Wednesday, September 24, 2008

READ THIS before you abandon your startup and take a safe job at a big company


  • Frustrated with the news about the economy?
  • Should I quit my dream and get a safe job at a big company?
  • Is it possible for a startup company to succeed in the current situation?
Read this first.
Entrepreneurs can succeed even during rough economic times.


I started my day today by reading the local business newspaper Dagens Næringsliv. I ended up in the user forum section where I saw the following post:
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Norsk pop duo søker investor

Dagens Næringsliv Forum 22.09.2008

Hansen/Randow - søker investor !
De hadde tdligere i år en hit med låten "stay",som ble produsert av stjerneprodusenten Tommy Denander (jobbet med Eric Clapton Toto ,Westlife o.l) -og de vil nå starte et eget selskap som tar seg av alle hansen/randow`s aktiviteter (cd utgivelser .konserter o.l). De holder på med cd innspilling i Stockholm om dagen med Tommy Denander ,og deres neste singel "frustrated" ble utgitt idag .Video til denne låten ble spilt inn på Svalbard . Duoen jobber også medd mulighet for utgivelse utenfor Norge .www.myspace.com/hansenrandow
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For those of you who do not read Norwegian, it is titled “Norwegian pop music duo seeks investors” and goes on to tell that 2 young pop artists are looking for investors for their new company that will manage their future concerts and CDs. It was also reported that their new single, which will be released today is titled “Frustrated”. OK, I could not help but laugh, and I am not surprised they are frustrated. Many young entrepreneurs are frusrated and also scared due to the recent economic turn of events.


Entrepreneurs are not just frustrated, they are scared
Raising capital will not get any easier during the next year. As Investors batten down the hatches and hunker down for the storm, they will have less liquid capital and be less willing to take on new high-risk projects. This is not great news for small startup entrepreneurs in early stage companies, but economic slow-downs do not have to be impentrable barriers for new enterprises. Nonetheless, anytime is the right time to launch a venture if the opportunity is right and the entrepreneur has assessed the situation correctly. If an entrepreneur is going to launch a company based on solving a customer need that is vague or not clearly defined, then it is always risky, regardless of the state of the economy.
Starting a new business always involves risk, and as we all know roughly 50% of all startups fail within the first 5 years. A tough economy can make a launch even more difficult as loan standards will be tougher and consumer spending weaker. But depending on the nature of your business and location, you might find cost reductions. For example, your suppliers may offer you better deals, rents may be lower, and workers may be more willing to work less. When times are rough, people don't hold out for higher salaries. You can probably hire better people more cheaply now than when the economy is cooking.

Actually benefiting from a bad economy?
You have to balance all the factors to evaluate whether the current business environment will support your new venture. It may even work in your favor. First you have to ask yourself if you have the stomach for high risk and the commitment that you will need as an entrepreneur, then put your good business skills to work. Make sure to shape your opportunity to have a strong business model and a rapid revenue model that accurately assesses costs and the price the market is willing to bear. Focus on a carefully selected, small and manageable niche market. Communicate a solid and unique value proposition that is completely focused on solving specific problems.

During periods of economic downturn, it's not necessarily safer to be with the big companies, but that's the perception. By being small and agile the company is in some respects even safer. The big companies suddenly don't take any risks and retrench and bunker down, whereas the small start-ups are out reinventing new models.

Crisis brings opportunity
During periods of economic downturn, consumers change their habits and strategies. For example, consumers use more time and effor to search for better pricing or higher value. Can you offer a product or service that tailors to this need? In tough times, companies will often postpone the purchase of new IT systems and rather invest money in re-vamping the older systems they have. Can your startup take advantage of this? Try to think clearly about the consequences of the economy and how it will affect your customers. If you are clever enough to have an open mind and to keep looking, you may be surprised with what you uncover. In a crisis things change rapidly, and this presents huge opportunities for creative entrepreneurs.
If you have the idea and you have a vision for it, don't wait for the conditions to be perfect or you'll probably end up waiting forever. There is business out there; it's just a question of who's going to get it.

Free webinar for Startup companies
You are invited to a free, online webinar (telephone & web) on October 15th at 10:00 where a number of startup entrepreneurs (primarily from Norway) will discuss this and other issues. Join us to share your ideas and to learn from what others are doing. You can find more information about this at www.xelerator.com. Sign up today. Space is limited.

Friday, September 19, 2008

Why do startups struggle with sales?


One of the most important survival factors for any startup technology business is the ability to generate sales revenues as quickly as possible. Cash flow is king. The more that an entrepreneur is able to prove to investors that he is a good businessman (able to generate cash flow) then the more credible and believable his entire venture story will be. The quicker a startup business is able to generate some revenues, the less desperate they will be to get funding from investors. The less desperate they are, the more likely that they will succeed in getting funding.

The Devil is in the details. So how can a startup reduce the time needed to generate revenue? In some of the earlier blog posts, I have emphasized the importance of having a small, carefully selected and manageable niche (a description of a group of people or businesses) . If you can define (in extreme detail) exactly the prospective client who is a perfect match for your product, then you will have a higher sales success rate with exactly this type of prospect. The challenge is in the detail of your definition. How specific and exact can you get in your detailed description of this group of prospects?

Small is good. Most entrepreneurs fail to make their niche description precise and exact enough. They do this because they fear that a small niche will not provide enough customers to support their business. This is the fatal error. The smaller and more exact you can make the definition, the greater the likelihood that you will be able to solve their exact problems, and therefore get the sale. The paradox is that even though your local market may only contain one prospect that fits your exact highly-targeted niche, there are many prospects on a global scale.

The King of the Hill. I once heard about a watch repairman who was left-handed. For years he struggled with tools that were designed for right-handed people. Frustration drove him to create a toolset for left-handed watch repair people. When he went out to sell it he could only find one other left-handed watch repairman in his city, therefore his local market was tiny. He did, however, discover thousands of left-handed watch repairmen in a global market. During the first few years he established himself as the recognized leader in the market for left-handed watch repair toolsets. He was the KING OF THE HILL, even though the hill was not so big. Since he had all these loyal, happy, left-handed repairmen as customers, he decided to branch out and sell lots of different tools and other products to left-handed repairmen. Now there were already a lot of competitors in this (larger) market (there always are), but since he already had an established base of customers, he was able to use them to leverage his position in the market. This simple strategy can work for almost any startup company.

So why do so many technology startups struggle with closing sales?
  • they fail to define an exact, detailed highly-targeted niche
  • they waste effort chasing prospects that are convenient or opportunistic, but not part of their high % target niche
  • their sales arguments get diluted because they are chasing many different types of prospects who each have different problems and needs
  • their reputation gets diluted because they have failed to differentiate themselves from all the other “generalists” in the market
  • they are not focused on solving the unique and obvious problems that their target niche prospects have, but rather general problems
  • they fail to talk to members of their target niche and to truly understand the unique problems that their prospects face
  • they fall in love with their own technology rather than seeking the solution to the customer’s problems
I challenge you to write a niche description for your startup that is precise and painfully specific. Make your niche small (so that you can dominate it), carefully selected (to take advantage of your unique skills), and manageable (a group that you can identify and locate easily).

Want some help in perfecting this? Contact Xelerator. We can offer seminars, workshops, coaching and consultants to help you with this process.

Tuesday, September 16, 2008

Response to a Crazy Stock Market

To succeed in a difficult economy, you have to stay focused on the true value you provide for your customers. Remember that they started Google during the dot-com collapse. - RICK
In search of value

Monday, September 15, 2008

How your startup can survive world economic downturn


Rather than panic, rethink the strategy for your startup.

When you read the news tomorrow, chances are that the biggest news headlines will be about the current economic crisis. Today is the day that Lehman Bank declared bankruptcy and the stock markets around the world are taking a beating. Time to panic? Time for startup entrepreneurs to give up on their ventures and get a normal 9-5 job?

There is an old Chinese saying that says that every big crisis offers
an even bigger opportunity. What is the real opportunity here? What will this global restructuring mean for us all and what opportunities will arrive? While the answers may not be readily apparent, it is certainly worth taking the time to ask yourself this question and to let your brain figure out some good answers.

Here are some simple and practical tips on How your startup can survive world economic downturn:
  1. Take a close look at your expenses. Jettison what is not absolutely necessary. In good times we have lots of extra spending money. In bad times, we have to tighten the belt. Simply spending an hour or so looking through all the expenses your company currently has will certainly uncover some areas where you can save money. The entrepreneur that ignores this task and lives on in denial is most likely to end up in big trouble. Money management is an essential and critical skill for all successful entrepreneurs. Take the time to carefully re-evaluate all your expenses. Remember that a delay is not a denial.
  2. Rethink your revenues and path to market. Can you change your approach in order to get to a cash flow quicker? Most entrepreneurs have big plans for their startup and for their product development. Grandiose and lofty dreams are what make entrepreneurs fun people to work with, but sometimes they fail to see that the path to revenues must be as short and direct as possible. Especially in tough economic times, you must do whatever it takes to get some revenue streams flowing. In most cases it is better to have some income coming in than to be at the complete mercy of investor contributions. For example, instead of using the next 7 months to complete the development of your product, what about offering some consulting services to your prospective customers? My experience with the venture community is that they place high value on an entrepreneurs ability to generate revenues. Any and all activities that can contribute income will be proof that you are not only a brilliant entrepreneur, but also an astute businessman.
  3. Narrow your focus (specialize and deliver). You have certainly heard of the 80/20 rule where 80% of your revenues come from 20% of your clients. In tough economic situations, it is more important than ever that you focus most of your attention on the 20%. This doesn't mean that you should ignore the 80%, but it does mean that you need to put 95% of your effort into keeping the 20% happy and reordering your products and services. Narrow your focus by analyzing your market and picking the customers that are most likely to purchase from you. This means the ones that have the biggest problems - the biggest challenges. Focus on them. The more specialized your niche description is, the greater will be your ability to communicate effectively and powerfully to this niche. In tough economic times, your ability to communicate will be an even greater competitive advantage for you.
  4. Fewer, not more customers. The idea here is that is much easier to sell to an existing and satisfied customer than it is to go out and find an entirely new customer. Many businesses make this mistake and end up using much unecessary effort rather than getting the full potential out of the customers they already have. If you have already delivered a quality product or service to your customer, then they already know you. They have experienced your company. What can you go back and offer them? What kind of additional products and services (your own or those of others) could you offer them? In all the businesses I have worked with over the past 15 years, I have never encountered one where the full potential of the customer relationship had been fully realized. Think hard about this. You will be surprised what you will discover.
  5. Think Global, not just Local. If you understood step 3 and if you have truly defined a very specific, highly defined and small niche, then chances are that there are not too many of these "perfectly ideal prospects" in your local market. If the members of your niche are selected on the grounds that they have exactly the kind of problem that you (and only you) can easily solve, then it is likely your market is global, not just local. The more specific the offer, the bigger the geography you will have to search. The best part of this is that different geographies are affected differently by the current economic problems. In Scandinavia, the effects will be different than in Italy and Greece. The diversity of a truly global niche market will give you a certain amount of resilience and a hedge against local economic downturns. Everyone is affected by a global problem, but fortunately, we will all be affected differently. Think Global and create a small, specific niche for your products.
  6. Talk with your bank. This simple little piece of advice is something that many startup entrepreneurs fail to heed. Today, we had a meeting with our bank. Not for any other reason than to check-in, let them know how we are doing and to ask their advice for the coming months. Bankers (and your investors) are there to give you advice. They like this role. Too many entrepreneurs never take the time to ask. OK, no one (including your bankers) expects you to follow all the advice you get, but just the process of asking helps further your case and demonstrates to your banker that you are willing to listen. Who knows, maybe they will also give you some good advice. Mine did.

If everyone is looking to the left, what would you see if you looked to the right for just a moment?

Remember that during this crisis, you may just discover something new and vitally important to the success of your business. Keep an open mind, don't panic and rethink your strategy.

Sign up for Xelerator's newsletter if you want more information or attend one of the free webinars in order to join the discussion with other entrepreneurs.

Monday, September 1, 2008

MobileAxept to Present at First Tuesday

Xelerator's Helge Krøgenes skal presentere MobileAxept på First Tuesday møte Tirsdag, 2.september, 2008. Bli med og lære om hvordan å tjene penger med mobil.
clipped from www.firsttuesday.no

First Tuesday Møte - September 2, 2008 - Mobile trender! Hvordan halvere kostnaden og doble gleden?

First Tuesday 2. SEPTEMBER - Mobile trender! Hvordan halvere kostnaden og doble gleden?
På høstens første First Tuesday er temaet mobile trender. Arrangementet finner sted på Rockefeller, tirsdag 2. september kl 18 og er denne gangen et samarbeid med Mobile Monday.

First Tuesday den 2. september vil bli et arrangement viet deg som lurer på hvordan du kan tjene penger på mobile løsninger, til deg som vil doble nytten til halvparten av kostnadene og til deg som lurer på hvilke mobile nyheter og tjenester vi kan forvente oss i tiden som kommer.

Vi har invitert dyktige analytikere og aktører til å dele sine refleksjoner. Hovedforedragsholdere vil være John Strand, teleanalytiker i Strand Consulting og Invild Myhre, konserndirektør i Network Norway. Helge Krøgenes skal også presentere MobileAxept.

blog it

www.xelerator.com