Up and Running:

“Women are three times more likely to share personal stories with a friend than men.”

Jackie Huba presents a good list over at Church of the Customer Blog in an interview with Michele Miller, author of The Soccer Mom Myth. Whether you’re a man or woman, if you’re building your business, you should read it. Unless you’re selling . . . well, never mind–read it. The post is 5 things you need to know about women and word of mouth.

Unfortunately, it’s just not simple, because the “three times more likely” thought doesn’t translate straight to what you’re thinking. Because, Miller says,

[Asking for referrals] is tricky. Because women are such great referrers, it seems logical. If you are doing business with her, and she values your relationship, it may seem perfectly acceptable to ask her for a list of friends who might benefit from your services. But that may not be a good idea, even if she thinks you’re the best thing since Starbucks drive-thru. She is the gatekeeper of her relationships. She’s not being stingy, she’s being protective.

So how to increase word of mouth from women?

Here’s the wrong way to do it: “Sign up three friends and we’ll give you a 15 percent discount.” This feels like you are asking her to sell out her friends. Instead, change the offer to “You and every one of your friends who signs up will get a 15 percent discount.” Now she has special access to a discount that she can pass along to friends.

So that’s three of five tips. For the last two, click the link above; it’s a good read.

I had coffee yesterday with a young man locked in a battle to the death with his startup. Lack of sleep, lack of exercise; it worried me. I’m sure I’ve been there a number of times myself during my years in business, and that’s precisely when I needed some advice, like the advice I offer today.

As you develop your startup take the time to define success, whether you explicitly state it in your business plan or not (and probably not, given what a plan is). What’s important to you? Is business the only thing, or is business a means to an end. Does having your own business mean you don’t have a family, or a vacation, or other things that are important to you?

Put some measurements of success somewhere so that you’ll be able to access them from time to time, as business grows, problems arise, and time goes on. Does having your own business mean you can coach the kids’ soccer team, and attend parent-teacher conferences? Does it mean a couple weeks skiing every winter?

I often talk about getting general agreements between partners and co-founders in writing. Usually people think that’s a matter of buy-sell agreements and dissolution of partnerships and such, but that’s not all. If you haven’t done this yet, do it. Define your success.

Sure, that definition might change at some point, lots of things change. At least you should have your definition of success available so you can review and mark the change. Reminders are good.

I like to talk about passion in startups. I do believe that your chances are much better if you work your startup around something you want to do. Better yet, work your startup around something you believe in. On that one, happily, it’s not only do as I say, it’s also do as I’ve done, because my startups have all been related to work I liked to do (business planning) and believed in (software).

Still, life is short. Your life is about life, not startups. Sure, we’ve all done the overnighters in crunch times, but don’t lose track of what’s really important. Business is what we do, not who we are. If you have a family, get home for dinner, and if you have to, you can work after dinner on your computer at home. Coach soccer. Work out.

Don’t let startup passion spoil the rest of your life.

I had an email the other day from someone who asked a very interesting question. So do I do what I love, or do I do what I’m good at? She explained that she has started a couple of local ad agencies that were doing well when she left them, but she saw the keys to success there as “selling ads.” And, she added “I’m just sick of selling ads.”

Unfortunately, emails being emails, she didn’t add what she loves into the equation, but she did get me thinking.

Aren’t those the same thing? Aren’t you good at what you love to do, and don’t you love to do what you’re good at?

I’ve always assumed that one of the best ways to build a business is to build it around what you love to do. I know this is weird, but I’ve always liked the way the words and numbers come together in a business plan, and, despite having been a words person first, I’ve always seen the beauty of the numbers, when the balance balances, and the cash projection is accurate. And I liked spreadsheet programming. So those various things explain how I came to start and then build Palo Alto Software. I was doing what I like to do, and I was (if I do say so myself) good at it.

Get ahold of the Wall Street Journal’s D5 interview of Steve Jobs and Bill Gates last June and listen to what these epic entrepreneurs have to say about their lives and their businesses. It’s clear there that they loved what they were doing, and for a very long time.

My view is that starting a business is a lot of work, so you need to like what you’re doing. And, let’s not forget, even if you like the main idea of it, it’s still a lot of work that you don’t like. Aside from the core work there’s the administration, dealing with customers, cleaning the shed, emptying the garbage, and all the rest of it.

My email person didn’t say what she did like to do, but even if she didn’t like selling ads, I can’t help wondering if there isn’t another part of the ad business that she does like. And a way to focus on that part instead of the selling that she doesn’t like.

Think of your start-up business plan as a matter of blocks; pieces. You don’t have to have the whole block structure done before you take any next steps. Start your blocks where you like. Some common blocks are the mantra, the mission statement, the keys to success, maybe a break-even analysis, or a SWOT, or how about the whole discussion of “who needs it” and “why” and “how badly?” Any of these things are blocks. A sales forecast is a block, and so is an employee/personnel plan, as in laying out month by month how many people are working here in your hypothetical company, and how much each of them get paid per month.

The key here is that you don’t get bogged down on having a finished business plan. You hear the stories of people who spent months developing their plan, but never get started. So instead of that, think of the blocks.

Start wherever you like

The blocks idea also saves you from the tyranny of sequence. You don’t have to start at the beginning and work thorugh to the end. You can jump in and start wherever you want.

• Mission statement, maybe? Define for yourself what your company will do for its customers, for its employees, and for its owners. Mission statements are a bit last century, perhaps doomed forever to Dilbert-related derision, but that’s still where some people start.
• Maybe you’re a numbers person. That’s okay, don’t apologize, business planning needs that too. I was a lit major in college but I still like to start my business planning with a sales forecast. Then I’ll do some conceptual work, then back to maybe costs and expenses, classic budgeting work, then back to basics.
• Business plans have hearts like artichokes do. In both, their hearts are their core, the best of it. The heart of a business plan is its marketing plan, meaning its identity, positioning, its differentiation, the sense of what business you’re in and why people buy. I like to call this your identity. That’s a great place to start.
• Some plans start with a product or prototype product. Maybe your first block is a bill of materials for manufacturing the new thing. That’s okay too, that’s a block, you can jump in there.
• There are lots more blocks. The mantra. The vision. A break-even analysis. A market analysis. A market forecast. Personnel strategy. Financial strategy. Some people like to build an equity plan first, focusing on how many shares exist, how many the founders get, how many the investors get.

Don’t worry about finishing

A good business plan is never done. It’s the launch of a planning process, and you want to understand from the very beginning that if you ever think your plan is done, your business is probably finished. Understand from the very beginning that you’ll have to review and revise regularly. Assumptions will change, your forecasts will be wrong, and the art of management will be figuring out when to revise the plan to accommodate changing reality, and when to stick to the parts of the plan that will work if you’re consistent but need more work. That’s paradox, of course, and that’s why we do it — owners and managers — instead of computers.

– Tim

Talking about starting a business? Before you start the talking, identify yourself and your business on this scale. It makes a huge difference. Try to choose one of three possible choices, the one that most applies to you and your business.

1. Just get going: you don’t need anybody’s approval except possibly your first customer or client. You’re a consultant, artist, artesan, professional service, or something else that doesn’t require building a product, or packaging, or design. Nobody has to approve your plan except you. You have what you need to get going, or the money you need to acquire what you need to get going.
2. Building something: You’re looking to start a business that requires more start-up money than you have, maybe more knowledge than you have. This is like a restaurant, an auto body shop, a retail store, a serious website, anything that requires building serious products, or packaging, or significant market launch. For the restaurant, as an example, by the time you buy the expresso machine, the chairs and tables and stoves and ovens, hire the people, develop the identity, prepare the location, you’ve spent serious money. You need investors, or partners, or (gulp) a lot of debt.
3. Planning to fly: You have worked with a successful startup or two or three behind you, you’ve got a team ready, and you have an idea that seems to offer very high growth of sales (or maybe web traffic instead of sales, if you’re in that world) and reasonable prospects of defensibility.

All three of these are startups, but they have very different needs and wants and prospects. One of the things I want to do with this new blog is distinguish between these different kinds of startups. Much of the writing and thinking about startups applies to some but not all startups. Here are some examples:

1. What do you need to start a business? I’m a business planner, I have been for years, so you think I’m going to start talking about the business plan.
   • However, while I do think everybody benefits from planning, if you’re in that first group — the get going group — when what you really need, can’t start without, is at least one customer. I supported my family with planning and research consulting for more than a decade before Palo Alto Software took off, and that business started with a customer (Apple Computer) before there was a plan.
   • If you’re in the second group, the builder group, then yes, you need to develop a business plan. You can’t get customers until you have a location rented and fixed up, you have assets in place, you’ve launched the marketing, etc. You don’t have the resources on your own, so you’ve got to involve others, and that takes a lot of explaining, and making commitments, and, frankly, it’s just dumb to try to go that way without having a prepared plan.
   • If you’re in the third group, intending to fly, some of the more fashionable high-tech and highly-visible ventures of recent years were able to land at least verbal agreement on venture financing without actually completing a full traditional business plan document. They used pitch presentations and personal track records and personal commitments. Those, however, are the exceptions; most of the high flyers need a plan whether their investors read it in detail or not, because they can’t build a pitch without a plan and they can’t manage without a plan. Of course some of them avoid the plan because they confuse it with a brick wall, but that’s a different post.
2. The legal steps change. The “just get going” crowd doesn’t really need to sweat the difference between corporations and partnerships and LLCs and ficticious business names. I ran my consulting business for years using my real name and my social security number. I didn’t worry about corporate umbrellas or the extra expense of legal formation because — who was I kidding? — it was just me and my client. I was a lot more worried about how long they took to pay invoices than about them suing me. Those of you in the “planning to fly” group, in contrast, are going to have legal work coming out of your ears, lots of jockeying for position between your lawyers and their lawyers, with their lawyers having the final say because they’re writing the checks. You builders will need good attorneys to set you up right, with the details depending on what you’re doing, resource levels, which state, and other factors.

So those are just a couple of examples, but I assume you get my point. In this blog, talking about startups, let’s establish a better mode for talking about apples as apples and oranges as oranges; or something like that.

– Tim