Feature Interview with Ivan Kaye of BSI
Click the Play arrow to hear Live Success Advice from Ivan Kaye with Cydney O’Sullivan
NAILING IT AS AN ENTREPRENEUR
By Ivan Kaye
Entrepreneurs are the people who build business, groups, cities and countries, help them connect and improve their standards of living. As an entrepreneur myself and also in the business of helping other entrepreneurs to grow, I know their pain and what makes them tick. Having been through the ups and downs that go with being an entrepreneur myself, here are 23 straight-talking strategies I have learned are absolutely essential to success.
- The importance of a mission statement
Have a clear vision of your company and its goals. Your mission statement must become the organisation’s governing ‘constitution’, the standard by which strategy, systems, structure, style, and skills are developed and judged.
The principles of creating and implementing a Mission Statement need to encompass the following:
- Identify the organisation’s fundamental reason to exist
- Crystallise primary, long-term goals
- Outline core principles and values – solid corporate ethics
- Clarify the key needs of primary stakeholders
- Inspire and motivate both management and employees
When formulating your mission statement remember the KISS principle – keep it simple stupid.
- Be a great leader
Rule #1 – there are no rules. Have a vision and articulate it. Become a giant by standing on the shoulders of giants. Get other people to buy into and join you in achieving your vision and
be adaptive as situations change or don’t work out. Be decisive and implement decisions quickly.
Find a mentor who gives you the energy, strength, and confidence you need when struggling with an issue, or when things aren’t working the way you want them to. It is great to have somebody looking out for you — and all they want in return is that you succeed!
- Be able to sell and network
You need to constantly sell. You have to sell to customers, employees, shareholders, you have to sell ideas, you have to sell everything. Continually listen and be responsive to customers, suppliers, employees, and investors. Use Referron to easily refer, track, measure and reward your referrals.
- Passion and drive
If you ain’t got passion – get a job!! Remember that whatever can go wrong will go wrong. Believe in yourself. Believe and do.
Without this constant focus and unwavering belief, the plight of the company will probably be less then ideal. Be willing to work seven days a week for the company if necessary. I do it, and I expect my people to as well.
Be there. Be involved with the business 365 days a year. Even when I travel I stay in touch with what’s going on. You have to be willing to sacrifice time whenever necessary. Most entrepreneurial endeavour can cause huge personal and family stress. You must at least acknowledge that these stresses exist and find balance wherever possible.
Be hands on. Know every aspect of the business, from manufacturing to selling to collecting money.
- Be honourable
You can’t fool people all the time, so don’t try. When we had rough times and payroll money came up short, I was always last on the list — everyone else in the company got paid before I did. Always keep in mind that a good employee is hard to find.
Be involved in all levels of the company’s operations — the more you know about how the people above and below you do their jobs, the better off you will be. Take time out to take your receptionist/secretary to lunch… they will let you know what is happening in your business.
- Develop detailed plans and goals and go for it
Keep reviewing and updating your plans and goals. They are not static. Continually measure against your goals and reward yourself when you reach a goal. Take a day off for golf or take a holiday.
- Focus on niche markets
Find your niche and focus on it.
- Cash and Finance
Maintain CFN—cash flow now. Minimise layers of management. Maximise profits by keeping costs low and productivity high.
Learn the numbers: you don’t need an MBA but you should take some courses to be able read balance sheets and income statements.
Be a miser: spend your hard earned cash only on the necessities. Every decision you make should be guided by sound business instincts.
- Team up with large companies that have similar objectives, but do not compete with you while reaching the same people
For example, a client had a small innovative system in storage software, and teamed up with Microsoft as it assisted their SQL products – they were able to take their product to market and it has now sold for many millions. Another client had a CRM that used INTEL worldwide to get to market. A small small web developer could align with a service company to increase the service to their clients. A financial services company could align with accounting firms, using the name of the large accounting firms to provide a niche service.
If you have a fire in your soul, it will show through. Bigger fish will see themselves in you and want to work with you
- Avoid FTI (failure to implement)
TAKE ACTION — implementation is king. Have courage to take the step of action: leaps of faith are necessary actions.
- Getting capital – where are you in the process
From the perspective of a small business owner seeking capital, the “pass the hat” to relatives and friends scenario is usually the first source of financing. Then the growing company will seek a second round of financing through a professional source.
Finally, the third or fourth round of financing replaces the founders of the company, usually creative and talented in their own right, who are replaced by professional managers installed by the investors. Again, the driven entrepreneur may not be the best management solution for the now established business. This is not always the case at all, but management replacement does happen in the real world. The financing process is long and difficult, but necessary.
- Acquisition decisions
Knowledge is key when it comes to buying other businesses: the more you know, the more money you stand to gain.
Make sure any business you are considering acquiring fits with your existing business and strategy.
Make sure it adds value vs sucks value and never get involved with a business that you and your associates are not familiar with. When in doubt, leave it out. Only enter into negotiations when you can walk away.
Don’t think you can ever protect your idea from someone who wants it. Charge forward. If they think you will be the first to cross the finish line, they’ll throw in with you.
The seeds of mistrust are sown early. Don’t skew the benefits of a relationship too much in anyone’s favour. And make sure that each other’s goals and objectives are well defined and achievable.
Establish a workplace environment that fosters innovation.
The entrepreneur must learn to be a manager of people as well. This is a very fine line and often goes completely unrecognised. Sometimes the entrepreneur is not a manager type and never will be. They end up burning through employees because they are long on ideas but short on management skills.
Being an entrepreneur does not necessarily translate well into the task of a manager. Understand the value in having a talented set of people around you – having an exceptional team is absolutely key. If you have people who are not first-class, building a real, meaningful, successful company is virtually impossible.
- Growth is key but dangerous
Leverage. What would happen if I added twice as much of x or stirred y for twice as long? Factor 4
Growth is good but be prepared for the financial ramifications. When business is exploding you must act most cautiously.
Rapid growth costs money. Increased staffing, working capital, infrastructure and technology to meet additional demand are expensive. You must consider your balance sheet and sources of funds before quickly burning money on information technology and human resources.
Do you have a sustainable pipeline of business to maintain cash flow? Can you find a cash infusion? If you aren’t growing and you have adequately consolidated, you are stagnating. Eat or be eaten.
- Point of difference
If you don’t have a unique POD you probably shouldn’t be dabbling in that market. Ideally, you should be indispensable to your clients.
The importance of uniqueness is critical to an investor. The world would still spin without most of the products we see. And no one is really in pain without them. So what makes yours special? It’s a tough question. Be ready to answer it. Know your market, business and industry.
Marketing is key: when you have the best technology or systems, make sure your customer knows it.
Every entrepreneur must have a feel for what makes a desirable product. You must seriously consider the demand for the product or idea that you seek to market.
Accessibility and communication are vital so ensure immediate and quality response to client inquiries. It’s about service, service, service . Not just band aids. Know your customers: they are the key to your survival so listen to them. Know the competition.
Try to concentrate on offering unique products that that the public truly wants. Adding a personalised touches that makes the customer feel special. Provide value at all times — the coveted more bang for the buck.
Ensure prompt delivery – no-one likes to be kept waiting – and focus on the little things.
As long as you have new people and new ideas, something new will occur—a different invention, a different method of distribution. Innovation is at the heart of competitiveness – the economic driver – but needs a fertile environment. Government, industry, universities, investors and entrepeneurs are all actors on the stage, and all play a vital part in the ecosystem.
- Corporate database
My most valuable asset is my customer database. In any business, the customer list is crucial to the company’s prosperity. Excellent customer records must be a priority. Demographic information like address and buying patterns can help you target clients and their needs.
Lillian said of his direct marketing business: “In 1960, I had 125,000 names and did proportional business. Today, the corporation has in excess of 18 million names and our sales reflect the exponential growth in our name acquisition. You must look for new ideas in building clientele as well as developing great products.”
- Image and perception
The best way to deal with the big boys is act like one. Talk the talk and walk the walk. Do what the big boys do and be recognised for it. Be at clubs, seminars and events. If people perceive you as a leader, performer and creator, then that is reality. PERCEPTION IS REALITY.
Be in customers’ sights everywhere they turn. Go on constant sales calls, advertise, attend trade shows and get coverage in the trade press. Become so good that you shut out your competition.
Another good rule is to be first. Dominate the niche with the highest quality product possible. When you begin to show success, competitors either think you already own the market, or it’s too small for them to bother.
Know what cross-sells. If you can do a joint promotion with a much larger, non-competitive brand, some credibility will rub off on you.
- Developing your brand
A strong company must produce more than good products or services — a good name is equally important, and this you must work for. It’s not enough simply to be the best; you have to be perceived as being the best as well. The payoff? Wait until you try to raise money. What investor doesn’t want to have a stake in the best?
Have confidence in your product and your company’s abilities. This confidence should manifest itself in all aspects of your business: in conversations with suppliers, skirmishes with competitors, and interviews with the industry press.
Building a reputation is not a passive process. Work to establish an image and mould it into the shape you want. Then don’t stop polishing it.
Be better than your competition and be prepared to prove it. When you have all the ammunition behind you, it’s easy to ask for a premium price and be reasonably assured you can get it. If you have the reputation and the product, a strong sales force, obviously, completes the picture.
Perception is crucial . Often in marketing, a company’s appearance is as important as function or value. Add the best packaging and sizzle you can afford without skimping. These are great places to appear larger than you are and reduce the chance of someone jumping in because you appear strong.
So, not only must you sell customers on your product, you must also sell yourself. Look professional. The step up you get from having a well designed, well printed business card, brochure, stationery, web site, and collateral material is a real boost. People want to feel that you will be in business for a while, and looking professional helps.
- Worthy offices are welcome sites
A well-conceived, uncongested office will give your company the edge. Be a winner in this category, and it will carry on into others.
Banks and investors don’t go on sales calls with you. Rather, they observe what they can observe: your office and workplace. Impressing your customers is as important as impressing your bank. If you don’t deliver, your competition will.
- Sound mind and sound business
The key to running a business is thinking every detail through. Once you understand the marketplace, you can trust your gut reaction. If someone calls you with a business plan and you possess the basic knowledge, then you can go after it.
Before you do, first write down the complete sequence of what it will take to get the product to the market. Then arrange the sequence in a logical order. Next, weigh the plan to see how much of it you can enact yourself. If you already have most of the talent yourself, then you can tackle the plan yourself without much cash. If you have to buy the talent, the plan is still possible but will require more cash. I had the talent and started with little cash. It worked.
- Strong business plan
A quality business plan is essential. It needs to be focused and well thought-out. A business plan will only get you in the door. A business plan is what investors and financiers have to judge you on. How you lay it out counts almost as much as what is in it. People look at both. Also, listen to investors’ concerns when you shop the plan around. You can always go back and improve the business plan.
The executive summary, obviously, is most crucial in that it answers questions in a short space. The who, what, when, how, and how much?
Your business plan must demonstrate that you’re organised in your thinking. There are some basic elements to a business plan:
- Clearly defining the business concept
- Outlining the economic model — how you’re going to make money in this business
- The market you’re addressing
- The product and service you’re providing for that market
- Who you’re competing with
- Who the management team is, what their skills are, and why they’re ideally suited for this business
- What they’re providing to the customer that has value, that somebody’s actually going to pay for. This needs to come out in several of the sections — in the market section, the product section, the competition section (because it shows how you differentiate yourself)
- Where the revenue is going to come from. It’s really easy to list different revenue models that apply to your business potentially. It’s a lot harder to say here’s how we’re going to make money for the first year. And then here’s how we’re going to build on it and build on it and build on it.
And really, the basic quality — attention to detail – is really what makes a business plan stand out. I’ve read so many plans that were just poorly written — grammatical errors, poor formatting, big chunks of information missing, not proofread and so on.
A business plan is a sales document and I’m going to draw my impression of people and their capabilities from how much effort and care they put into writing their plan. Once a plan gets above the good threshold, I still don’t have a clear understanding of whether or not the concept is great and the business is great until I spend time with the entrepreneur and until I try to really understand the products and talk to potential or existing customers. The qualities of the people are fundamental in determining whether we will invest or not.
I also have to think hard about the revenue model and make sure that the business has appropriate economic parameters. The actual numbers in a business plan are less important than the structure of the cost and expense model and the revenue model. It has to fit with the relevant KPI’s. I’m not worried about whether it’s a $50 million company in year five or a $10 million company in year five. But if it’s a $50 million software product company in year five and it’s making $700,000 per employee, then their model is screwed because there are very few software companies that have more than $200,000 a year in revenue per employee. In that way, I try to see if it holds together.
- In summary: Entrepreneurs come in a million configurations, but some of these configurations have been proven to be more successful than others
When planning your business launch, take advantage of all the entrepreneurial services from BSI to business planning, growth strategies and government and network, network, network.
Think of every customer as a partner and business as a mutually beneficial relationship. Avoid being backed, or backing other people, into corners.
Innovation is the lifeblood of entrepreneurs, but ensure the backroom and systems are strong and antipate you obstacles.
When starting a business, the only certainty is uncertainty. Use all the resources at your disposal to prepare for it.
Your passion won’t be felt by all – handle it.
Secure enough capital to get you through the unprofitable growth period. Entrepreneurs who are too optimistic at the outset can run out of money early on — and watch their enterprises crumble. Know your market.
Getting the company off the ground is only the first of many tests to come. Successful entrepreneurs are always looking forward and planning ahead for what’s next. Plan each month to have something new to tell your investors.
Keep overheads low during the growth period . Minimal overheads are sure to impress investors down the road. Concentrate on cash flow.
Hire people based on your actual needs, not your projected needs . A small, agile company can best respond to the ever-changing marketplace.
You must earn your customers’ trust, and crisis situations, though harrowing at the time, are the ultimate test of your mettle. If you can perform when the chips are down, your customers will have complete confidence in you when everything is running smoothly. Always be sure your systems can handle a breakdown.
About Ivan Kaye
Ivan Kaye is a Chartered Accountant, who co-founded Business Strategies International (BSI) for the sole purpose of helping the entrepreneur grow. BSI helps entrepreneurs and SMEs access capital, grants and customers, and connect them with people who can help them grow their business. Ivan is a Director of Business Strategies International (BSI), 10X (business coach,) Ark Total Wealth, Liquidity Finance, Keynected and Referron.
He is focussed on leadership, financial planning, raising money, finance, building your business, commercialisation and other stuff – and is a passionate blogger (Google bsivc). He is passionate about bringing together CEOs, SMEs, and early stage companies by referring and connecting, hence Referron and Keynected. http://www.referron.com/
To watch Simon Sinek’s Ted Talk “How Great Leaders Inspire Action” go to http://bit.ly/TedWhySinek