THE BLOG

26
Feb

Skills Entrepreneurs Lack: Part 2 – Negotiating



As Monty Python taught us in the Life of Brian, entrepreneurs really have no choice but to negotiate. You’ll negotiate how much equity to give your partners, your pre-money valuation, the salary of your first employee, the deal terms of a strategic sale, etc. But most people are terrible negotiators. Recognize yourself in any of the following?

  • The Robot – You state your position and keep repeating it until you get what you want or walk away
  • Mr. Nice Guy – People love negotiating with you, mostly because they always win
  • Type A – You win the negotiations but lose the relationship

Learning effective negotiating skills will allow you to create true win-win scenarios. The best book I’ve ever come across about negotiations is called Getting to Yes. It’s $10, will take you less than an afternoon to read and is considered the classic text on how to negotiate. There are few books that will do more to improve your skills. The Wikipedia entry has a great summary of the five key points (but please read the book):

  1. Don’t bargain over positions – Unless you’re buying a house, the traditional offer-counter offer style of negotiating doesn’t work.
  2. Separate people from the problem – Don’t let emotions and styles ruin your negotiation.
  3. Focus on interests – Figure out what people really want, there’s often overlap with what you want.
  4. Invent options for mutual gain – Make sure the other side wins as well.
  5. Insist on using objective criteria – De-personalize negotiations using facts and figures

If reading Getting to Yes makes you realize that negotiating is not the same as improvising, then it’ll be the best $10 you ever spent.

23
Feb
Las torres del honor: Un capitán del ejército en la Transición y el golpe de Estado del 23-F

Calling All Area C#, .Net Senior Programmers to Startup Drinks!

I want to meet all qualified C#, .Net senior programmers looking to flex their leadership muscles with a venture backed startup.  I’m looking for someone with 4-6 years of experience in web application development on ASP, .NET and C# and and excellent understanding of Visual Studio and SQL. You should have a bachelor’s degree in science or engineering and if you’re bilingual, all the better.

Look forward to meeting you at Startup Drinks this Wednesday, February 25 from 5:30pm at Brutopia.

Robin

23
Feb

Skills Entrepreneurs Lack: Part 1 – Accounting

I’ve had a lot of thought-provoking conversations lately about how to develop the skills entrepreneurs need to be successful. Although building a successful startup depends on luck, timing and passion, it also depends on skill.

#1 on my list is accounting (finance is also important but it’s further down the list). If you’re a founder/CEO you should never leave “the numbers” to your accountant. You don’t need to master double-entry bookkeeping

by hand (unless you want to impress a very select group of people) but you need to grasp the fundamentals. For example:

Jim Frazier (Creative Commons)

Jim Frazier (Creative Commons)

  • The difference between profit and cash flow (hint: profitable companies can and do go bankrupt because you pay rent with cash, not profit)
  • Budgeting and forecasting (i.e. using accounting to gain control your business)
  • The balance sheet (i.e. knowing whether you or your creditors own your business)

If you think this should be the domain of your CFO or accountant, you’re mistaken. Running a business without a good grasp of accounting means you’re flying blind. You won’t know where you’re leaking cash or how to control your expenses. You won’t recognize which products or services make or lose money. You’ll risk running out of money even when things are running smoothly.

Here are 3 suggestions on how you can improve your accounting skills:

  1. Take an entry-level accounting course at a local business school or an online school. You may not enjoy learning about debits and credits but a semester’s worth of evenings and weekends will buy you a true understanding of the relationship between money and your business.
  2. If you’re an autodidact, work your way through books like Accounting for Non-Accountants, The 36-Hour Accounting Course, or for true beginners, The Accounting Game. Don’t try this at home if you aren’t a self-studier. Sleepiness will ensue.
  3. Do your own accounting (under the supervision of a chartered accountant) and prepare your own financial statements. You should be able to make entries, reconcile your bank statements, and make sense of your income statement, cash flow statement and balance sheet, at least for a few months. This is easy with software like Quickbooks and Simply Accounting but you’ll still be learning the basics while gaining a new found respect for your bookkeeper.

The language of accounting is used whenever you raise money, get a bank loan, communicate with your Board, or measure your performance. It’s one of the fundamental skills of being a CEO.

17
Feb

Startup Drinks February

The last Wednesday of the month comes around faster than you realise and suddenly, it’s time for Startup Drinks again!  January’s drinks was pretty gregarious and good fun, which can only be good for business.  Keep encouraging those who need to come to Startup Drinks this Wednesday, February 25 at Brutopia from 5:30pm until whenever.

I’m putting out a challenge to all who read this: if you’re a senior programmer looking for work (or know someone who fits this description), look for Robin from Flow and introduce yourself!  We’re looking for senior software developer for one of our clients and I’d love to have a chat over a pint.

Registrations are open at TechEntreprise

!

See you there,

Robin

07
Feb

Why startups don’t need more pitch coaching

If alien economists went to startup events they’d conclude that all startups fail because they don’t know how to pitch VCs. (Some people think that all economists are, in fact, aliens, but I digress). The Canadian Regional Boot Camp for Technology Start-Ups was announced recently by StartupNorth and others and I was struck by how much emphasis was placed on pitching.

The agenda consists of a session on “Funding Pitch Preparation” followed by “Pitching Session to a Review Board” consisting of Canadian and US VCs. I’d like to ask a simple question:

Why do so many startup events focus on pitching investors?

Here are some of my concerns:

  1. Funding is a solution to a problem that not everyone has. There are many great businesses that never raised a dime of outside capital. So why does every startup event talk about funding?
  2. When you put lipstick on a pig… We spend too much time training startups how to speak the language of VC. Investors are in serious trouble if they’re filtering deals based on the ability to pitch.
  3. The pitch does not equal the business. People argue that honing the pitch means improving the strategy of the business. But in the real world, hardly any startups have everything figured out in advance. What’s the point of hearing them lie on stage?
  4. 1 size does not fit all. Lots of people do unspeakable things in Excel to force their revenue projections to scale to $50 million. Why? Because VCs are only interested in business that “scale”. But scalable busineses are usually riskier businesses. A lot of entrepreneurs would be happy with the payouts from smaller exits.
  5. Watching awful pitches is entertaining... That’s why people watch the Dragon’s Den and pitch coaching at startup events. But entertainment value aside, isn’t there something more useful we could be doing?

I don’t mean to criticize event organizers all of whom are honestly trying to help entrepreneurs. I’m also not criticizing the VC model which is a very specific type of investment that has been improperly promoted as a funding solution for everyone.

I’d just really like to see more startup events focused on all of the problems facing startups, not just how to attract VCs.

03
Feb

Translating Strategy Into Action

In previous posts I talked about how to create a simple, strategic plan without falling down the rabbit hole of arguing about mission, vision, objectives, goals, strategies etc. I also talked about how to actually get a group of people to agree on a set of goals

which is always fun and never easy.

cc Fenris Photography

cc Fenris Photography

This post talks about the crucial last step: translating your strategy into real action.

1. Follow-through – Once you have your plan finished, schedule monthly or quarterly review sessions right away and make sure people know in advance that they will be expected to report on their performance vs. the goal set in the plan. Send a meeting invite for a specific date and time along with an agenda right away. This tells people this is not a drill.

2. Make people uncomfortable when they don’t deliver – There have to be consequences when people do not deliver. For most companies, having to stand up among colleagues and say either “I didn’t deliver” or “My forecast sucked” is a powerful enough consequence. Don’t be afraid to be tough on people who don’t deliver, including yourself!

3. Reward people when they do deliver – Make a point of congratulating people when they deliver what they promise. It sends a signal that this is important to your company. It seems like common sense but most companies only focus on fixing the negative while taking the positive for granted.

4. Reward people when they deliver part 2 – Put your money where your mouth is. Tie bonuses and option grants to good forecasting and good delivery. If you have compensation tied to anything else you are sending mixed signals.

5. Be prepared for naysayers – People who were cooperative during your planning sessions will become less cooperative when the rubber meets the road and they have to explain why they missed their targets. They will question the planning process, claim that the strategy has changed, and blame external factors (e.g. The Downturn). You need to shut these people down quickly. Decide if you want to be a company with great performance or great excuses.

6. Get the whole company on board – Make the plan (and all the brainstorming materials) available to everyone in your company. After every review cycle, publish the results (good or bad) so they can be seen by all. Apply the same planning discipline to departments, your Board of Directors, and individual employees.

It’s probably fair to say that there’s no such thing as Really Simple Strategy Planning (sorry). In reality it’s a time-consuming process that’s bound to create some conflicts within your startup. But the payoff is huge if you can create a company culture that encourages thoughtful strategy development and hard-nosed dedication to performance. If you don’t have this mindset in your company it may be time to ask why not.