Honest Revenue Projections

In entrepreneurial ventures, it's almost always the entrepreneur/founder who creates revenue and expense projections for the pro forma. Talk about a conflict of interests. It's especially dangerous when you as founder develop the expenses first. It's only natural to look for revenues that rise to these expenses after that. Classic inductive versus deductive reasoning.

The short post: develop revenue projections first. make them solid numbers that draw on similar operations. Go full Sherlock Holmes on finding comparables, using their publicly posted revenues  and estimating revenues for private corporations. Contrary to general belief, most private companies do publish their revenues in interviews and public promotional material. You just have spend time finding this scattered and incomplete data. Gathering what you can and interpolating the rest is difficult but possible and will generate a basis for reliable revenue estimates. Use multiple sources.

When you're confident you have a reasonably good estimate for revenue over the next three years, only then should you tackle expenses. If these estimates are less than revenues, lucky you. If not, you have to take a harder look at expense and consider bootstrapping measures to bring them into alignment with revenue projections.

Finally, before revising revenue and making UNreasonable adjustments, have a trusted colleague take a look. And then have them consider any adjustments you make. If unreasonable, the project may be a no-go.

Walking Away From A Seemingly Great Product

Had a client demo a great product for me recently. I was really impressed with his passion and the utility of the device. But the product lacked a key feature that will prevent it from being a success and I passed.

Consider the issues:

The founder claimed to possess a great deal of experience in business as co-owner of two technology related firms. He also claimed participation in a business with a similar product to the one he was now promoting. Unfortunately, he couldn't provide proof or either.

In addition, he was asking for really large and rounded figures to start the business but failed to deliver a detailed list of anticipated expenditures. Not a single pro forma or estimate on company letterhead could be produced.

Revenue, likewise, was estimated using generally available figures for sales of other products in the same industry. But no basis for his product's anticipated stellar performance was available.

Worse of all, he was adamant that none of this was necessary. His pitch was that this was obviously a great product in a great industry and anyone with half a brain and the balls to go after it would. The "academic stuff" was a waste of time in his mind. He even suggested anyone not sold on this was a wimp and just p;lain stupid.

Lesson here is that a very critical component of the product is the entrepreneur. Had he asked for help assembling the requested data and provided what he had. I might have helped. Had he an entrepreneurial "stop at nothing" personality, he'd find comparables for revenue projections. I tried coaching and encouragement, but you can only lead a horse to water.

I have no doubt a similar product owned by a more rational entrepreneurial spirit will prevail.

I passed.

Steampunk Revolution - Marketers Beware!

Getting in early on a trend is every marketer's dream. Predicting one, unfortunately, isn't so easy.

As a technology commercialization consultant, I love business development and watching how all the pieces fit together and blend with the environment. I'm also a fan of the Steampunk aesthetic. So when IBM released a report predicting Steampunk is a trend that will become mainstream hip as early as 2013, I took notice.

For the uninitiated, steampunk according to wikipedia is:

Steampunk is a sub-genre of science fiction that typically features steam-powered machinery,^[1] especially in a setting inspired by industrialized Western civilization during the 19th century. Therefore, steampunk works are often set in an alternate history of the 19th century's British Victorian era or American "Wild West", in a post-apocalyptic future during which steam power has regained mainstream use, or in a fantasy world that similarly employs steam power. 

... and so much more. 

The genre has attracted the imagination and contributions of many talented people in music, literature, fashion and art. When Gary Oldman and William Defoe start showing up at fashion shows wearing steampunk inspired designs, as a marketer you might want to take notice. We have at Kronicity and are including lots of cool steampunk features that can ride this trend. And I've created this Steampunk Pinterest Board for a taste of the style.

"Prada Goes Steampunk" on Community BuzzFeed site:
http://www.buzzfeed.com/steampunk/prada-goes-steampunk-for-fall-3n9d

Want more evidence? Consider unknown music artists like Mr. B The Gentleman Rhymer, Professor Elemental, and Abney Park can get 100,000 views, there might be money to be made. Check out their embedded videos below and the stunning video short here:

 

ATT And The Old Way Of Running A Business

Alexander Graham Bell

I've posted about Southwest Airlines, possibly the best run company on earth in an industry so difficult to operate in that I can't figure our why anyone would enter. On the flip side is ATT. I can't figure out why they're in business or why anone would work for them.
The biggest problem with the company, from my limited but disappointing experience, is that the employees I've met don't like management, management doesn't listen to customers, and management hasn't clearly or effectively communicated to the employees that their gola is customer satisfaction.

It started simply enough, a crew came out to install lines an service. Job done, they were walking ou the door without even checking to see if the new line worked. They told me it was a customer self install and instructions came with the box. I insisted they stay anyway. The line didn't work. They tried. Again, no service. They speculated it was a line outside he house an not their job. NOT THEIR JOB!? I thought all AT&T customer service was everyone at the company's job!

Anyway the second crew came out and then left without so much as knocking a saying hello. Again, no service.

I went to the AT&T store where I ordered the service to complain. They called the same multilevel phone answering help line I tried earlier and handed me the phone. Yes, handed me the phone to hold for an answer! Again, it wasn't their job at the store. I held for what seemed like forever and finally got through to someone and then another and finally some help.

A third crew came out and finally fixed the problem. I lost two full days dealing with this issue. The employees were rushed and unhappy and clearly were on opposite sides of the fence from management.

 I sent a letter to the CEO. Underlings responded and offered me a discount on service. They missed the point. I didn't want a discount (I took it) I wanted to let these guys know how bad things were in the field and that management needed to make some serious changes. My appeal appeared to go right over their heads.

 AT&T needs to read my post about Southwest Airlines and take a page from their playbook. It's no secret, Soutwest is happy to share with everyone. Define vision, mission in terms of the customer, empower the employee to act accordingly. Poor Alex must be turning over in his grave.

Maybe We Should Hire The Trekkie

If you want a good accountant, you don't need to look for a whole lot of imagination or out-of-the-box thinking. It's a pretty well defined and very limited field of study. Besides  the truly innovative accountants tend to end up in jail. But if you want to compete in today's fast paced world with 18 month product life cycles, you're going to want to take a close look at the people you're considering for jobs that require innovative thinking.

Of course you'll have to look for the tried and true indictors of a good employe, a neat clean well dressed person to start with. But well-dressed doesn't have to be the same grey suit every other interviewee wore for their interview. A cool evolution tie or Star Trek cuff links might indicate immaturity to the old guard, but today it might be the sign of employee who has fun, has interests and possibly enough outside interets to provide a unique perspective and that innovative thinking you're looking for.


Take a look at the resume too. Back in the day a resume that contained numerous jobs in different fields would have been a huge "Do Not Hire" sign for interviewers. But a closer look might indicate the jobs are actually aligned with a direction you an to take your company. It might provide that person with the broad experience and expertise to address your needs. It indicate you have a person in he hot seat that can pivot as needed and meet whatever challenges come his or her way.

On my resume, I moved from geologist/paleontologist consultant of 22 years to tea retailer and wholesaler the next 10 years and onto Technology Commercialization consultant during my 30+ years business career. The first move was because oil mergers dumped too many consultants into the field and enhancements in 3D seismic forcing paleo to the sidelines. My New Orleans based tea industry literally went under water with Hurricane Katrina. Rather than include excuses on the resume, I simply included "I can't be killed" as a comment in the margins next to my last career change.

Keep in mind that this approach won't be well received by all interviewers. I recall my graduate level entrepreneurial professors, for instance, complaining I wasn't serious enough, but my finance professor gave me kudos for associating entrepreneurial finance with the principles of evolution and lauded me for adding humor to my discussions. He said finance COULD BE FUN if we like what we're doing with it.

This philosophy has served me well. I've managed to avoid really poor job choices that slowly eat away at your soul and flow into exciting prospects such as the Timeline Project at Kronicity. My new partner in the venture said he partnered with me because of passion in spirit and my ability to pivot when needed to adres any change in circumstance.

Bottom line for the employer, if you ant an innovative employee who can meet the challenges of today and tomorrow, a person who can innovate, take a closer look at that resume and hire the guy with the Star Trek cufflinks. Although I might draw the line on the Vulcan ears thing.

Analysis THEN Strategy

I have a blog that discusses the Entrepreneurial Sequence, an attempt at what to do and in the order it should be done in. It includes a graphic that depicts the sequence as well. And because no one size fits all, you might take some exception to some items, but overall, it's a great tool o follow and use to make sure you've included all the important stuff. Which brings up today's topic, Analysis THEN Strategy.

Virtually every client and potential client I've interviewed gets this wrong. They start on the wrong end.  They choose a location, an image or a price based on, well... not much real data. Before going to market, you have to understand who your most likely customer is and what motivates them to buy and determine how to reach them. This is Market Analysis. Once this is complete, you can focus on Market Strategy, the How to reach close the gap between your product and the customer. Likewise, Business Strategy that includes positioning, branding, your unique selling point and how you'll operate are determined through carful analysis of your business, your product and the competitive forces that act upon you, or Business Strategy Analysis and Branding.

This all falls under the "Think Before Acting" category.

Check out the blog and let me know what you think. If you want to delve deeper, try our ebook/lesson plans on Amazon and Barnes & Noble.

On Amazon Books

Barnes & Noble

Exorcism, Zombies, & Entrepreneurial Books

I received a note from a teacher recently about my 9 years old’s performance. Apparently, she was doing really well in everything, but suddenly started slacking in writing. I sent a note back that read, 

“Yeah, she hasn’t been the same since the exorcism.” 

Perhaps this was immature. Perhaps it hinted at a lack of concern for my daughter. But,  fortunately for me, the teacher had a sense of humor and I did not  receive a visit from child services. It actually worked out quite well. The teacher had a sense of humor and we hit it off. My daughter may even get a bit more attention in class because of it. 

But even if this didn’t go so well and I did get that child services visit, I’d still do it again. Life is short and I want to associate with people who do not have sticks jammed so far up somewhere that you can’t interact with them like normal human beings are suppose to. 

So where’s all this going? Well, I’ve written a book about entrepreneurialism at the urging of a business research consultant down in New Orleans. She wanted to market my technology commercialization business and suggested an online form or tutorial might be beneficial. 

So I did. Rather proud of the work. It’s a short ebook, under 200 pages, that sequences entrepreneurial concepts from concept to launch. I use the sequence charts in it regularly to keep myself organized and on task. My clients love the overview and also the sequencing. 

The book is in three parts, discussion of concepts, student exam with answer key, and being the guy who jokes about exorcism, an application of concepts in a post zombie apocalyptic world. Yeah I know, I’m not being serious enough for some folks. But I’m not writing it for them. I’m writing for the business student who can’t stand the thought of suffering through yet another boring business book. The teacher who wants to engage students. And for entrepreneurs who have a life and personality that might give them a shot at success. 

Business can be fun. And if you’re not enjoying the process of building your business, quit and get a job. 

Feel free to comment, rant and ridicule below. I won't care.

You can get a copy of "Surviving

On Amazon Kindle

Customer Centric Planning - Color

It makes me want to scream! There's a process to developing a business. But nearly every client I've had does it backwards. Problem is that they're married to the business, can't let go of any part of it and can't stand anyone telling them, especially consultants who have just walked into the door, telling them what to do with the business they have worked on for months or years. I know because I use to be one of them.

Let's look at some examples from personal experience.

#1. COLOR: My clients are attracted to a clean light look.

I worked with a baker who insisted his logo be simple and clean using light pastel blue and green. Problem is he couldn't identify who his customers were much less know what they wanted.

After some research we discovered that the actual demographic when considering look took a backseat to psychographics. Nearly all well financed and researched similar businesses (this is a shortcut to expensive research and testing) focused on earth tones in the rich orange, red and yellow spectrum. This psychographic color pattern has been known to create a warm freshly-baked feeling and induce spending in most humans, globally. The same goes for most coffee shops. Check out a Starbucks next time you're in or take a peak at McDonald's web site for the preponderance of red, yellow, orange and brown.

We put this to the test at the Indonique Tea & Chai Cafe in New Orleans. Customers were asked what scone they liked best in one trial and what chai was preferred in another. There were two options in each trial. One used an edgy black and steel looking packaging design, the other had a rustic earth tone and ethnic feel. In both trials, the customer was tasting the same exact scone and chai. But in each trial, the earth toned packaging was preferred 90% of the time. Humans are just wired that way.

There are numerous points to consider when creating your image. In addition to color, shape, font, spacing, placement, music selection and more count. Seek professional help early and plan before you spend.

Check back tomorrow for frustration #2. Music Selection

Surviving & Profiting from the Zombie Apocalypse - The Rough Guide

An application approach to understanding entrepreneurial concepts and the entrepreneurial sequence. 

Just published this as a free online service at http://entrepreneurialsequence.blogspot.com/ (concepts only) and as a lesson plan that includes student questions and answer key, plus the Zombie Apocalypse application. The lesson plans are available individually or as a complete set on TeachersPayTeachers.com.

I created this as a service for my clients and a quick guide for me when working through new projects. Thought the Zombie application would be fun for students.

NOTE: The Zombie application is only available on TeachersPayTeachers. And the first lesson plan is FREE. I'm hoping to have it as an ebook on Amazon.com soon.

Love some feedback.

Fiscal Cliff & Congressional Incompetence

I just had to weigh in on the whole Fiscal Cliff thing. NOTHING is being done by either party to remedy the situation.

PROBLEM:

The problem I see is that with a tax code that is hundreds of pages long and so damned complicated that only the wealthy can use it to avoid paying taxes.

SOLUTION:

The solution is a flat tax for individuals and businesses making more than $30K per year with no deductions that equals the total spending of government. If a business is paying the same amount as an individual and no deductions allowed, there's no place to hide it.

And if we're reducing spending, let's start with government. Rather than pay Uncle Sam a dollar to distribute 20 cents back to us, allow individuals and businesses to contribute their tax burden directly to a publicly funded operation. That percentage the government spends on itself in the process of collecting and distributing the funds will go instead to where it's needed. Local, State and Federal Agencies will maintain lists of what needs funding for tax payers to choose from. Pick the school library or road construction project of your choice and mail it directly. The whole thing can be done on line. 

As for outsourced American jobs, apply a minimum wage and OSHA regulations to foreign manufacturers. Ban offenders and those nations not complying with inspections from exporting to the US. Oh, and just as OSHA and FDA and every other government institution charges us for the privilege of being inspected, pas on the cost of these inspections to foreign manufacturers as part of import duties.

BENEFITS:

This allows us to see exactly how much congress is spending. It's an actual percentage of what we earn. If we vote for more spending we'll see it immediately in our monthly tax bill.

The tax form will fit on a post card. No more accountants and tax lawyers. These professionals could focus on running and GROWING businesses and not watching the business owners back as they avoid burdensome taxes.

By eliminating the huge percentage Uncle Sam wastes collecting and distributing our taxes, we'll find we have an enormous surplus of cash.

BUT WHAT ABOUT TAX DEDUCTIONS?

No one buys a house for the deduction. We all take advantage of it, but don't buy because of it. Besides with a flat tax and the resulting higher income, the result will be far more profitable without the deduction. MIGHT EVEN HAVE ENOUGH CASH TO PAY FOR HEALTH INSURANCE.

Call my Libertarian rear end crazy, but the solution is simple. Cut out the middle men in congress who created the mess and close an potential loophole for the extremely wealthy.

By the way, if the senate was designed to have equal representation for each starte, why do we need two senators from each state. Wouldn't one do?

Let me know what you think by commenting.