taken from Stanford’s Entrepreneurship Corner. The speaker is Aaron Levie, who founded Box.net from his dorm room.

The five lessons, by the way, are:

1) Do something that was not possible three years ago,
2) Do something you are extremely passionate about,
3) Don’t compromise,
4) If you feel comfortable, you’re probably not doing it right, and
5) Don’t write your obituary too early.

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If You Have to Ask, The Answer is No

by Tim Berry on January 27, 2011

Jeffrey Busgang titles his Harvard Business Review post “Should I Become an Entrepreneur?” I admit, it’s not an unreasonable question, and my response — if you have to ask, the answer is no — is probably unfair and too abrupt.

Even so, I answer that way to point out that entrepreneurship is so often something that happens to you, rather than something you choose. You fall in love with a business idea, a product, or a challenge, and you can’t resist. Or the opportunity arises, suddenly, and you say yes to it.

The idea that you choose entrepreneurship like you’d choose a sweater is acceptable, I suppose, because so many of us choose careers by establishing our interests. And “I want to own my own business” certainly comes up a lot.

My own three decades of entrepreneurship did not start me asking that key question. From the beginning, it was looking with eager anticipation at the possibility of making it on my own. I knew I wanted to do what I liked. But could I cover expenses? Keep the kids in shoes? And then for years it was a matter of making the next mortgage payment, not knowing for sure where the money would come from. And being progressively more unemployable as the years rolled on.

I like this: in the post, Jeffrey says:

I have concluded that being an entrepreneur is an irrational state of being. If human beings were purely rational, evaluative, value maximizing individuals, they would not start companies. If they sat down and did the expected value calculation by laying out the probability-weighted outcomes of being an entrepreneur as compared to taking a safe job, it would not pencil out.

How delightfully business-school-like to put it in terms of maximizing expected value calculations. However, I read humor there, Jeffrey’s tongue in his cheek, a suppressed grin.

I also like the series of questions Jeffrey asks to answer the main question. Including:

  • Do you have an idea that no one can talk you out of?
  • Are you prepared to endure with modest or no salary for a few years?
  • Are you bored with your current work environment/life situation?

I think he’s got it right, except perhaps his title, because as you look at the content he’s got entrepreneurship as something you can’t resist.

Think of it this way: do you dare to escape boredom? Can you? Will it work for you?

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jar-of-rocks

5 tips on how to release stress during your work day

by Chelle Parmele on January 26, 2011

I’m not a fan of stress. I don’t enjoy it. I haven’t actually met anyone who did. Some people say they strive on stress, but I don’t think that means the same thing as enjoying it. It takes a toll on your body, your energy and the people around you.

Starting and running a business is tough! It’s stressful and it’s full time. But don’t forget to take the time for yourself. You may not include massages or time on your mountain bike as business expenses, but in the long run they can be as important to your business as your computer or paperclips.

Over the years I’ve collected little pieces of advice from various sources that helped me get through particularly stress filled times. So take a deep breath… no really. Take a breath right now… ahhhh. Now read on.

1. Move. Standing up, stretching and walking around wakes you up and gets your blood and oxygen working and flowing. Try never to sit at your desk for long stretches of time. Even if it’s just a couple circles around the cubical maze, take time to move your body.

2. Put the big rocks first. I love this one. When you map out your day with your to-do lists and schedules, figure out what your big and important projects are and work on those first, all the “sand” and “little rocks” will fit in around those and you’ll find you accomplish things a lot faster. I know when I started thinking of my day in these terms, I felt a lot more relaxed in how I got my day situated and done.

3. Accomplish something. I love marking things off as complete. Nothing makes me feel success quite like accomplishing a whole list of ‘things to do’. Even when it’s small stuff. It’s still important. If I could throw a party for myself at the end of each day for all the great things I accomplished that day, I really would. And I’d invite all of you, and we’d have cake.

4. Play. Remember when you were little and the best part of your day was jumping into a huge vat of brightly colored squishy balls? Or jumping up and down on your toes because it made your pigtails go up and down? When did we stop doing that? Why did we stop playing hopscotch or jump rope. I want recess! When you leave the office, leave the office. Don’t bring it home with you. Home is for playing with the dog, weeding the flower garden, cooking a masterpiece, building the rest of that fence you only half finished before winter set in. Balance is a beautiful and healthy thing.

5. Enjoy Life. This is it. You only get this one shot. Make it count. And keep in mind that it’s generally not as bad as you first think. Stop, take a break, come back to it and you’ll figure it out. I promise.

‘Chelle Parmele
Social Media Zen Marketing Master
Palo Alto Software

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3 Main Pitfalls of Inexperienced Management

by Tim Berry on January 26, 2011

I liked this post listing Top 10 Pitfalls of Inexperienced Management Teams on BNET. I think author Steve Tobak nails several important points. My favorites:

1. Failing to say no to opportunities. The number one pitfall is taking on too much, starting too many projects, spreading resources too thin, and failing to focus on what’s most important: execution and growing the core business.

Absolutely true. And this pair of them, seemingly two sides of a single coin, also both very real (in my opinion):

4. Hiring other inexperienced executives. If you’re scratching your head and wondering how dumb is that?, you’re not alone. I can never figure out why entrepreneurs do this, but they do, and their boards, VCs and all, let them. It happens all the time. The result: the blind leading the blind.

5. Hiring executives just for their experience. All too often, entrepreneurs know they need to complement their relative inexperience with executives who’ve been around, so they hire people with big corporate backgrounds and overlook key qualities like how well they’ll do in a fast-paced, collaborative, entrepreneurial environment.

All 10 points are valid, but I wanted to highlight these three here. Although there are no general rules, these are important.

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3 Winning Startups And Keys to Success

by Tim Berry on January 25, 2011

What do award-winning entrepreneurs have in common? The three here won the Entrepreneur.com Entrepreneur of the Year awards for 2010. They accepted the awards last Thursday at the Entrepreneur.com Third Annual Growth Conference, held this year in Atlanta. For each of them there was a short video and a short talk. I was in the audience, and I was impressed:

  • Daniel Lubetzky of KIND Healthy Snacks won the award for 2010 Entrepreneur of the Year. His video is available right now on Entrepreneur.com. He told a great story of building a company around values – “all natural whole nut and fruit bars made from ingredients you can see and pronounce” – and building the company the old-fashioned way, hard work, pounding the pavement, marching around New York, going store by store to generate a channel of distribution. The company started in 2003 and passed $30 million sales last year. Daniel’s key to success, as he said accepting the award, was “trust my team.” You can click here for more on Daniel and KIND.
  • Derek Zobrist of Enovative Kontrol Systems won the award for the 2010 Emerging Entrepreneur of the Year. He has three employees and sales of just a few hundred thousand dollars annually, selling control systems that save energy as retrofits to hot water systems. He cited persistence as his key to success. Derek is 21 years old. He came up with a system using additional sensors and links to computers to manage standing hot water better. As he accepted the award, he shared that his small startup had been on the brink of disaster when it landed a contract with a major hotel chain. You can click here for more on Derek and Enovative.
  • Allen Kim, co-founder of Bebarang, a student at the University of Michigan, won the College Entrepreneur of the Year. He described his company as “Netflix for baby clothes.” His key to success is making a difference, helping parents solve a problem. He also gave a lot of credit to his co-founder and others on the team, and talked about how the idea started with watching his sister dealing with the problem and expense of keeping clothes on her baby daughter. Click here for more about Allen and Bebarang.

The backgrounds, and particularly the videos on these three, are good examples of what makes startups tick. Entrepreneur has made the entry videos, which were vital for selecting the winner (by popular vote), available on the site. Enjoy.

(Images: from entrepreneur.com)

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instructions

Crafting a Simple Business Plan

by Tim Berry on January 20, 2011

When I first started working with business plans back in the late 1970s, the average plan was much longer and more complex than what I see today. That might be because business plans are more common than they used to be–they’re used more and more often and by more people. It might also be a matter of trends among bankers and investors who read business plans. Or it could be because people have less time to waste wading through documents!

For whatever reason, the trend in business plans these days is to go back to the fundamentals, with good projections and solid analysis. An “easy to read quickly” format is more important than ever. If you want people to read the business plan you develop–and most people do–then my best advice to you is keep it simple. Don’t confuse your business plan with a doctoral thesis or a lifetime task. Keep the wording and formatting straightforward, and keep the plan short.

But don’t confuse simple wording and formats with simple thinking. The reason you’re keeping it simple isn’t because you haven’t developed your idea fully. You’re keeping it simple so you can get your point across quickly and easily to whoever’s reading it.

With that in mind, let’s get down to some specifics when it comes to simplifying your plan.

Rein in your prose. Effective business writing is easy to read. People will skim your plan-they’ll try to read it while talking on the phone or going through their e-mail. Save the deep prose for the great American novel you’ll write later. When you’re crafting your plan, remember these tips:

* Don’t use long complicated sentences, unless you have to for meaning. Short sentences are fine, and they’re easier to read.
* Avoid buzzwords, jargon and acronyms. You may know that NIH means “not invented here” and KISS stands for “keep it simple, stupid,” but don’t assume anybody else does.
* Use simple, straightforward language, like “use” instead of “utilize” and “then” instead of “at that point in time.”
* Bullet points are good for lists. They help readers digest information more easily.
* Avoid “naked” bullet points. Flesh them out with brief explanations where explanations are needed. Unexplained bullet points can be frustrating.

Keep it short. The average length of most business plans is shorter now than it used to be. You can probably cover everything you need to convey in 20 to 30 pages of text plus another 10 pages of appendices for monthly projections, management resumes and other details. If you’ve got a plan that’s more than 40 pages long, you’re probably not summarizing very well.

Of course, there are exceptions to the rule. I recently saw a plan for a chain of coffee shops, for example, that included photos of the proposed location, mock-ups of menus and maps of other proposed locations. The graphics made the plan longer, but they added real value. Product shots, location shots, menus, blueprints, floor plans, logos and signage photos are useful.

Use business charts. Make your important numbers easy to find and easy to understand. Use summary tables and simple business charts to highlight the main numbers. Make the related details easy to find in the appendices. Also…

* Use bar charts to show, at a minimum, sales, gross margin, net profits, cash flow and net worth by year.
* Three-dimensional bars look slicker, but two-dimensional bars are usually easier to read. Make sure the numbers are obvious.
* Stacked bars make totals easier to visualize. If your sales divide into segments, stack the bars to show the total.
* Use pie charts for market share and market segments.
* Show tasks and milestones as horizontal bars with labels on the left and dates along the top or bottom. Most people call this a Gantt chart. Show only the major tasks and milestones, because too many details make these charts hard to read.
* Always put the source numbers close to the charts in a summary table so readers can reference them quickly and recognize the numbers in the charts. And never leave a business plan reader unable to find the source numbers of a chart. That’s frustrating.
* Don’t use a chart without referencing it in the text. If source numbers aren’t completely obvious in the summary tables, make sure you specify which appendices contain the detailed numbers.

Polish the overall look and feel. Aside from the wording, you also want the physical look of your text to be simple and inviting. So take my advice:

* Stick to two fonts for your text. The font you use for headings should be a simple sans-serif font, such as Arial, Tahoma or Verdana. For the body text, you should probably use a standard text font, like Century, Times Roman or Book Antigua.
* Avoid small fonts. Only a few of the more readable fonts are fine at 10 points; most of them are better at an 11 or 12 point size.
* Use page breaks to separate sections and to separate charts from text and to highlight tables. When in doubt, go to the next page. Nobody worries about having to turn to the next page.
* Use white space liberally. Words crammed together into small spaces are uncomfortable to read.
* Always use your spell-checker. Then proofread your text carefully to be sure you’re not using a properly spelled incorrect word! Double check that your text numbers match those in your tables.

Tim Berry is the president of Palo Alto Software Inc., based in Palo Alto, Calif,  which produces the industry’s leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses. He is also the author of The Plan-As-You-Go Business Plan, published by Entrepreneur Press.

This article first appeared on Entrepreneur.com, March 1st, 2005.

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Avoid These Three Startup Mistakes

by Tim Berry on January 20, 2011

While speaking at Entrepreneur magazine’s Growth Conference in Atlanta this week, I spoke to small business owners in a talk I’m calling 3 Weeks to Startup after the book that I co-authored. I went over the basic assumptions behind starting a business in three weeks – that it’s a tight schedule, and very quick, but doable with tools available online today – and I shared some of my favorite common startup mistakes to avoid.

Here are the top 3:

1. Starting a business with no real customer need.

You know the type: all businesses should be built on what the founder wants to do, but that has to be tempered with consideration for what people need, want, and want to pay for. And the image on the slide is the Apple Newton, which is a good example. There was a need – the success of the Palm Pilot four years later proved it – but the Newton didn’t meet it. Don’t just count on pride and persistence, make sure there’s a need for what you’re selling.

2. Running out of cash.

Starting costs are predictable, they depend on what you need to buy, the early expenses, your marketing costs, your strategy, resources, and so on. Some cash flow dynamics are predictable. For example, you need to know ahead of time if you’re going to have to wait for customers to pay you after receiving the goods or services you give them. You need to know if you have to stock a lot of inventory.

Cash flow is easiest to understand if you lay it out into rows and columns. It isn’t as simple as profits, because profits are an accounting concept that takes liberties with the timing of sales, costs, and expenses. A good cash flow plan will focus on the money, when you get the checks to deposit, and when you write the checks, regardless of the technical timing of sales and such you need in accounting.

3. Failing to plan.

There’s so much uncertainty in any business, now and since forever, that it’s just foolish to not break that all into a plan that puts it into perspective. It doesn’t matter that a plan will change – and it will – because just getting started with the planning helps you understand all the factors involved. And when you have a plan, you start immediately to review and revise and track results, so having the plan makes it easier to correct it as needed. Plan, and keep that plan alive.

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A New World of Experts Without Gatekeepers

by Tim Berry on January 19, 2011

I posted here yesterday something that worries me about social media marketing, those fake word of mouth tactics. Writing that reminded me about the good and a little bit bad in the sweeping change of the new business landscape that social media represents.

I’ve been in the expert business for 40 years. I was a journalist, then a business journalist, then a consultant, a software developer and publisher, and now a blogger.

Today if you’re smart you can establish yourself in the expert business by publishing what you know and marketing it yourself. You write your blog, you get active in Twitter and Facebook, you join blog chats, and if you really do know your stuff it’s entirely possible that you’ll emerge above the noise, and make a good living.

It used to be that establishing expertise took dealing with gatekeepers. When I got started you had to write books or magazine articles and get them published, which meant you had to convince editors. Or you could rise above the crowd by getting speaking engagements at trade shows. Maybe you could do some workshops or seminars, if you had the marketing know-how and resources to bring in the people. The world was full of gatekeepers.

I have mixed feelings. Gatekeepers worked for me and my career; I got the degrees, wrote the books, got them published, got the speaking gigs. In the new world I see smart hard-working people rising fast without having to wait for grey hair and gatekeepers. That’s wonderful. I also see the good ones competing in a world of sharks, fakes, and charlatans, with most of the gatekeepers’ influence gone, so it gets harder and harder to tell who is for real and who isn’t.

What do you think?

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When Self-Promotion Goes Too Far

by Tim Berry on January 18, 2011

With so much buzz about social media marketing these days I can’t help but wonder how many people think manufacturing fake word of mouth is a good marketing technique.

I’m referring to people who get onto sites like Quora, a collection of good questions and answers, and recommend their own stuff without saying it’s their own stuff.

One thing is answering a question by linking to your own website, book or blog post. I’ve done that myself, in Quora — but only sparingly, when the link directly answers the question, and never without disclosing my bias.

It’s quite another thing to troll the web looking for places to recommend your own stuff as if you were an objective third-party person recommending it. People trust objective recommendations, so maybe this works. But does it work over the long term, when they do it as a marketing method? Wouldn’t that kind of marketing cut into long-term business health by killing your credibility?

In Twitter, LinkedIn, and Facebook we at least have the on/off function, like channels, follow or not, friend or not, which helps somewhat. But in Quora, it’s question by question, and if this continues, eventually we’ll have to wade through the fake answers to find the real ones.

John Jantsch summarizes marketing as getting people to know, like, and trust you. If your introduction starts with something fake, can you gain credibility later?

And meanwhile, this kind of fake word-of-mouth or stealth marketing in social media sites threatens the value of the sites. I’ve been spending a lot of time in Quora lately, and I think I’m starting to see it more and more. It seems like a damned shame, really, because Quora has started out as an excellent collection of really good answers to really interesting questions. The more it gets polluted by fake recommendations, the less valuable it will be.

I hate to say that spam obviously works because it keeps coming. And some other unpleasant tactics that show up in social media must work, because they keep coming. But are we too dumb to see through these fake recommendations? Does that work too?

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