viernes, 29 de febrero de 2008

10 Critical Cash Flow Rules

del blog Planning, Startups, Stories

Cash flow problems can kill businesses that might otherwise survive. According to a U.S. Bank study, 82 percent of business failures are due to poor cash management. To prevent this from happening to your business, here are my 10 cash flow rules to remember.

  1. Profits aren't cash; they're accounting. And accounting is a lot more creative than you think. You can't pay bills with profits. Actually profits can lull you to sleep. If you pay your bills and your customers don't, it's suddenly business hell. You can make profits without making any money.
  2. Cash flow isn't intuitive. Don't try to do it in your head. Making the sales doesn't necessarily mean you have the money. Incurring the expense doesn't necessarily mean you paid for it already. Inventory is usually bought and paid for and then stored until it becomes cost of sales.
  3. Growth sucks up cash. It's paradoxical. The best of times can be hiding the worst of times. One of the toughest years my company had was when we doubled sales and almost went broke. We were building things two months in advance and getting the money from sales six months late. Add growth to that and it can be like a Trojan horse, hiding a problem inside a solution. Yes, of course you want to grow; we all want to grow our businesses. But be careful because growth costs cash. It's a matter of working capital. The faster you grow, the more financing you need.
  4. Business-to-business sales suck up your cash. The simple view is that sales mean money, but when you're a business selling to another business, it's rarely that simple. You deliver the goods or services along with an invoice, and they pay the invoice later. Usually that's months later. And businesses are good customers, so you can't just throw them into collections because then they'll never buy from you again. So you wait. When you sell something to a distributor that sells it to a retailer, you typically get the money four or five months later if you're lucky.
  5. Inventory sucks up cash. You have to buy your product or build it before you can sell it. Even if you put the product on your shelves and wait to sell it, your suppliers expect to get paid. Here's a simple rule of thumb: Every dollar you have in inventory is a dollar you don't have in cash.
  6. Working capital is your best survival skill. Technically, working capital is an accounting term for what's left over when you subtract current liabilities from current assets. Practically, it's money in the bank that you use to pay your running costs and expenses and buy inventory while waiting to get paid by your business customers.
  7. "Receivables" is a four-letter word. (See rule 4.) The money your customers owe you is called "accounts receivable." Here's a shortcut to cash planning: Every dollar in accounts receivable is a dollar less cash.
  8. Bankers hate surprises. Plan ahead. You get no extra points for spontaneity when dealing with banks. If you see a growth spurt coming, a new product opportunity or a problem with customers paying, the sooner you get to the bank armed with charts and a realistic plan, the better off you'll be.
  9. Watch these three vital metrics: "Collection days" is a measure of how long you wait to get paid. "Inventory turnover" is a measure of how long your inventory sits on your working capital and clogs your cash flow. "Payment days" is how long you wait to pay your vendors. Always monitor these three vital signs of cash flow. Project them 12 months ahead and compare your plan to what actually happens.
  10. If you're the exception rather than the rule, hooray for you. If all your customers pay you immediately when they buy from you, and you don't buy things before you sell them, then relax. But if you sell to businesses, keep in mind that they usually don't pay immediately.

miércoles, 27 de febrero de 2008

El poder de las inversiones ángeles

del blog de Mariano Ruani - Inversor Angel, espero que les sea útil.



Después de un par de semanas agitadas con el Curso de formación de Business Angels, miles de invitados y final de NAVES en el medio volvemos al blog.

Les dejo algunas citas aleatorias que dejó el curso.

Algunas de John May (artista invitado), podría escribir un blog entero con las suyas pero dejemos 2 de los mitos señalados.

“1 en 10 start-ups recibieron capital de inversores ángeles de EEUU, 1 en 1.000 recibieron capital de un VC, 1 en 10.000 llegaron a salir a bolsa”

“Menos de 1/3 de las Inc 500 son empresas High Tech”, John May, New Vantage Group, Chariman of Angel Capital Association.

“Para ser un inversor ángel hay que ser del tipo medio vaso lleno y no medio vaso vacío, sino nunca se harán inversiones” esta no se si la dijo John , Silvia o quien pero la compartíamos todos …

“Hay que encontrar mas abogados/jueces pro-deal. La seguridad jurídica argentina ahuyenta capitales.” Alberto Navarro, abogado estudio G. Breuer

“En Argentina tenemos una limitante cultural y no hay mercado de capitales por eso para invertir debo tener el 100% del capital necesario, en proyectos con margen muy alto, con un agregado de valor diferencial y monetizable, preferentemente en proyectos que generen caja”, Carlos Adamo, inversor OfficeNet, Avex y varios mas.

“El riesgo lo asume el que da el dinero no el que lo toma.”, Tobías Schmukler, Innovatekne.

“Este año se empezaron a ver muchos mas deals con acciones preferidas, liquidation preferences y anti-dilution clauses. Se están sofisticando cada vez mas los acuerdos” Manuel Tanoira Abogado de estudio Uriburu Bosch.

“Los Start-up son como una obra de arquitectura, los costos son mayores que los planificados, los plazos se extienden, la pileta llega en marzo!, los primeros meses del emprendimiento termina siendo la maqueta para corregir y recién después poder escalar”, Horacio Guibert Arquitecto uno de los founder del Club de Business Angels.

“No es lo mismo un proyectista que un constructor” otra de Horacio diferenciando entre quien sabe hacer un plan de negocio y quien sabe ejecutar.

“Los start-ups son como deportes extremos, son negocios extremos”, Jorge Villalonga, Chrysalis y uno de los founders del Club.

“Hoy hay inversores de mejor calidad de los que hubo en la burbuja del 2000.”, Alejandro Mashad, Director Ejecutivo de Endeavor Argentina.

“Ya no hay distinción entre emprendedor e inversor, ya somos todos socios.”, “cedimos una porción minoritaria de participación y ya triplicamos la facturación” emprendedores Gustavo y Walter Vodeb, Conexiones.com, proyecto invertido por el Club.

“Creemos que se puede hacer una gran empresa de ciencia y mejorar la calidad de vida compartiendo los beneficios con los científicos” Mario Genero emprendedor VP científico de Nedken. Proyecto invertido por el Club.

“Según un estudio, saben cual es la elite de la sociedad italiana? 45% profesionales (abogados, doctores, etc.), 25% políticos, 16% deportistas, 4% Entrepreneurs”, Luigi Amato, Meta group. Creen que en Argentina y nuestros países es mejor el ratio?

“Desde la Agencia estaremos apoyando la difusión y formación de nuevas redes de ángeles.” Daniel Falcón, Prosperar

Seguramente me estoy olvidando de algunos de los invitados, sepan disculpar.

Acabo de releer las citas y parecen negativas, en realidad además de las satisfacciones, se hizo bastante hincapié en ser conciente de los riesgos antes de lanzarse. Para que después no haya problemas, temores que generen dudas con la empresa invertida y en marcha que puedan dañar la relación con el emprendedor. Se habló de lo mucho que se debe cuidar a los emprendedores, sus ilusiones y pasiones y errores que cometen los inversores.

La idea es que cada vez haya más inversores ángeles, pero que estos sean profesionales y concientes de los riesgos que corren.

Gracias a todos y seguramente repetiremos la experiencia el próximo año.

lunes, 25 de febrero de 2008

Emprendedor: ¿se hace o se nace?

del blog Entrepreneurship, Capital de Riesgo y Tecnología, no se si todos estaran de acuerdo con esto, otros se seniran orgullosos. Personalmente, creo que algo de razon tiene.

Espero que les sea útil.

Lamentablemente no creo que se pueda enseñar a ser emprendedor. Es imposible.
Me sobran los ejemplos de gente que intenta y no puede porque “they don´t have what it takes” (no tienen lo que hace falta)

Es algo que se lleva adentro, y que en el mejor de los casos se “despierta” de alguna manera, pero no es una capacidad que se aprende. Uno puede aprender metodologías de venta, de liderazgo, de innovación- pero el emprendedor tiene que tener en su ADN la semilla de todas estas cosas para llevarlas a la práctica de manera exitosa.

Este mes en mi nuevo trabajo “del otro lado” no ha hecho mas que confirmar lo que ya sabía: El emprendedor de verdad, el que va a hacer la empresa de 100 millones y 500 empleados, el que sueña con la expansión global y salir a las bolsa, ese, tiene una mirada diferente.

Yo la he visto en pocas personas, todas muy exitosas (o en camino de serlos), para quienes ningún obstáculo es grande y todo es, de cierta manerea, posible. Cuando lo veo me estremezco porque se que estoy ante una capacidad escasa e invalorable, y hasta sexy, diría.

Yo lo relaciono con un águila, que mira su presa desde los 1000 metros y se lanza a casarla: la vio antes que nadie, va a superar todos los obstáculos y atraparla porque fue lo que se propuso.

Y ese instinto no puede enseñarse- se tiene o no se tiene. Nadie puede enseñarle a un águila a ser águila- es.

viernes, 22 de febrero de 2008

Inteligencia Competitiva: aquello que no sabes puede acabar contigo

del blog Marketing & Innovación, espero que les sea útil.

Aprovechando que los días 29 y 30 de noviembre se ha celebrado en Madrid la conferencia internacional “La Inteligencia Competitiva: factor clave para la toma de decisiones estratégicas en las organizaciones”, es útil hacer una reflexión sobre el papel que debe desempeñar esta disciplina en las empresas innovadoras.
La Inteligencia Competitiva es un proceso sistemático de observación y recogida de información relevante acerca del entorno de la empresa, seguida de su tratamiento, análisis y difusión para incorporarla a la toma de decisiones. Dependiendo del objeto de su análisis la Inteligencia Competitiva puede tener más foco en el mercado, los competidores, los clientes, el entorno económico, tecnológico, regulatorio-legal, etc. En cualquier caso, el objetivo final es obtener información sobre la que basar las acciones de la empresa. Éste es un aspecto clave, que hace que la Inteligencia Competitiva no consista únicamente en una vigilancia más o menos pasiva, sino una actividad proactiva que va a permitir detectar amenazas y descubrir oportunidades y actuar en consecuencia.
Las fuentes de información a incorporar al proceso de Inteligencia Competitiva son muy variadas y van desde bases de datos de patentes a páginas web de noticias, pasando por informes de analistas. La explosión de información generada por los usuarios que se está produciendo en la llamada Web 2.0 en forma de blogs, foros, wikis y redes sociales donde se opina sobre productos y empresas ha multiplicado la importancia de este factor. Esta mayor cantidad y diversidad de las fuentes de información relevantes para la labor de Inteligencia ha llevado a la situación que se conoce como “infoxicación” y a la necesidad de aplicar herramientas sofisticadas de recogida, procesado y análisis automáticos de esa información.
En sectores innovadores, caracterizados por la aparición de nuevos competidores y la agresividad de los actuales, por ciclos de vida de producto cortos, por tecnologías con capacidad de disrupción, por largos y costosos proyectos de I+D, por nuevas legislaciones que redefinen industrias enteras, etc. la Inteligencia Competitiva es si cabe más importante que en sectores más estables o maduros. Para las empresas en esos sectores, tener en su rádar todo lo que ocurre en su entorno en relación a los movimientos de sus competidores o las necesidades de sus clientes no es opcional, sino indispensable.
Se ha relacionado a la Inteligencia Competitiva con otras disciplinas tales como la Inteligencia de Negocio (más conocida por su nombre en inglés de Business Intelligence) y la Gestión del Conocimiento. Se diferencia de ellas en que el ámbito de la Inteligencia Competitiva es el entorno de la organización, se nutre de fuentes de información de todo tipo, principalmente externas y no estructuradas (en formato libre), y su enfoque es anticipativo y orientado al futuro, con el ánimo de detectar oportunidades y amenazas. Por el contrario la Gestión del Conocimiento se ocupa de este importante activo interno de la empresa, con un énfasis en la compartición y la reutilización del conocimiento generado con anterioridad. Por su parte el Business Intelligence, aunque también persigue generar información útil para la toma de decisiones, se centra en datos casi exclusivamente internos a la organización y estructurados (p.ej., data warehouse), de modo que las técnicas para su tratamiento son muy diferentes.
Una de las conclusiones de la conferencia de Madrid es que en España -con un tejido empresarial formado mayoritariamente por PYMEs- si bien las grandes empresas han adoptado las prácticas de Inteligencia Competitiva, el resto de organizaciones distan mucho de estar al mismo nivel de adopción que en otros países de nuestro entorno. La aparición de empresas especializadas que proporcionaran profesionalmente este tipo de servicio y un cierto apoyo a su aplicación por parte de las administraciones públicas permitirían paliar este problema.

miércoles, 20 de febrero de 2008

DINERO REGALADO PARA PYMES.AR

del blog de Edgardo Donato, espero que les sea útil.

Leía un artículo de Alejandro Maglione, Director Ejecutivo de Argenpyme y me pareció útil compartirlo con ustedes:"...Es notable la falta de información que existe acerca de las posibilidades que tienen nuestras pymes de acceder a líneas de crédito diversas, que en algunos casos, como vamos a explicar, tienen hasta un 50% del monto de un proyecto encuadrado en un ANR (Aporte No Reintegrable). ANR quiere decir literalmente dinero regalado.En otros casos hay tasas que subsidia la SSePyme de la Nación, y así se podría decir que hay posibilidades financieras para todos los gustos y actividades.Hoy comenzaremos por contarle sobre la operatoria PRE, que es una línea del Banco Interamericano de Desarrollo (BID), que se instrumenta a través de la SSepyme, la que a su vez ha designado como ventanillas de ingreso a esta operatoria a diversas organizaciones, como ARGENPYME, donde se le explica a la pyme todos los pasos que tiene que dar, luego la ayudan a recopilar la información necesaria y por fin la misma organización se ocupa de presentarla en dicha Subsecretaria para que comience el trámite correspondiente.El PRE atiende a proyectos que importen un monto de $150.000, de los cuales, como ya le dijimos, $75.000 (el 50%) va como ANR, y el restante 50% lo debe aportar la pyme solicitante. Obviamente, cuando nos referimos a montos máximos, significa que se puede solicitar de allí para abajo el monto que la empresa efectivamente necesite.El proyecto en sí debe ser presentado de una forma determinada, por lo que la operatoria prevé la figura del ‘formulador’, cuyos honorarios son atendidos también por la operatoria a la hora de aprobar el proyecto. Nuestra fundación también lo puede asesorar a este respecto.¿Qué puede hacer una pyme con un PRE? En pocas palabras: comprar intangibles. Es decir, no puede comprar bienes de capital (maquinarias, etc.).

Y como ejemplos de intangibles le podemos dar:
• Certificación de normas de calidad.
• Estudios de mercado.
• Reingeniería de procesos productivos.
• E-commerce.
• Desarrollo de Productos y/o servicios.

¿Qué empresas pueden aspirar a un PRE?
Aquellas que califiquen como pymes según la ley 25.300, que estén radicadas en el país (Argentina) y tengan dos años de actividad..."

lunes, 18 de febrero de 2008

Historias de Emprendedores & Emprendimientos

Diario La Nacion - Economía y Negocios

Muebles con diseño moderno y materiales de la Patagonia
  • Muebles que combinan diseño contemporáneo con materiales de la Patagonia. Esa es la propuesta de El Catango, la empresa que Patricio Machado fundó después de la crisis y que obtuvo el segundo puesto en el concurso de emprendedores BiD Challenge International Finalist Week, organizada por la ONG holandesa Business in Development Network.
  • El diseñador produce los muebles en San Martín de los Andes, ciudad a la que se mudó exclusivamente para empezar de cero, después de no encontrar nuevas oportunidades en el Buenos Aires post crisis. Las empresas, según relata, habían reducido sus presupuestos de publicidad y por entonces él se dedicaba a diseñar puntos de venta para firmas como Procter&Gamble.
  • "Yo estaba un poco cansado de la ciudad también. Nací en Neuquén y fui a estudiar en la Capital Federal, y después de todo el problema económico y la seguidilla de presidentes, vi que no me hacía feliz la calidad de vida que estaba teniendo", recordó.
  • "Quería desarrollar algo con mis conocimientos de armado de un producto y estrategias de marketing. Vi que el tema chocolates estaba explotado, y después de hacer una rápida investigación de mercado pude ver que no había desarrollo mobiliario", explicó Machado.
  • "Todo era muy básico y no había identidad del lugar, salvo el típico tronco rústico. Entonces -prosiguió- se me ocurrió combinar el diseño contemporáneo, de líneas limpias, con la identidad del lugar. Busqué fusionar telares mapuches o maderas autóctonas con otro diseño."
  • La nueva estructura de El Catango crece al 30% anual y factura 30.000 pesos mensuales. "No estamos con una megaganancia, pero superamos los obstáculos y ahora podemos crecer", concluyó Machado.

viernes, 15 de febrero de 2008

Los 10 mitos de ser emprendedor

del blog de Guy Kawasaki - How to Change the World, espero que les sea útil.

Many entrepreneurs believe a bunch of myths about entrepreneurship, so here are ten of the most common and the realities that bust them:
  1. It takes a lot of money to finance a new business. Not true. The typical start-up only requires about $25,000 to get going. The successful entrepreneurs who don’t believe the myth design their businesses to work with little cash. They borrow instead of paying for things. They rent instead of buy. And they turn fixed costs into variable costs by, say, paying people commissions instead of salaries.

  2. Venture capitalists are a good place to go for start-up money. Not unless you start a computer or biotech company. Computer hardware and software, semiconductors, communication, and biotechnology account for 81 percent of all venture capital dollars, and seventy-two percent of the companies that got VC money over the past fifteen or so years. VCs only fund about 3,000 companies per year and only about one quarter of those companies are in the seed or start-up stage. In fact, the odds that a start-up company will get VC money are about one in 4,000. That’s worse than the odds that you will die from a fall in the shower.

  3. Most business angels are rich. If rich means being an accredited investor –a person with a net worth of more than $1 million or an annual income of $200,000 per year if single and $300,000 if married – then the answer is “no.” Almost three quarters of the people who provide capital to fund the start-ups of other people who are not friends, neighbors, co-workers, or family don’t meet SEC accreditation requirements. In fact, thirty-two percent have a household income of $40,000 per year or less and seventeen percent have a negative net worth.

  4. Start-ups can’t be financed with debt. Actually, debt is more common than equity. According to the Federal Reserve’s Survey of Small Business Finances, fifty-three percent of the financing of companies that are two years old or younger comes from debt and only forty-seven percent comes from equity. So a lot of entrepreneurs out there are using debt rather than equity to fund their companies.

  5. Banks don’t lend money to start-ups. This is another myth. Again, the Federal Reserve data shows that banks account for sixteen percent of all the financing provided to companies that are two years old or younger. While sixteen percent might not seem that high, it is three percent higher than the amount of money provided by the next highest source – trade creditors – and is higher than a bunch of other sources that everyone talks about going to: friends and family, business angels, venture capitalists, strategic investors, and government agencies.

  6. Most entrepreneurs start businesses in attractive industries. Sadly, the opposite is true. Most entrepreneurs head right for the worst industries for start-ups. The correlation between the number of entrepreneurs starting businesses in an industry and the number of companies failing in the industry is 0.77. That means that most entrepreneurs are picking industries in which they are mostlikely to fail.

  7. The growth of a start-up depends more on an entrepreneur’s talent than on the business he chooses. Sorry to deflate some egos here, but the industry you choose to start your company has a huge effect on the odds that it will grow. Over the past twenty years or so, about 4.2 percent of all start-ups in the computer and office equipment industry made the Inc 500 list of the fastest growing private companies in the U.S. 0.005 percent of start-ups in the hotel and motel industry and 0.007 percent of start-up eating and drinking establishments made the Inc. 500. That means the odds that you will make the Inc 500 are 840 times higher if you start a computer company than if you start a hotel or motel. There is nothing anyone has discovered about the effects of entrepreneurial talent that has a similar magnitude effect on the growth of new businesses.

  8. Most entrepreneurs are successful financially. Sorry, this is another myth. Entrepreneurship creates a lot of wealth, but it is very unevenly distributed. The typical profit of an owner-managed business is $39,000 per year. Only the top ten percent of entrepreneurs earn more money than employees. And the typical entrepreneur earns less money than he otherwise would have earned working for someone else.

  9. Many start-ups achieve the sales growth projections that equity investors are looking for. Not even close. Of the 590,000 or so new businesses with at least one employee founded in this country every year, data from the U.S. Census shows that less than 200 reach the $100 million in sales in six years that venture capitalists talk about looking for. About 500 firms reach the $50 million in sales that the sophisticated angels, like the ones at Tech Coast Angels and the Band of Angels talk about. In fact, only about 9,500 companies reach $5 million in sales in that amount of time.

  10. Starting a business is easy. Actually it isn’t, and most people who begin the process of starting a company fail to get one up and running. Seven years after beginning the process of starting a business, only one-third of people have a new company with positive cash flow greater than the salary and expenses of the owner for more than three consecutive months.

miércoles, 13 de febrero de 2008

4 lessons on learning from your mistakes


At the risk of belaboring a small point (and repeating a bit of the story from my last post), I couldn't help but write this month's ezine article on learning from your mistakes since my word bumbling was so fresh in my mind. Here is the article:

This week I was flying high from the opportunity to write a guest post for the New York Times. As someone raised by a family who loves to read and write, it felt like the height of professional accomplishment. Wednesday the post was published and I got a real charge out of seeing my words under the NYT masthead.

Yesterday, I spent many hours writing a detailed post on pricing. As a last touch to the post, I referenced the famous consultant Alan Weiss, author of 25 books, including Million Dollar Consulting. I listened to an interview with him and Robert Middleton and found that while his advice was excellent, his direct way of saying things might put off some of my more sensitive readers. So I mentioned that Alan was a bit "crass."

Upon checking email early this morning, Alan himself informed me that he was offended by the word "crass." I looked it up in the dictionary and was very horrified to see that he was right - the word meant "So crude and unrefined as to be lacking in discrimination and sensibility." I chose the wrong word and offended a complete stranger. And a prominent one at that.

My immediate emotional reaction was dread. What a difference a day makes! I felt really stupid and realized I had made a big mistake.

Any business expert will tell you that all successful people fail and make mistakes, some of them many times. In fact, did you know:
After Harrison Ford's first performance as a hotel bellhop in the film Dead Heat on a Merry-Go-Round, the studio vice-president called him in to his office. "Sit down kid," the studio head said, "I want to tell you a story. The first time Tony Curtis was ever in a movie he delivered a bag of groceries. We took one look at him and knew he was a movie star." Ford replied, "I thought you were spossed to think that he was a grocery delivery boy." The vice president dismissed Ford with "You ain't got it kid , you ain't got it ... now get out of here."
Tom Landry, Chuck Noll, Bill Walsh, and Jimmy Johnson accounted for 11 of the 19 Super Bowl victories from 1974 to 1993. They also share the distinction of having the worst records of first-season head coaches in NFL history - they didn't win a single game.
After his first audition, Sidney Poitier was told by the casting director, "Why don't you stop wasting people's time and go out and become a dishwasher or something?" It was at that moment, recalls Poitier, that he decided to devote his life to acting.
These and lots of other examples remind us that we are not alone to either publicly humiliate ourselves or fail miserably.

The challenge is, how do we learn from our mistakes in the moment we are making them so we don't get paralyzed with shame?

Lesson one: Apologize immediately
Before doing anything else, swiftly and directly apologize for your mistake. Tell your wife you are sorry for hurting her feelings. Tell the store clerk that you really didn't mean to walk out the door with the copy of People magazine you were scanning while waiting in line. Tell your boss you didn't mean to call him an idiot on the conference call - you thought your phone was on mute. However you have injured or harmed someone else, say you are sorry and extend the appropriate restitution. Waiting a long time to apologize will just further anger the person you have offended and lead them to believe you have no remorse for your actions.

Lesson two: Tend to your emotions
After doing something particularly stupid, you usually feel like either laughing or crying. Both will make you feel better. So hug your sweetie, your kids or your dog. Or get some coffee with your best friend and cry on her shoulder. This will release some of your pent-up emotion so you can think rationally. Humor is the other great pressure relief. My dear blog reader Mike, after reading my public apology to Alan about word confusion, shared the following story:
A number of years ago, a friend rang me up and said she was interested about a job advertised in my company. She was looking for some general background information and so on. She told me she was going to be interviewed by my boss at the time. After the interview, I asked her how it had gone, and if she was interested in the job. She just burst out laughing. When trying to sell her on our company and how much people liked working there because we had low turnover of staff, my boss made repeated use of the term "the low rate of nutrition". He meant, of course "attrition". After that, my friend said she couldn't consider working there because she'd never be able to look him in the eye without laughing. But truly, we were all very skinny at the time!
Mike's comment made me laugh out loud. I feel for his former boss, who probably turns red whenever he recalls his mistake. That is if he realizes it - for all we know, he could still be touting the benefits of skinny employees.

Lesson three: Remember who you are
For the perfectionists among us, your mind doesn't seem to be able to distinguish between big and little mistakes. You feel the same pit in your stomach whether you misuse a word or smash into someone's bumper because you are yacking on your cellphone. So as soon as you gain composure, remind yourself that you are generally a decent human being and are entitled to a mistake or two. I know that I would not want to get friendly with someone with no cellulite, who always sends a thank you card the day after receiving a gift and who would never consider feeding her kids potato chips for dinner. No one is that perfect.

Lesson four: Move on with a great story
Once you have apologized and gotten over the emotional impact of your mistake, move on. Take your wife out to dinner, get back in line with the same clerk who thought you were a shoplifter, return to the Monday morning meeting and look your boss in the eye, or start writing your next article. Stop beating yourself up and start formulating a great story from the lesson. These stories are what will hold you together the next time you trip up and do something foolish. And the first time your child comes to you with tears in his eyes because he made a fool of himself in public, you can quietly put him on your knee and say "You think that is stupid? When I was your age, here is what I did ..."

Alan graciously accepted my apology. And I learned a great lesson.
What are your thoughts about learning from your mistakes?

lunes, 11 de febrero de 2008

Branding yourself with happiness

Del blog de Alexander Kjerulf - The Chief Happiness Officer

While I’m traveling the world making people happy at work, here is a guest post by Dan Schawbel. Dan is the lead personal branding expert for generation-y. He blogs at The Personal Branding Blog, publishes Personal Branding Magazine, directs Personal Branding TV, and is the head judge for the 2008 Personal Brand Awards.
A happy brand is a successful brand
Ever wake up, dreading your typical routine 9-5 workday? I can picture you waking up, rolling out of bed, getting dressed, running to Dunkin Donuts, dreaming about being successful on the way to work and then finally sitting down at your cube watching the clock until you leave. Now who in their right mind would want to go through such an outrageous process? Today, I write before you, to tell you that you too can be happy at work. You may not be a Chief Happiness Officer or a Chief Technology Officer, but the same concept applies.
Introducing personal branding, the happiness-initiator and guess what, it’s free. Personal branding is the process by which we differentiate ourselves by identifying and articulating our unique value proposition to achieve a specific goal. Wouldn’t you want to be branded as a happy person? People don’t want to be associated with a miserable Grinch-like individual that hates their job and the people around them. Why not start the day with a smile on your face, greet people who walk past you and be perceived as a team player.
Of course, if your job doesn’t fit your brand, then this isn’t possible. Personal branding allows you to use social media vehicles, such as blogs in order to convey your passions, goals and expertise. Now, for free, anyone can have their own website and build a reputable brand name. I used to be in product marketing, but my real interest was in personal branding and social media, so through all of my personal branding efforts, I was able to sculpt a position at my company that I would be content with. You can do the same.
Anyone can achieve happiness, but in order to get to that point, you need to gain confidence in yourself, be optimistic and pursue your passion. Starting a blog is a great way to let others know what makes you happy, and building a community through your blog can link you up with those that share interests, thus you both can be happy. In the workplace, whether you are a consultant or working for a fortune 500 company, your attitude is a reflection of your standing, in terms of customer acquisition and retention. In a web 2.0 world, people deal directly with people, so you need to be a “people person.”
Take Guy Kawasaki for instance. When do you ever see him angry? Never, and that’s because his brand is built on giving back to others, being a good father and sharing business practices.
Being happy at your job is success. If you’re not happy with your job, then build a brand that reflects who you are and be recruited or start a company based on that.

viernes, 8 de febrero de 2008

Plan-as-you-go? a good idea?

de Planning, Startups, Stories

I don't like overused sports references, but dribbling is such a nice way to explain the importance of planning that I can't resist. Whether it's dribbling a basketball or a soccer ball, it's a matter of keeping your eyes up, watching what's developing around you on the court or the field, even while also managing the details of dribbling the ball right in front of you. You have to plan as you go.


This is a good way to explain plan-as-you-go business planning. You have a plan but you're also watching developments around you, revising the plan as assumptions change and opportunities arise.


What I particularly like about this idea is the sense of planning instead of just a plan. Dribbling is about constant motion, constant change, constant review and revision. So too, planning should not be constrained by the original plan.


I particularly object to the people who think planning is bad because having a plan means being locked in, constrained in your options, because you're following a plan. On the contrary, having a plan should make it easier to identity changing assumptions and to change that plan on the fly. That's plan-as-you-go planning.

miércoles, 6 de febrero de 2008

Why Early Stage Venture Investments Fail

de union square ventures, espero que les sea útil. Es la opinion de un VC, asi que a los emprendedores les (nos) va a venir bien para mirar un poco afuera del tarro.

In my last post on failure rates in early stage venture capital, I made the point that every portfolio is going to have failures. I’ve made 32 direct investments (the deals I’ve sourced, led, and managed myself) over the past 17 years. Of those 32 investments, 5 of them have been failures. Those 32 investments includes 6 unrealized Union Square investments I am currently managing and 3 that we’ve sold. If we assume that at least one and possibly two of the unrealized Union Square investments will fail (hopefully not!), then something like 20% of the investments I’ve made are going to be failures. That’s a pretty low failure rate and I am proud of it. I am also proud of the fact that I’ve lost money on investments because until you do, you really aren’t a “seasoned” venture investor. It’s almost a requirement in our business to have lost money. It’s a rite of passage, but also one you want to do very infrequently.
So why do venture investments fail? Well if I look at the ones I’ve been involved in (including deals my partners led but where I shared the pain of loss) there are two primary reasons.
1) It was a dumb idea and we realized it early on and killed the investment. I’ve only been involved in one investment in this category personally although I’ve lived through a bunch like this over the years in the partnerships I’ve been in.2) It was a decent idea but directionally incorrect, it was hugely overfunded, the burn rate was taken to levels way beyond reason, and it became impossible to adapt the business in a financially viable manner.
Four of the five failures I’ve been involved in fit into this second category and probably 2/3 of all the failures I’ve seen “up close ad personal” fit into this category. I don’t blame the entrepreneurs and managers entirely for these failures. The investors and the boards of these companies (ie me) are responsible for failures like this. Entrepreneurs may not have the experience to know the folly of taking burn rates to levels which make “figuring it out” impossible. But we as investors know how high burn rates kill companies and we have a responsibility to fight them at every turn.
This is a lesson that is etched into my brain and into my back with the scars of $20mm losses, bankruptcy filings, and mass layoffs. It’s ugly, painful, and totally and completely avoidable.
My friend Dick Costolo, co-founder of FeedBurner, describes a startup as the process of going down lots of dark alleys only to find that they are dead ends. Dick describes the art of a successful deal as figuring out they are dead ends quickly and trying another and another until you find the one paved with gold.
I like that analogy a lot. Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business.
Here’s an interesting breakdown of the “transformers” versus the “stick to our plan” investments in my personal track record.
Greater than 5x – 11 total investments – 7 transformed, 4 did not1x to 5x – 10 total investments – 6 transformed, 4 did notFailures – 5 total investments, 1 transformed, 4 did notUnrealized Union Square investments – 6 total, 3 transformed, 3 have not
You might think that the home runs had their plan figured out right out of the box and the deals that were less successful were mostly transformers. That’s not the case with the investments I’ve been personally been involved in. It’s about the same ratio for both categories.
But where you really see the value of being nimble is in the failures. All but one failed to transform their business and all but one were unable to do that because of the large unsustainable burn rates they had built up. Even the one business that did transform itself, it went from a low cost business model to a high cost business model and they put themselves in a pickle when the transformation didn’t pan out.
To go back to Dick’s analogy, you can go down lots of blind alleys if the cost of doing so is low. But if you are spending a million dollars on each blind alley, you’ll be out of business in no time.
So it’s pretty clear to me that most venture backed investments don’t fail because the business plan was flawed. In my experience at least 2/3 of all business plans we back are flawed.
Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.
I should also say that for businesses that don’t have the benefit of venture capital backing, the reverse is probably true. Almost certainly non-venture backed businesses will not have the ability to get too big too fast. They will mostly fail because they have the wrong business plan and they don’t have the wherewithal to survive for the period of time it takes to figure out the correct one.
Regardless of whether you have taken venture capital or not, capital efficiency and bootstrapping are critical values. You must keep your burn rate low until you can show without a shadow of a doubt that you have a business model that works, can be operated profitably and is ready to be scaled. Then and only then should you step on the gas.

lunes, 4 de febrero de 2008

Demystifying the art and science of knowing what to charge for your services


A couple of weeks ago, a reader named David wrote inquiring about an offhand comment in a recent post about mentoring where I said:
"A ten-minute conversation with an older female business owner about the link between gender and compensation totally changed the way I thought about charging for my services in my consulting business."
David said:
"I was wondering if you would be willing to share more about that "ten-minute conversation" you had.
I ask as my gf is considering leaving her corporate job (ie safety net, ie golden handcuffs :) in favor for her passion of a life coaching pursuit ... I know the above quoted segment addresses directly some of her own concerns, so I would be v. interested, AND appreciative, of any real-world insights into the advice of others in appropriately charging for consulting services."
As I was preparing to respond to David's email, it occurred to me that this general issue of charging for services is a real stickler for many first-time entrepreneurs. I know that I still struggle with this issue myself, even after eleven years in business.
How do you know what to charge for your professional services?
By professional services I mean things like coaching, consulting, financial advising, writing and web design. Basically, any gig where you sell your knowledge for a fee.
Why is pricing so tricky?
Pricing your services is tricky because there is no magic formula or "correct" answer. I see four distinct parts of the pricing equation: psychological demons, practical needs, external market and financial results.
Part One: Psychological Demons
To be able to charge decent rates for your services, you have to feel confident about your skills and talents. Herein lies the rub for new entrepreneurs, since you are either offering your services on a freelance basis for the first time, or are doing something totally new. This tends to bring up the following anxieties:
What if I am not very good?
What if the competitor down the street is better than me?
Will my client think I am greedy for charging too much?
Will my client think I am wimpy for charging too little?
What if I am unable to deliver what I promise and my client outs me as a fraud?
Suggestion: Fortify your self-esteem. However you need to, validate that you are indeed good enough, smart enough and people like you.
Reflect on good work you have done in the past and use that to anchor thoughts of work in your future.
Ask trusted colleagues to give you objective feedback about your skills and past business results.
Repeat affirmations such as "My relationship advice will create harmony in thousands of homes across the world" or "I am meant to help people overcome their shame of poor financial management" or whatever saying rings true for you. Far from just being fodder for comedians like Al Franken with his character Stuart Smalley, affirmations can truly heal a fractured self-image.
Invest in training and advice for yourself at the same rate you plan on charging clients. This is really important! By doing so, you will feel in your bones what it is like to spend some of your hard-earned cash on professional advice. Usually you see that the person brave enough to charge healthy fees is no smarter or more experienced than you. And this will boost your esteem. If you are not willing to invest in your own growth and development, how can you expect your clients to?
Part Two: Practical Needs
A common error made by new entrepreneurs is not to take into consideration all of the expenses related to working for yourself when setting hourly rates. Most people take their annual salary and divide it into hourly increments. What this approach misses is:
Your annual salary as an employee is based on working full-time. Unless you have excellent luck and get full-time contract work immediately, chances are you won't be working full-time your first year as an entrepreneur. Nor may you want to work full-time, as billable consulting hours tend to be much more draining than the "padded hours" you get as a salaried employee. I never worked more than 2/3 time as a consultant, since I had to spend the rest of the time catching up on administration, marketing and relaxing.
Your salary doesn't include your benefits like health insurance, retirement investments, vacations and sick time. An extremely crude general estimate for these things in the U.S. is 30% of your salary.
Suggestion:
If you are still an employee, ask your HR department to give you a breakdown of the value of each of your employee benefits.
Create a spreadsheet to account for all of your expenses as a self-employed person. To get ideas for what to include, FreelanceSwitch created a handy Rates Calculator.
From this analysis, you will have a number which reflects how much you need to make to fund your current lifestyle.
Part Three: External Market
Knowing what you need to make to cover your living expenses is only part of the equation. You also have to know the competitive range for similar services. Here is where the piece of advice fits in that David was asking about:
Early in my career, I was negotiating the salary for a new position. I asked a very seasoned female mentor for her advice. "What are you thinking of asking for an annual salary?" she said. "All I need is about $50,000 a year," I replied. She said "The most common mistake I see females make in negotiating salary is just thinking about their basic needs and no more. You must charge what the market will bear, especially on par with your male counterparts. If you don't, they will lose respect for you."
I grimaced a little bit and said "I don't want to become one of those greedy businesspeople who only thinks about money. I don't just work for the paycheck, I also do it to contribute something meaningful to the world."
"Here is the key," she said. "You must charge the market rate or more, but you can give it all away."
This floored me. I was raised to live modestly and to reduce, reuse and recycle. I had the idea that anyone who made a lot of money was automatically greedy and selfish. Suddenly, I realized that the more money I made, the more I had at my disposal to invest in the community, pursue artistic passions, travel and help others in need. It totally changed how I viewed money.
Suggestions:
Survey your competitors to get a range of fees for similar services.
Ask a couple of trusted colleagues about their pricing strategy. When I recently had to put together a proposal for a blogging project, I emailed two of the smartest bloggers I knew and asked about their pricing. Hearing both what they charged and what the fees included was extremely helpful.
Part Four: Financial Results
I am saving this for last, but it is by far the most important part of the pricing equation. People don't pay you for your time or process, they pay you for the results of your work. These results are translated into value, which can be money or time saved or earned, brand value increased or risk reduced. A friend summed it up well:
When clients give you money, guess what? They want it back!
It is your job to identify and quantify metrics. This is not simply to justify your fees, it is also to make sure that what you provide is useful and will have a positive impact on your client. Here is value pricing in action:
I had a friend that did a presentation for 250 sales representatives from a large computer company. He charged $30,000 for two hours of his time. After wondering how he got his client to smoke crack before signing the contract, I asked him how he justified such a fee. "Easy," he said. "Each rep has a minimum of $300,000 worth of business in their annual sales funnel. I have proven that by using my techniques, you can close a minimum of 10% more deals. So if ONE of the 250 participants does what I tell him, they will recoup their money. If 25% of them do, they will make nearly two million dollars. In reality, I charged too little."
Can you see how solely relying on your practical financial needs and the norms of the market can skew your pricing model? By focusing on results and value, you will not only be able to charge more, you will do better work because you will be defining and measuring the right things.
Suggestions:
As you are discussing the project with your client, define success metrics. Ask them "How will you know that our work together was effective?" They should say things like "I will get more clients" or "I will deliver better presentations" or "I will improve my credit score" or "I will capture more names on my mailing list from my website visitors."
From these broad results, dig deeper and ask "And what would that mean to you in terms of money, time or risk?" You should hear things like "If I deliver more effective presentations, I will get more referrals which will increase my income by X%." or "If I improve my credit score, I will qualify for a loan which will allow me to start my business and make $5,000/month." You must dig until you get some tangible metrics.
To hear a whole lot of tips on value pricing, you can pick up a 90-minute recording and transcript of Robert Middleton interviewing Alan Weiss, author of Million Dollar Consulting. It is $29 and was well worth it from my perspective. If you don't want to drop the cash, check out some free info on Alan's site here. He has very strong opinions and may seem a bit strong minded to some of you. (Important update: I originally used the word "crass" here to describe his style and received an email from Alan Weiss pointing out that this was not a fair characterization. He was so right. Had I looked up the word in the dictionary, I would have seen that "crass" means 'So crude and unrefined as to be lacking in discrimination and sensibility.' That is NOT what I meant and I am terribly sorry and embarrassed to have chosen that word. What I meant is that he is very strong and to the point, which can be uncomfortable for some people. My apologies Alan, and I learned a good lesson.) My advice with all "gurus" is take the info that applies and discard the rest. (I used an affiliate link for this recommendation since I stand by Robert's work 100%)
A former client, Skip Miller, wrote a book called ProActive Selling that has all kinds of good information about the sales process, including value pricing.
Once you have a good baseline for your prices which takes into account these four factors, you can create some standard pricing which will act as a starting point for new contracts.
Final Suggestions:
Always offer at least two and no more than five pricing options for any client. So as a coach, you can have
1 session at $X
3 sessions at $Y
6 sessions at $Z
It is easier for people to make decisions when they have options. But don't give too many, or they will get overwhelmed.
Read Nine Factors to Consider When Determining Your Price from Freelance Switch.
I really welcome your additional suggestions, since I know many of you have a lot more experience in this area than I do. Bring it on!

viernes, 1 de febrero de 2008

Un emprendimiento exitoso que esta cambiando el mundo

No se si muchos conoceran Kiva o no. Este es un emprendimiento desarrollado por una persona común y corriente, que no pertenece al sector financiero, que insipirada en una conferencia de Yunus, decidio hacer algo, y terminó aportando su granito de arena para cambiar el mundo.
Les dejo un post de Guy Kawasaki al respecto, espero que les parezca interesante.
Esta claro, que emprender no siempre es vender algo, o si, pero hay otras definiciones para entender la plabra vender.

The Six Lessons of Kiva

Stanford Magazine has a terrific article about Kiva called “Small Change, Big Payoff” by Cynthia Haven. This is the story of how Matt and Jessica Jackely Flannery created it to enable people to make micro loans to entrepreneurs around the world.

The results are awesome: more than 123,000 people have loaned more than $12.4 million to 18,000 entrepreneurs. In fact, there so many lenders that there’s has been limits so that everyone can make a loan. The process involves reading a short profile about each entrepreneur and then deciding which to fund. From beginning to end, you can make a loan in under five minutes if you’re a slow typist. Lenders do not earn interest though the micro-finance organizations that helped Kiva find the entrepreneur does. Entrepreneurs pay 99.67 percent of the loans.

Here are some lessons that any entrepreneur can learn from the Kiva phenomenon:

  1. Create meaningful partnerships. Most entrepreneurs create partnerships to impress investors, journalists, customers, and parents. Hence, most partnership as bull shiitake. The best test of a partnership is whether its existence requires that you change numbers in a spreadsheet. No changes = b.s. partnership. In the case of Kiva, it has sixty seven partnerships with micro-finance organizations. It is these organizations that provide the “leads” for lenders to fund.

    Also, Kiva has partnerships with PayPal (free transactions), Google (free traffic) as well as with Yahoo!, Micorosft, MySpace, and YouTube. As you can imagine, these kinds of partnerships do make you reboot Excel.

  2. Catalyze and support evangelism. Like Apple, Harley-Davidson, and Tivo, evangelism starts with a great product, and Kiva has one. When you have a great product, then evangelists will appear, and Kiva has 250 active volunteers—what I would label “evangelists.” Kiva has really institutionalized evangelism if you ask me.

  3. Find a business model. You’d be surprised how many people wave their hands or avoid the topic of business model completely. Kiva’s model is a minimum $2.50 voluntary fee that lenders pay when checking out their “shopping cart.” If I understand this right: lenders receive no interest and pay a voluntary fee to Kiva in order to loan money. And you thought Google had a great business model—wow, as Wayne and Garth said, “We’re not worthy.”

  4. “Bank” on unproven people. What would the ideal background be of the founder of Kiva? Investment banker from Goldman, Sachs? Vice president of the World Bank? Vice president of the Peace Corp? Vice president of the Rockefeller Foundation? Partner at McKinsey? How about temporary administrative assistant at the Stanford Business School? Because that’s how Jessica started her quest. The spark that lit the fire was a speech by Muhammed Yunus, founder of the Grameem Bank and Nobel Peace Prize winner.

  5. Focus on free marketing. Kiva launched in 2005 with seven businesses in Uganda. The first “marketing” was sending out an email to the wedding invitation list of Jessica and Matt. All seven businesses were funded in a weekend. Then the Daily Kos picked up their story from a hacked together press release. Then PBS’s Frontline covered the organization and loan volume went from $3,000 to $30,000 over night. No road show. No Demo. No TechCrunch 40.

  6. Ignore the naysayers. The Flannerys got a lot of advice that you can’t send money around the Internet without government approval; that Kiva couldn’t scale beyond a few African villages; that a non-profit couldn’t offer an investment product; and that it would violate SEC regulations as well as the Patriot Act. Besides this, Kiva was a no-brainer.