Are You Addressing Your Business’ Problems or Just Its Symptoms?

As any entrepreneur knows, there are a never-ending number of issues that will arise as you run your business and, if you want to succeed as an entrepreneur, you need to make sure that you’re able to keep all of these trouble spots under control so that your business continues to move forward. However, it can be really difficult for an entrepreneur to attend to all of these issues and still stay focused on the strategic management required to build a successful business. Getting sucked into dealing with all of these daily fires and not having time leftover for strategic planning is what people in the industry refer to as an entrepreneur who is working in the business instead of working on the business, and it doesn’t bode well for the company reaching its full potential.

This incredibly common issue is actually just a symptom of a larger problem, however. I’ve talked about this before here on New Venture Mentor, and I will probably talk about it again, but today we’ll discuss one specific method for combating it – the 5 Whys technique.

Let’s take a look at some definitions: A problem is “a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome,” while a symptom is “a sign of the existence of something, especially of an undesirable situation.” So, in more concise terms, symptoms tell you that a problem is present, but they are not the problem itself. Therefore, addressing a symptom does not solve the underlying problem, which will rear its ugly head some other way. If you’re spending your time focused on the symptoms in your business – the daily fires that pop up – instead of addressing the underlying problems, you’ll always have more and more symptoms to deal with and won’t be able to make real progress.

So how do you tell what is a symptom and what is a real problem? One of the best methods is the 5 Whys method, originally developed by Sakichi Toyoda for use in the Toyota Motor Company. As with most things that lead to success, this technique is incredibly simple, but sometimes difficult to implement. Basically, all you have to do to find the real problem instead of getting caught up in the symptoms is to ask a series of 5 Whys about any issue that arises in your business. For example, let’s say your profit has gone down at the restaurant you own. You’re tempted to obsess about the fact that profit has gone and come up with a bunch of strategies for various ways of increasing your profit – maybe you need to advertise more, maybe you need to stay open longer hours, maybe you need to offer more dinner options – but you shouldn’t jump in to brainstorming solutions just yet, not at this stage. Even though it seems that profit being down would absolutely be a problem in a business, if you use the 5 Whys technique you’ll see that it’s actually just a symptom. So, profit is down at your restaurant. Stop and ask yourself:

“Why is profit down at the restaurant?”

Profit is down at the restaurant because margins are down.

Next, ask yourself:

“Why are margins down?”

Margins are down because we’re selling fewer alcoholic beverages and desserts, our highest margin items.

Continue on here:

“Why are we selling fewer high margin items?”

We’re selling fewer high margin items because customers don’t know we have a full bar and wine cellar, nor that we have a pastry chef on staff.

“Why don’t our customers know about our offerings?”

Our customers don’t know about our offerings because we don’t advertise in our menus or marketing and our staff doesn’t mention it.

Why don’t we promote our highest margin items?

We don’t promote our highest margin items because our owner has been brainstorming advertising options instead of looking at our root problem and updating our menus and training our staff.

Okay, I’m clearly joking a bit there with that last answer but you get the point here. By going through the exercise of 5 Whys we realize that the restaurant owner should create a cocktail menu and wine list, perhaps including pairing suggestions with the top entrees, profile the pastry chef, and have the servers ask all guests directly if they’d like anything to drink or would like any of the award-winning pastry chef’s amazing desserts. These small, inexpensive tweaks will be far more effective for improving the bottom line than increasing advertising spend, but you wouldn’t have realized it without getting down to the root problem instead of focusing on the symptoms.

Appropriately enough, an owner who is too swamped with all of the business’ fires to focus on strategic vision is also usually a symptom, not a problem. The real problem – once you work through the 5 Whys technique – is usually something along the lines of an owner’s inability to delegate or a lack of systemization within the business. Moving forward with your business – and your life, really – you should always force yourself through the 5 Whys technique to make sure you get to true problem and don’t waste time on symptoms. You’ll be amazed at the effect it can have on your business. Also, please note that the 5 Whys technique doesn’t necessarily require 5 Whys – sometimes you’ll need 3 and sometimes you’ll need 13 to get to the real problem. The point is not the number of times that you ask “Why?” it’s that you continue to ask it until you’ve found the true source of the issue.

That’s it for this week here on New Venture Mentor. Thanks for watching and I hope you found this video helpful. If you liked it, please let me know by giving me a thumbs up on YouTube and, if you’re feeling especially generous, I’d be greatly appreciative of any small fan funding donation you can make to help me keep my channel alive and these videos coming your way. If you don’t want to give, no worries, but you should still subscribe to the channel and to my email newsletter so you’ll always be the first to get the latest tips and info to help you plan, launch, and grow your business.

How Should Startup Founders Split Equity?

As you put together your team for building your business, it can be a bit of an awkward conversation to sit down and start doling out ownership of a company that doesn’t exist yet, especially if you have personal relationships with the people you’re founding with. Many entrepreneurs find this discussion to be so awkward that they actually put it off and then they have a huge headache on their hands when they don’t have anything down in writing, the company has started to grow, and founders disagree on what direction the company should head in and how much of it each one owns. You can avoid this whole mess by taking the bull by the horns from the beginning and hashing all of this out from the start. Trust me, it’s way less awkward to have these conversations now than it is to have them after you’ve all been working for a year. If you want your relationships and your company to remain intact, get this equity split business handled right away.

So, if you’re with me and you want to get this figured out right away, how do you determine who gets what?

To be honest, there is no right way of splitting up the equity in a startup, but there are a few things to take into consideration with your founders as you determine who’s entitled to how much of the company.

First up is any financial contribution. Some founders chip in cold hard cash to fund a business, some don’t. Clearly, if someone is putting in money, he or she should be compensated for that contribution, just as any investor would be, with equity.

Next up is sweat equity. 99% of the time, startups are built through the sheer determination and hard work of their founding teams and that sweat equity that is put in and not compensated with a typical salary and benefits package should definitely be compensated with equity instead. Be honest about the contributions that each member of the team is making . How much time are they putting in? How integral to the company’s success is the work they’re doing? How much would you have had to pay an outsider to do the same work? Some of you may be working part time, some may be full time, some may be chipping in where possible but not have a regular commitment – all of this is typically taken into account when determining equity splits.

You’ll also want to consider the experience levels and roles of all of your founding team members. This overlaps quite a bit with the sweat equity piece, but it’s worth noting that a senior executive forgoing salary and working full time is not really of the same value as an entry-level worker forgoing salary and working full time.

Additionally, most founding teams take the idea and any associated intellectual property into account. Now, how this is done varies widely. If there is formal intellectual property, meaning patents, copyrights, trademarks, etc., brought in by one team member, that intellectual property certainly has value and that value should be noted. When it comes to the idea itself, however, opinions diverge. Some people believe that the person who originally had the idea should get the lion’s share of equity; others believe that the success of a business has so much more to do with execution than the idea that bringing the idea is worth almost nothing when divvying up equity; and others fall somewhere in between these two extremes. It doesn’t matter so much what you believe in this instance, it just matters that you and your cofounders are on the same page about it and get all of these details figured out and put in writing from the beginning.

Finally, you’ll want to make sure that those cofounders who remain involved in the company’s growth and development over the long haul are compensated differently than those who are a part of building the business at the beginning but then depart long before the company reaches success. Everyone, and I do mean everyone, should be on a vesting schedule so that anyone who leaves long before the rest of the founders doesn’t get the same amount of ownership as those who stick around through it all.

Again, these are some factors that are most commonly considered when dividing ownership rights between cofounders and they’ll, hopefully, help you get the conversation rolling with your cofounders and steer that conversation to the most relevant pieces of information, but the key here is that you address the issue and get everything in writing from the beginning – not that you divvy up equity based on a template.

Tips for Naming Your Startup or Small Business

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My cousin recently had a new baby – the cutest little munchkin ever, I might add – so her bookshelf was filled with books of baby names to help her choose. Your child is going to carry the name you give her forever, so you want to choose wisely. Some people may be dicks about it *cough* North West *cough*, but most new parents take this decision seriously. If you’re an entrepreneur, your business is almost like your baby, so one of the first things that new entrepreneurs need to do when getting ready to launch their business is to come up with a name for that business – one that customers will remember and that you’ll still love many years from now.

While Shakespeare may have you believing that a rose by any other name would smell as sweet – that’s not entirely true. There are many studies that have shown how our preconceived notions about something affect our experience of that thing – the same wine tastes better when test subjects are told it’s expensive vs. when they’re told it’s cheap, for example, or the same resume gets pushed to the side if it has a woman’s name or an “ethnic” name at the top and chosen for the finalists pile if it has a “traditional white male”name. That means that what you name your business really does matter, so you want to make sure you choose wisely before you lock down the company name that will travel with your business into the future.

With that said, here are some tips for choosing a great name for your business:

First up, you want to make your company name memorable. There are a few quirks of the human mind that can help with this. A business name that rolls off the tongue and just sounds nice is easier for your customers to remember. If you can alliterate or rhyme without sounding like a complete cheeseball, go for it. You also want your name – if possible – to look pretty when written, not just sound pretty when said aloud. This is called letter-form beauty and is especially important if you offer something that is meant to make a customer just feel good. For example, you don’t want a spa to have a name that looks ugly on the sign, people would rather go to the spa down the road with a pretty sign. While you’re focused on making the name look and sound pretty, you should also try to add in some unique letters. For whatever reason, words with letters like J, K, Q, V, W, X, Y, and Z – basically letters that would help you crush it in Scrabble – are more memorable. Finally, it’s helpful if the name you choose both relates to what you offer and conjures up a mental image of a physical thing – for example, the Sea Shore Spa give you a bit of alliteration, makes it clear what your business is, conjures a mental image of a physical thing, and looks and sounds pretty. It just doesn’t have any of those point-grabbing Scrabble letters, but you can’t have it all.

Next up, consider the markets you want to have a presence in and double check that your name works just as well in the language and culture of all of the markets you want to enter. The most infamous story about this relates to the Chevy Nova. Nova is a pretty innocuous name in English but in Spanish it sounds like”no va,” which means doesn’t go, probably not the best association you could have with a car name. Another example is when I was working at an internet advertising startup and we were supposed to promote an online game that was basically the old-school Nintendo game Duck Hunting, but on Facebook. No big deal overall, but the word for duck in Spanish is also used as a very derogatory term for a gay person in Puerto Rican slang and given that the game was about hunting ducks, the team clearly decided to make changes to the promotion once I pointed this out to them. As you choose your company name, just be cognizant of how that name will come across to all of your potential customers, not just those who are from the same culture and speak the same language as you do.

You’ll also want to check that this perfect name you just chose is actually available. Is the domain name free? How about all of the social media monikers? Can you trademark the name or is someone else already using it? Do some research online to make sure you can take control of whatever name you choose online and off and be sure that it’s easy enough to spell that people will be able to find your easily when they search for you online.

Finally, take every bit of this advice with a grain of salt. These tricks are guidelines to help you select a memorable name – they shouldn’t cause you to obsessively try to find a name that includes every single one of them and ends up sounding forced and weird. Also, there are obviously examples of companies that ignore pretty much all of these rules and are still memorable and have become a part of the language – like Google. You can break all of the naming rules and still be successful and you can follow all of them and fail, but if you want to give yourself a leg up, consider some of these naming tips as you choose your company’s name.

Elements of a Good Strategic Plan for Your Startup or Small Business

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Welcome back to New Venture Mentor. Thanks for swinging by. This week we’re going to talk about the all important strategic plan.

Many small business and startup coaches and consultants, including myself, regularly espouse the benefits of a strong strategic plan and implore entrepreneurs to spend the time necessary to create a great one to guide the growth of a business. But what is a strategic plan exactly and what are the elements of a good one?

Well, the first step in creating a solid strategic plan is having a clear vision of where you want to go. Strategies are developed in order to help you achieve certain goals, so you need to set those goals before you can develop the strategy. If you want to have a strategic plan that is actionable and helpful, you need to be clear and specific about the goals that you’re trying to achieve. Don’t say that you want your business to be more profitable by the end of the year, say that you want to achieve a profit of $1 million. Don’t say that you want to increase your number of customers, say that you want to increase your number of customer by 70%. You need to lay out a vision of what success means for your company over a given period of time – probably over the next 12 months – and then you’ll use that vision of success as the goal towards which all of your strategic initiatives should move you. As a guide, all of the things that you identify here in your vision should be SMART goals – that is, they should be Specific, Measurable, Achievable, Relevant, and Time-Bound.

The next step in building a strategic plan is evaluating what your core competencies are and identifying the market opportunities that align with those core competencies. Core competencies are the things that your company does exceptionally well. This is not a goal, like in the first step, this is what your company excels at right now. Be honest about where your company really distinguishes itself from the pack and then identify opportunities in the market that you can take advantage of given these core competencies.

Finally, take a look at where you want to go, what your core competencies are now, and what market opportunities you can take advantage of. Now, using those as the basis for this next step, break all of your goals from the vision section down into smaller goals, and then break those goals down into even smaller goals, and so on. By the end, you should have a clear path to achieving your vision by accomplishing a set of smaller goals all along the way. These action plans should include a bunch of SMART – Specific, Measurable, Achievable, Relevant, and Time-Bound – goals that all add up to the larger SMART goals you included in your vision. Once you’ve done that, you have your strategic plan – a clear vision of where you want to go and how you’ll get there. It’s as simple as that.

I know that was a quickie but that’s it for this week here on New Venture Mentor. If you liked this video, I hope you’ll consider making a small fan funding contribution to my YouTube channel. If you can’t, no worries, but a thumbs up would still be greatly appreciated. Also, don’t forget to subscribe to my YouTube channel and to my free email newsletter to make sure you never miss any of the tips and info that will help you plan, launch, and grow your new business.

How to Get a Warm Introduction to an Investor

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If you’ve done any research about raising funding for your startup or small business – or, really, if you know anything about human behavior – you’ll recognize that you have a much better chance at getting an angel investor or venture capitalist to write a check to fund your business if you’re able to get a warm introduction to that investor. Assuming you don’t spend all of your free time rubbing elbows with multimillionaires, however, you may have to put in a little work to get that introduction and I’m going to give you some tips for accomplishing just that.

First up, make sure you’re prepared for a meeting before you head to start trying to get meetings. You really never know when you might procure that warm intro you’re looking for and when the investor will want to meet. I’m not saying you need to jump through ridiculous hoops and be available at an investor’s every beck and call, but if you get the opportunity to have a meeting, you don’t want to ask for a couple of weeks to prepare. Additionally, you have to remember that these investors have lives too and care about many things much more than listening to your pitch. If someone says they’d love to hear your pitch but are heading off on a month-long vacation next week and need to see you the day after tomorrow, you should be ready to pitch them the day after tomorrow.

Secondly, be sure you know what type of investor you’re looking for. Most investors, whether angels or VCs, have a sweet spot within which they like to make their investments. That means that they’ll typically back companies in a particular industry, at a particular stage of development, in a particular geographic region, and that need a particular amount of money. Before you go out there networking, make sure you know where you fall in that mix so that you can be clear about who would be good fit for you as an investment partner and who wouldn’t be.

Thirdly, get out there and become a part of the community. If you’re watching this video wondering how to get a warm introduction to an investor, it’s likely that you haven’t really become a part of the entrepreneurship or startup community in your area. These circles tend to be pretty small and it’s pretty easy to get to know someone who could make a connection for you, or to meet the investors themselves at one of the events in your area. That’s not going to happen if you’re never present in the community, however. Whether or not you’re actively seeking investment, you should be out there getting to know the other entrepreneurs in your area, participating in events, sharing your idea, learning from others, and just really committing to being a part of what’s happening on the entrepreneurship scene. This is how you learn, network, and find out about new opportunities for your business.

Fourthly, make use of the technology we have available to us and utilize the networking platforms out there to see who you know that could connect you to someone who might invest. Jump on LinkedIn to look up some of the investors you’d love to work with and you’ll immediately be able to see if someone can make an introduction for you. We have so much more visibility and transparency now than in the past when it comes to others’ networks and you should absolutely make use of that. If you don’t have someone who can make an introduction for you yet, move to Facebook or Twitter and try to find out where the investors you want to meet will be and then plan to attend those events as well. If you continue to participate in the same community in which the investor participates, you’ll eventually meet him or her or at least meet someone who knows him or her.

Finally, be persistent. It may take you a little time to get a warm introduction to the investor of your dreams, but it will be well worth it once you do. Remember as you go through the networking process that there is much more value to building long-term relationships with the people you meet than getting a one-time intro to an investor. The best thing you can do is bring value to the community – share your idea, show off your intelligence and dedication, and most of all, help the other members of the community. An introduction is only effective when it’s backed by praise and you need to have a good reputation in the community in order to get that.

That’s it for this week on New Venture Mentor. Thanks for watching and I hope you found this video helpful. If you did, please let me know by giving me a thumbs up on YouTube and maybe even making a small fan funding donation so that I can keep this channel up and running. If you can’t or don’t want to give, no worries. You should still subscribe to the channel and to my email newsletter over at CateCosta.com to make sure you’re always in the loop on the latest information, tools, and tips to help you plan, launch, and grow your new business.

How to Run a Sale That Helps, Not Hurts, Your Small Business or Startup

When you’re new to the entrepreneurship world, you’re excited to get out there and do everything that you can to promote your business. One way of doing that is through sales and coupons that might attract new customers into your store or onto your website. If you’ve never run a sale before, however, you might not realize some of the hidden dangers that lie in such a promotion and, if you’re not careful, you may end up losing money on the promotion as opposed to making it. This week I’ll give you a few tips to help you make sure your first sale or coupon promotion is a success.

Firstly, you have to be clear before you run your sale what your goals are with the promotion. Do you want  to reward the loyal customers you already have? Do you want a surge a new customers for a quick burst of cash inflow? Do you want to find new customers but keep them for the long term? Do you just want to get your name out there in general so that you can help build a bit more awareness about the fact that you exist? It doesn’t really matter all that much what your reason for running a sale is, but you need to know your goals before you do so so that you can design the sale in such a way as to make sure that those goals are achieved.

For example, if you want to reward loyal customers you already have, you shouldn’t promote your sale to everyone but instead should offer a coupon only to those people on your email list or who have made a purchase in the last month. If you want to generate a quick burst of cash flow and don’t care if the customers come back, you can discount far more heavily than if you want these new buyers to come back when you don’t have a sale.

This leads us to the second point: once you know your goals with the sale, you have to identify the target customer for this specific promotion. As I started to explain a second ago, if you want nothing more than a quick influx of cash then you’ll be targeting any bargain hunter out there with a great deal that still allows you to make some money on the volume of sales you’ll get right now. If, however, you’re trying to generate long-term customers then your sale will need to target the type of people that are your ideal customers and will likely come back once they’ve seen what you have to offer, but they need a little extra push to come check you out that first time and the sale can be just that. In this case, you wouldn’t want your sale to be too far off from what you’d normally offer because you wouldn’t want to attract the customers that are simply sale chasers.

In addition to making sure the deal you offer makes sense for attracting the type of customer you’re looking for, be sure that you cover your butt and are incredibly clear about what the restrictions are. If you say customers can use a coupon to get $20 off any purchase of $50 or more, make sure the coupon says only one may be used per customer or you’ll have people coming in arguing they should get their entire purchase for free because they have 3 coupons. Also make sure to note that your promotions cannot be combined with any other sales and that the deal is good only for certain dates. You don’t want someone coming in and using last year’s Valentine’s Day sales coupon AND this year’s Valentine’s Day sales coupon on top of each other.

Finally, it seems ridiculously obvious, but make sure that whatever deal you offer will still allow you to make money. You’d be amazed at how many entrepreneurs out there don’t actually know what their cost of sales is for any given item, which makes it basically impossible to know if you can still make money on it after a 25% discount. Having lower margins in the short term to generate more volume or more long-term business is fine. Not doing the math and accidentally selling things at a loss is not.

Once you’ve made sure you know why you’re running a promo, who you’re promoting to, and have all your coupon Is dotted and Ts crossed, you’re ready to get out there and promote your sale. Just remember to track the performance of any discounts or coupons you offer so that you can analyze the success of your sale once you’re done and be able to make an informed decision about whether it’s a worthwhile promotion to repeat or not.

That’s it for this week here on New Venture Mentor. If you liked this video, please let me know by giving me thumbs up on YouTube or, if you’re feeling especially generous, giving a little fan funding contribution to help me keep my channel live and keep bringing you tips and information to plan, launch, and grow your new business. Also, don’t forget to subscribe to my channel and to my newsletter so that you’ll always be the first to get the latest. Thanks for watching and I’ll see you next time on New Venture Mentor.

Top Startup Mistakes: Refusing to Adapt

I post tons of articles that I find around the web to help answer questions for my followers and help you all move your businesses forward. People often write in asking me to elaborate on pieces of those articles so I’ve started a series to do just that. I recently posted an article from Entrepreneur about common mistakes people make when launching a new company. The next of those big mistakes: refusing to adapt. 

 

Becoming successful in entrepreneurship requires a delicate balance. You’ve probably all heard the advice that you need to power through and believe in your idea no matter what, but you’ve probably also heard that nothing ever goes according to plans and you need to be able to pivot, pivot, pivot until you produce something that customers want to buy. In addition to the fact that the word pivot is so over-used that it now sounds like nails on a chalkboard to me, these two pieces of advice in combination just don’t seem to make much sense. Either you need to be completely dedicated to your idea even when nobody else believes in you or you need to be willing to throw that idea out the window to follow the customer’s whims, but you can’t do both at once, right?

Let’s try rephrasing that second bit about pivots to make this all a bit more clear and to allow me to stop saying the damn word pivot. Now, while it’s absolutely important that you believe whole-heartedly in your idea when you’re an entrepreneur, that doesn’t mean that you can ignore everything else that is going on around you in the world and, more specifically, in your industry. As Charles Darwin said, “It is not the strongest of the species who survives, nor the most intelligent; it is the one that is most adaptable to change.” Click here to tweet this quote. However, adaptability doesn’t necessarily mean a complete, 180 degree change; it simply means recognizing changes to the environment and adjusting to take advantage of the opportunities and avoid the pitfalls that those changes create. The most successful entrepreneurs adapt to the environment, yes, but they also change the environment to fit their goals.

Let’s think about this through a few examples. Let’s say you make a zero calorie soft drink and then the government in one of the countries where you sell it outlaws the use of your main sweetener. Refusing to adapt means not changing your formula and facing legal action and the loss of all business in that country. Clearly, clinging to your original idea makes no sense in this case. You have to adapt to the situation and change your formula and/or contest the new law in court, but that doesn’t mean you immediately toss out your original concept.

Or what about if you make an educational phone app to help kids learn how to read. You begin testing and it turns out that the reading app doesn’t really outperform other apps in general but is a superstar when it comes to teaching kids whose first language is not English learn to speak and read English simultaneously. You never intended your app to be for language learning but now you have a decision to make: keep on your original course and market an average solution to the whole market, change course and start over building a new app for the original market, keep this app but now focus on English as a foreign language students, or do options 2 and 3 simultaneously. Clearly, option one isn’t likely to be the most successful choice, so you need to adapt.

Let’s look at it from the other side, however. Let’s say you’ve been a singing coach for 3 decades and you have an idea for an app that would help voice students learn to match pitch more easily but as you’re sharing the idea people tell you that there aren’t really enough singing students around to make your app worthwhile and you should instead create an app that helps people learn math because STEM is hot right now. Well, whether or not your original app would be successful, it makes no sense for you to change course and try to build something you know nothing about just because the potential market may be bigger.

Adaptability isn’t about allowing yourself to become unfocused on an idea and just bouncing around wherever the wind blows you. Adaptability is about recognizing changes to the environment in which you’re building your business and making sure you make small adjustments to keep yourself on track and moving forward.

Knowing how to tell the difference is one of the skills that sets great entrepreneurs apart from the rest. If you need some help trying to figure it out, you can start by checking out my video on whose advice you should listen to and whose you should ignore as well as the one on how to conduct market research. Both of those will help you gather the information you need to be able to make the right decisions about whether to change direction or stay the course.

Did you like this video? If so, please let me know by making a small fan funding donation to support my YouTube channel and keep the videos coming. If you can’t give anything, no worries, but a free thumbs on YouTube would also be much appreciated. Plus, make sure you subscribe to the channel so you’ll be the first to know when new videos go live and, if you prefer to get my latest blog posts right to your inbox, be sure to subscribe to my newsletter.

Thanks so much for your support!

Top Startup Mistakes: Thinking Too Small

People often write asking me to elaborate on pieces of articles I’ve shared so I’ve started a series to do just that. I may combine a few or leave a few out here and there, but I will cover the topics that people asked me to elaborate on. I recently posted an article from Entrepreneur about common mistakes people make when launching a new company. The next of those big mistakes: not dreaming big enough. 

Welcome back to New Venture Mentor, I hope your 2015 is starting off splendidly well. As we move into the new year and everyone is still succeeding at their resolutions because we’re only 2 weeks into them, I want to give you just a quick episode today about how thinking too small can really hold entrepreneurs back.

Entrepreneurs often fall into one of two categories: they think they’re the next Steve Jobs and that they’ll soon be billionaires or they lack confidence and are constantly worried about failing. While both can cause major problems in your new startup or small business, this week we’re going to talk about the latter issue, a lack of confidence.

Becoming an entrepreneur is a bit crazy. Clearly, you have to be at least somewhat prone to optimism to become an entrepreneur because we know that most new businesses fail and yet we believe that our business will be different. At the same time, however, most entrepreneurs are also prone to bouts of anything from mild self-doubt to sheer panic and it’s these doubts that often lead entrepreneurs to think to small and limit the success of their businesses.

Now, when I say this, I don’t mean to say that every single entrepreneur should be dreaming of building an empire, that’s not what everyone wants. I do mean to say, however, that you need to do a gut check every now and again to make sure that having set a low bar for success isn’t holding you back from growing your business in a way that would actually be more aligned with your goals.

Let’s say you opened a bakery because you wanted to share your grandmother’s delicious pies with as many people as possible and be able to support your family. Remember those two goals: share pies with as many people as possible and support your family. Now let’s say that your bakery does really well, everyone in the neighborhood loves you, and you’re making enough profit to live comfortably. Woohoo, this is success, right? At this point, most entrepreneurs either say, “Great, I accomplished my dream,” and keep operating their one bakery or they may expand by opening a second location of their bakery. Those are both valid choices if that’s what you want to do, but that’s small thinking. What about if you partnered with the area grocery stores to have them sell your pies in their stores? What if you went even bigger and partnered with a regional baked goods distributor and had your pies sold throughout the surrounding states? What if you licensed the recipe to another company entirely and you didn’t have your name on the pies, but they were shipped and enjoyed by people all around the country? Maybe you think those are awesome options and maybe you don’t, but the point is that they would accomplish your goals of sharing the pies with as many people as possible and supporting your family in a much bigger way than your little bakery and if you think too small you won’t ever even consider them.

Beginning your 2015, just remind yourself that while it’s okay to choose to have a business as big or as small as works for you, you should at least entertain the idea of thinking big because you may never know what options are out there for the expansion of your business unless you take a look.

That’s all for this week – I told you it would be a quicky. If you liked this video or found it helpful, please let me know by giving it a big YouTube thumbs up and if you want to really show your love by helping fund this channel so you can keep getting free tips and info to help your business grow, I will be forever appreciative. Also, don’t forget to get over to CateCosta.com, if you’re not already there, and sign up for my newsletter so you’ll get all of the latest delivered right to your inbox every Tuesday morning. Plus, just one last favor to ask, as I’m filming this I have 1,495 subscribers here on YouTube and I would absolutely love to make it up to 1,500 by the end of the month so, if you don’t mind, please click the subscribe button and help me reach my goal.

Thanks so much for your support and I’ll see you next time on New Venture Mentor.

How to Conduct Competitive Intelligence – Ethically and Inexpensively

As you begin building your startup or small business, it’s important that you stay up to date with what’s happening in your industry and what your competitors are doing. You can’t really compete very well if you don’t pay any attention to what anyone else is doing.

Think about it this way, if you’re a football coach or player, you definitely watch video of the next team you’re going to play and analyze their style and strategy, note their strengths and weaknesses, and come up with strategies for beating them before you walk onto the field on game day. Yes, most of your time is spent developing your own skills, but you can’t ignore what’s going on on your competitors’ teams. It’s no different in business. You should be paying attention to what your competitors are doing and you should have a competitive intelligence strategy laid out for how you’ll go about gathering this information.

Now, of course, you don’t want to get sucked into a stalking spiral. Competitive intelligence can be just as addictive as looking at wedding and baby photos on Facebook, so be sure you know what information you want to gather and how you’ll gather it before you start so that once you have what you need, you stop. Also make sure that you’re keeping all of your “spying” techniques and practices above board and that you never cross any ethical lines while conducting competitive intelligence. Creeping on some companies online is one thing, corporate espionage is quite another.

To begin investigating, simply start with your competitors’ websites. It’s always a good idea to see how your competitors present themselves to customers and get an idea of their branding, messaging, and sales funnel. Additionally, you can use tools like SEMrush.com to help you identify how much traffic your competitors’ websites generate and where that traffic comes from. You shouldn’t blindly copy anything and everything that competitors do, but if they’re getting lots of traffic from PPC ads and you’ve never even given PPC a try, you should take note. The same goes for checking out competitors’ social media profiles: note which platforms they’re on, how many followers they have, whether those followers are active, etc. Also pay attention to the type of content they’re putting out and what gets the most interaction from followers. Again, don’t copy everything you see but if Facebook posts with videos are netting 10x the shares of Facebook posts with just text, you may want to experiment with posting some videos on your own Facebook page.

You can gather some great information from a company’s website and social media presence, however, be sure to take everything with a grain of salt. This is the public persona of the business and that public persona may or may not match up with what’s actually happening behind the scenes. You’re not likely to see a competitor posting that if they don’t increase sales immediately they’ll be bankrupt in 6 months, nor are you likely to see companies spilling the beans about their most exciting upcoming projects until they’re ready to launch those projects.

In addition to checking out the public personas of your competitors, try looking under the hood a bit. If you’re in the high growth startup space, pay attention to who’s raising money, who’s been funded, and how big the checks are. Also take note of who the investors are and who’s on the Board of Directors. This type of information can tell you a lot about where a competitor is in its life cycle, how much runway it has, and what may be in the works. Combine that with some research into the team: who are the founders and what are their backgrounds?, how many employees are there?, who are the employees and what are their backgrounds?, is the company actively hiring?, is there a lot of turnover?, etc.

Finally, check out the press. See if your competitors are getting any attention from the media and note what it’s for and whether the coverage is positive or negative. How are they attempting to position themselves and what are the talking points they’re trying to get out there? Are they media darlings or they having trouble getting traction?

All of this information will help you understand the competitive landscape in which your company is being built and help you build a more successful strategy for your own success. You’re not building your company in a bubble, so a sound plan of attack must take into account what your competitors are doing.

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Thanks for watching and I’ll see you next time on New Venture Mentor.

Business Basics Review: Choosing Your Legal Business Type

I just got back from my vacation so we’re going to round out the month with the final post in the Small Business Basics Review: Choosing Your Legal Business Type. This week’s video will cover the basics of the LLC, S-Corp, C-Corp, Partnership, and Sole-Prop to help you decide which is the right choice for your new startup or small business.