12 Vital Questions for Any New Business

Global Entrepreneurship Week

It is Global Entrepreneurship Week on 18 November through 23 November.  There are events all over the world.  The overall organisation website is: www.unleashingideas.org. You can find out more following twitter hashtags #GEW, #GEWSpain, #IESEGEW.  There will be plenty of events in your city led by Entrepreneurs’ Organisation, The Kauffman Foundation and many more local entrepreneurship groups.  Get involved!

Here is a post inspired by the Global Entrepreneurship Week.  What questions must you ask of yourself and your idea before moving into execution?

The 12 Vital Questions for Any New Business

Are you an entrepreneur?  Are you a corporate leader?  Do you have an idea and have thought about turning it into a business?  Here is a list of 12 questions that you must answer (and why):

  1. Why do we exist? (purpose)
  2. What is our aspiration (vision)
  3. Exactly what problem will this solve? (value proposition)
  4. For whom do we solve that problem? (target segment)
  5. How big is the opportunity? (market size)
  6. What alternatives are out there? (competitive landscape)
  7. Why are we best suited to pursue this? (our differentiator)
  8. Why now? (market window)
  9. How will we get this solution to market? (go-to-market strategy)
  10. How will we measure success? (KPIs)
  11. What factors are critical to success? (CSFs)
  12. Can we succeed – is this viable and sustainable? (go or no-go)

This comes from Ramanathan’s answer to What should you do as an Entrepreneur if you have no background in business over at Quora.

Pitching Your Idea

As a bonus, once you’ve got those 12 answers cracked… you now need to be able to share the answers in a way that others can get excited, get involved and make it happen with you.  You need to pitch.

What is the best pitch:

“The best pitch decks don’t feel like they were created for the benefit of venture capitalists. They feel like an outgrowth of the work the startup is already doing.” Michael Wolfe

Pablo Villalba pitching Teambox

The best pitch decks portray:

  • This is what we are doing.
  • This is how we are going to do it.
  • We can do it better if we get some money in.
  • This thing is going to happen with or without you.
  • Are you in or are you out?

That comes from Michael Wolfe’s answer to What should be in a Pitch Deck also at Quora.

Further Reading

Yahoo pays Millions to Teen Coder (the real story)

Nick D’Aloisio

The story in the tech news of the last few days is the purchase of Summly by Yahoo for the sum of $30M, making the 17-year old founder Nick D’Aloisio an instant millionaire.

It sounds fairly simple.

The story they want you to believe:

Teen whizz writes cool app.  App downloaded by millions.  Yahoo gets interested.  Teen whizz meets after school to agree $30M deal.  Teen now rich.

The reality might be a little more useful.

The reality: Mentors and Advisors made this deal.

Horizon Ventures, the Hong-Kong based Venture Capital fund that is part of Li Ka-shing‘s empire spotted Nick D’Aloisio a few years ago.

He was a great coder, and presents himself well; he had a decent app.

Billionaire Li Ka-shing’s company Horizon put together a group of mentor/advisors for Nick – including Jonathan Ive, chief designer at Apple; other well-known tech and media names including actors Ashton Kutcher, Stephen Fry, Spotify’s Shakil Khan, Zynga’s Mark Pincus and Lady Gaga’s manager Troy Carter.

Together they shaped an unknown London geek into a cool dude and a $30M deal with Yahoo.

It was not the awesomeness of the app, it was the credibility of the mentors and advisors that made this deal.

Resources

If You Can’t Explain What You Do in a Paragraph, You’ve Got a Problem

I so loved the title of Brad Feld’s post, that I just had to copy the title.

This is an important one.  We live in a world of personal branding, quick online reputation checks and a lot of noise.  Authors, Entrepreneurs and job seekers get less and less time to explain themselves.

This morning I was listening to Guy Kawasaki pitch his new book “APE” in a webinar on publishing.  He talked about the challenge of an author.  “Nobody walks into the bookstore thinking I am here to make Guy Kawasaki a little bit richer.  He walks in with a problem that he wants to solve.  His problem.”

The mentality of someone walking into a bookstore and browsing, and the mentality of an investor share a lot of similarities.  They have their own agenda.  Either you show you can help that agenda very quickly, or there are 20,000 other books in the bookshop that will get their attention.

If You Can’t Explain what You do in a Paragraph, You’ve Got a Problem

Gimme some Attention!!

I love the energy of entrepreneurs.  I spend a lot of time involved in activities in Barcelona.  I love the entrepreneurial energy. It is great to see people and institutions coming together to build the supporting community.  We need to get better at connecting 1) the people with the resources with 2) the people with the ideas with 3) the people who can execute these ideas.

If you approach me at a networking event and say “I’d like to talk to you about my business.”  I’ll say “Great.”  Then I will ask “What problem do you solve?”

This is the point at which 85% lose my attention.  They try to steer the conversation to describing the technology, or give a generic statement that uses either the word “platform” or “solution”.

I don’t want to hear about what language you are coding in.  I don’t really care about which font you have chosen for your book.  I don’t care when you started.

The 3 Ingredients of What We Do

Brad Feld says the “What We Do” Paragraph should be three sentences: (1) what we do, (2) who we do it to, and (3) why you should care. Sometimes this can be two sentences; sometimes four, but never more than a paragraph.

I believe the major risk of early stage startups is getting customers to buy, and showing that you can sell.  The words “platform” or “solution” are indicative of an entrepreneur who has not spent much time with real or potential customers.

What’s your paragraph?

Photo Credit: saikiishiki via Compfight cc

Video: Dealing with Objections

You finish your pitch and the customer says: “Your product is too expensive!”.  You arrive home, you’re a few minutes late: your partner says “You are always late!”.  At a dirty plate left on the table: “you never wash the dishes!”

What do you say in this moment?

How do you handle objections?  It is possible to take proactive control of your emotional state.  You can practice a habit of not reacting like a viper snake or a cornered bear.  It will improve how you sell, it will improve how you manage… and it will improve the quality of your relationships.

Aikido Conversation

An Aikido Dojo

I posted a short video yesterday to my YouTube Channel explaining a concept that I teach in my class on persuasion: “Aikido Conversation”.

From: “What I want to say”

The most important step in persuasion is being able to leave behind “what I want to say” and move to what “they need to hear”.  It requires emotional control that we don’t have as standard.

To: “They need to hear”

When someone gives you an objection, or accuses you of something – the real issue is underneath, not at the surface.  If you react with what “I want to say” you will have a fight, you will lose the opportunity to understand what is really at issue.

How to deal with Objections

[youtube=http://www.youtube.com/watch?v=ylH5emU7JRA]

Transcript of the Video:

You finish your pitch and the customer says: “It’s quite expensive”… “Your product is too expensive!”

You arrive home, you’re a few minutes late: your partner says “You are always late”

At a dirty plate left on the table: “you never wash the dishes”

What do you say in this moment?

Most of you, and myself included, went through 14 years of school where we were taught one way to respond to questions:

Teacher asks questions “how do you spell cat?”
Student: “C A T”

Teacher: “what is the biological process called osmosis?”
Student puts hand up explains in detail the process through which cell membranes allow water to go from one side to the other.

So for 14 years you’ve been taught that you provided an answer to a question. If you went to university you probably had another 3,4 years where you gave answers to questions…  but in real life, in persuasion in getting to what the other person is really about, what their needs really are the worst thing you can do is give an answer to question. If someone says “your product is too expensive” and you said “no it’s not! it’s only €1000” you’ve lost every chance to understand what else is behind their reasoning.

If you get home and your partner says “you’re always late!”

“No no no! Tuesday I definitely was here on time”… you’re gonna have a crap weekend

You’ve had 14, if not 18 years of training that you answer questions and it’s going to cause fights in your home life, it’s going to cause problems at work, it means you’re not selling anything.

Because when someone says your product is too expensive, that’s not what their real issue is.  When someone says “I will have to speak to my boss” that’s not what their real issue is.

If we had lots of time here I would create a little role-play thing because what happens here in our model of the human brain: the stem, emotion

When your partner says “you’re always late” emotion goes up and what happens is this part disconnects. The way to make someone stupider is insult them, object to them tell them they are wrong. When asked a question there’s an emotional reaction.

Emotion up, Intelligence down

and the higher emotion goes
the lower thinking goes

so if you don’t practice this response you’re not going be able to do it in the moment.  if you don’t practice repeatedly how you’ll respond to

  • “you’re always late!”,
  • “you never wash the dishes!”,
  • “you never do your part of the share!”
  • “your product is too expensive!”,
  • “your competitor is better!”,
  • “you failed us 3 years ago!”
  • “I don’t trust your company!”

if you don’t practice this habit of not giving an answer. You’re not going to be able to do it in the heat of the moment.

So i would say this: when you are asked a question or given an objection what I want you to do is say “I understand”, and repeat in your words what they’re saying:

Them: “your product is too expensive!”

You: “I understand that money is an important factor for you, What other criteria will be used in taking this decision?”

You understand… and you give an open question back. I call this “Conversation Aikido”

Martial Arts

Martial Arts are about using the energy, the force of the opponent against them. In Judo, if someone punches you pull their arm and you allow the energy to keep flowing.  In Karate… don’t be where the energy is arriving.  In Aikido the concept is you go towards the punch, go towards the energy

If someone punches you, if someone asks you a question, if someone objects or says you’re wrong: The Aikido method is go towards and see the world from their view.

In Aikido you learn to go towards the punch, dodge it, and look and you are seeing the world in the same direction as the person who’s attacking you.

“I understand”

It takes some habit to start to be able to give “I understand” and fill in good words so practicing

  • “you’re always late!”…
  • “I understand you feel frustrated”
  • “I understand you feel let down”
  • “I understand…”

You will have to work on this quite a few times over the next 10 years to find the set of words that captures what the other person feels, what’s behind it

  • “What can we do now?”
  • “What happened during the day?”,
  • “What would you like to talk about?”,
  • “What can we do this weekend?”

so that is the way that instead of when you get punched, walking straight into the punch, having a very bad weekend;  when a client says “you’re too expensive!” and you say “No we are not!”: You learn nothing:

  • about who else they are considering
  • what other criteria are important
  • what process they have gone through
  • who else is involved in the decision

I hope that, and this takes 14 years of it being drummed into you… 4 more, 18 if you went to university.  It’s gonna take you at least 18 years to get out of the habit of responding to questions with answers

We live in an uncertain world and we don’t have the answers but by giving the answer we shut down the possibility of hearing what’s really going on in the other person’s mind, in the other person’s business, what other things are going on; so if someone says:

“your product is too expensive” -> “I understand that money is an important criteria for you what other things are important in this decision?”

“I’ll have to talk to my boss in this” -> “Hey, this is an important decision I understand you want to get everyone involved”  “When can I come and meet with you and your boss together?”

…that’s a bit of a closed question…

but the habit here is being good at “I understand” and accepting the energy that is coming from the other person and then giving back an open question

and I guarantee that if you do it 4 times: the answer to your 4th open question begins to be what’s the real underlying need issue, interest of the person that you’re listening to.

Terrible or Fantastic? Do we need more Shoes?

In the late 1870s, A Dublin-based shoe company sent 2 salespeople from their head office to a new territory in rural Africa.  The two salespeople, Willy and Jimmy, travelled out on boat, trains and foot to reach the rural African areas that was to be their new sales area.

2 months later, 2 telegrams arrived in the Dublin headquarters.

The first telegram from Willy read “Terrible news. They don’t wear shoes.”

The second telegram from Jimmy read “Fantastic opportunity. Never seen a greater need for shoes. Much work to do.”

Are you seeing the world as Willy or as Jimmy?

The 3 Basic Questions of Good Business

Good business has been done the same way for centuries. The medium does not change the rules for success.

Question 1: Who exactly do you help?

Who do you help?  What problem do you solve for them?

How can you make that pain tangible for the listener?  Effective sales is about helping a customer understand that their suffering can go away.  They have a choice.  Continue to suffer, or begin to change.

Question 2: Where can you take me?

People don’t buy coaching, they buy results. “I am a coach” = about me; “I enable you to make a living through speaking” = results, about you.  Olympic coaches have not won gold; they have helped others achieved gold.

The more I am specific, the more I show how others like you have gone on this similar journey and achieved these desirable results, the better.

Customer testimonials are powerful.  When a salesperson explains their “vision” it is because they can’t show you a customer who has already gone through the journey.

Question 3: Why can I trust you?

What makes you worthy of trust? It takes a tremendous amount of trust to click “buy” on the website of someone you have never met and believe that the goods will be delivered.

These are the 3 important questions.

Don’t Be Cheap.

“Cheaper” is never a deep human life goal.

I don’t often hear people say “I wish my life was cheaper”.

We never buy because something is cheaper. We buy because of the story we can tell ourself and others when we buy cheaper… I am a smart person because I get good deals.

But, Apple is not cheaper. It is about making you feel bigger.

Selling your services or products on the “cheaper” tag is not building a brand.

Ryanair is cheap, but cheap is not its core value.

Apple is 5% of the revenues of smartphones, but 85% of the profits. They create an experience that people desire, and the people are happy to pay.

My service might be cheaper… but there is something about my service that is far more valuable; there is an experience you can give others that is far more valuable.

If they end up paying less, that is a side benefit.

Few powerful brands are built on the value “cheaper”.

Success = 80% Diagnosis, 20% Prescription

Don’t rush to the solution.  You need to go through a good diagnosis process before the listener is ready to hear the solution.  If you rush to solution, the listener is not ready to trust you.

Do you take time in your meetings to really ensure that everyone shares the view of what the problem is?  I have been to many meetings where the conflict is really due to the fact that each person is trying to solve a different problem.

7 Critical Elements of an Entrepreneurial Pitch

How to Pitch?

There are 7 critical elements of an effective entrepreneur “Pitch” that works (video here on the blog):

[youtube http://www.youtube.com/watch?v=fs6nUu0q-OE?rel=0%5D

The 7 elements of a good entrepreneurial elevator pitch

A good entrepreneurial elevator pitch will contain these 7 elements:

  1. description of the problem you solve
  2. the individuals or groups that will benefit
  3. the specific product or service you will deliver
  4. how you differ from competitors and other substitutes
  5. how you will make money
  6. what resources you require (money, time, support, expertise)
  7. an outline of the value that will be created
What do you think?  What is the best pitch you have seen?  How much time do you spend preparing and practicing your pitch?

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