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Posted on March 11

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Sometimes, you'd just like a roadmap to build a great business. Here's the (rough!) blueprint that we've discovered in building great companies.

1. Build a Great Life

To build a great business, first build a great life. Stop doing what you don't love. What excites you? List your passions. From that, what were you born to do? If you'll survive just doing it, that's your career. Where do you need to be in twenty years with it? Choose a goal -- something powerful. Then, chase it down and imagine beating it into submission.

2. Forget Planning. Start Your Business Quickly.

Start your business by seeking your goal. Forget market research. Forget business plans. Forget prototypes. Forget finding the one "great" invention or idea. Forget "being organized." Instead, start quickly: Use a copycat idea, and focus on customers the Fortune 500s aren't targeting. Ask: What can I sell? Start selling it. Yes, sell what you don't have. It'll tell you your product's viability. And most importantly, you'll need cash flow to keep your new company afloat. After you sell something, get all of the logistics done: your product, your licenses, permits, equipment, et al. Continue selling your product, and use that as a steady cash flow for bigger things ahead.

3. Lead Well: Be Humble. Focus on Results.

To lead your business to greater heights (and start building a "real" company), focus your business on consistent, positive results. Along the way: Be humble. Humility enables constant improvement.

4. Get Self-Motivated People.

Start surrounding yourself with the people who share your values, have produced results elsewhere, and didn't take credit for them says Jim Collins, Peter Drucker, Warren Buffett, and a plethora of other business greats. You can't build a great business without great people. Continually focus on recruiting. Here's a dilemma: You can't manage people. The right ones will be self-disciplined. Seek them.

5. @&^% Weaknesses. Exploit World-Class Strengths.

After -- not before -- you have your team, discuss the direction of your company. The team decides the ideas -- not just you. Where are you headed? What are the threats? What do you need to modify? Importantly: what can you do better than any business this world has to offer? Conflict is good. Argue. A culture that breeds yes-men won't tell you what's wrong about your company. Then together with your team, build a disciplined organization based on this three-circle Venn diagram: (1) your business's passions, (2) where it could be the best in the world, and (3) its economic engine (profit/x). In the middle of it, mark down your thirty-year, super-outrageous goal that comes from clear understanding. Then, do everything that follows this diagram. Jim Collins calls that your Hedgehog. Give people a direction related to your Hedgehog, then get heck out of the way.

6. Discipline Your Company, not Your People.

Next, build catalytic mechanisms that automate your company's Hedgehog. It must eject those who don't fit your values quickly and make those who do fit thrive. Be a clock-building genius, not a time-telling genius (e.g. build a culture that produces innovative products). If you think you have a people problem, you probably don't; you have a systems problem. Fix quickly.

7. Market to the Right People, not the Masses.

To market your products, use disruptive innovation to target the right people. People don't buy because of the product's quality. They buy because of who else is buying. Know the venturesome innovators of your industry, who you'll find when you seek disruptive innovation by targeting underserved markets. Target them. Only. Only. Only. They'll attract the majority. You can't. Start tinkering with small experiments. Get your offering out quickly for "beta" testing. If you're not failing, you're not experimenting enough.

8. Focus on Profits, while Keeping Cash Flow Up.

To keep your business alive, know your finances. Keep good books. Keep positive cash flow. Analyze your numbers: How will you improve your basic profitability ratios (e.g. profit/sales)? Improve cash flow? Most important, how will you improve your primary economic denominator (i.e. profit/x)? F&^% growth. Growth for growth's sake is a clear path to bankruptcy. Instead, build a great business first--then grow when you have the people to handle it.

9. Keep Focused. Eliminate distractions.

Look at your Hedgehog. Scan your company. Does everything fit your Hedgehog? Do your processes, structures, policies align with it. If something's not, eliminate it. Also, find ways to accelerate your Hedgehog. Technology can help here. And only here.

10. Improve. Constantly. Forever. For Eternity.

Repeat Steps 4, 5, 6, 7, 8, and 9. Done? Repeat again. It's a never-ending loop. Oh, and have fun! [Editor's Note: The article's not perfect, yet. We're constantly revising this, so come back often! | Thank you to our clients, as well as Peter Drucker, Jim Collins, and William Hewlett for their inspiration.]
Posted on March 11

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In our experience, entrepreneurs who know bootstrap financing succeed much more. As you're running your business, you'll receive numerous offers from different retailers & service providers claiming their products will boost your company's sales. Truth is, if they don't have guarantees in place, 99% of them are either hyping, or - most likely - lying. You can boost your sales - and most importantly, your profits - by keeping a smart eye on your finances.

The Basics of Bootstrap Financing

Have a goal: Where do you want your company to be in 5-10-15 years? Then, start small, think before you buy, and learn to barter. Most importantly, keep a tight fist on all your expenses by buying only what will help you reach your goal. Even if your grandmother just granted you a huge chunk of cash, or you received something from the SBA, or millions from a Silicon Valley venture capitalist, bootstrap as much as you can.

Manage Cashflow Well

You'll improve your bootstrap financing dramatically if you keep your inflows high, and your outflows low. Constantly find ways to widen this gap. Cashflows is the lifeblood of your company. To do this, improve your accounts receivable by collecting quicker. If you have accounts payable on hand, delay it for as long as possible without penalty. Rid excess inventory. Most importantly again, manage expenses wisely by spending only on what fits your goal.

Things You Can Do To Save

For non-commodities, we recommend quality over price. For commodities, however, here's what you can do: Trade your services for other services or products. Buy a budget notebook that fits your requirements from Dell. Make and print your own letterhead. Steal a ballpoint pen and other essentials from your home. Use a small office for now; even your home office might work if you're still working on your own. Buy generic-commodity products. Most of the time, brand names are repackaged generics. Save up! You'll need it in the future. Simple, quick conclusion: Companies that bootstrap well, succeed.

Posted on March 11

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We hear all the time from so-called business "gurus": "Find a unique selling proposition", "What differentiates you?", "How are you unique?", etc, etc, blah, blah, etc, blah. It's all baloney. Fortune 500s weren't built because they were unique. They were built because they excelled at something. Words of wisdom from the business gods, then? Stop trying to be unique. Instead, be the best. At something. [If you need help finding your company's inherent strengths, please contact us.]
Posted on March 10

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Growing a company without proper support will put your company on life-support. "Small is the New Big," according to Bo Burlingham. Here's a must-read article from Inc. We're just diving into his new book, so we'll keep you updated with references and opinions on the book.
Posted on March 09

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Marcus Buckingham: "I've found that while there are as many styles of management as there are managers, there is one quality that sets truly great managers apart from the rest: They discover what is unique about each person and then capitalize on it." Remember, people can't be managed. The key then is to tap into the your people's inherent abilities, give it a direction where they will shine, and most importantly: get out of the way.
Posted on March 09

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We're still surprised business naming firms still attract clients. Charging the average $75,000 a pop? No, thank you. According to Harvard's Business Review, "You might boost your odds if you spend six years and millions of dollars developing the name, as Standard Oil reportedly did before settling on 'Exxon.' But you can do just fine by pulling a name out of a phone book. That's how P&G cooked up 'Pringles.'" Sony, Google, The Gap, Yahoo!, and Barbie didn't need naming firms. Neither did Starbucks, Microsoft, and Apple. And neither did...(yeah we're sure you get the point). When in need of a name, trust your instinct. There, we just saved you the $75,000. Spend that on marketing.
Posted on March 09

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Though Ajax seems all the rage these days, ignore the hype. You could probably live without it. Here's Wikipedia's explanation of what Ajax means: "Asynchronous JavaScript And XML, or its acronym Ajax, is a Web development technique for creating interactive web applications. The intent is to make web pages feel more responsive by exchanging small amounts of data with the server behind the scenes, so that the entire Web page does not have to be reloaded each time the user makes a change. This is meant to increase the Web page's interactivity, speed, and usability." We've been asked a lot about this "tech trend," and our opinions on it. The concise reply: If it doesn't make business sense, don't use it. Companies that are quick to adopt this new technology, but with no clear insight into how it drives business growth, will suffer in the end. This includes having unneeded overhead, maintenance costs, and a myriad of other problems. Not to mention the most important: time. If it doesn't make business sense, don't use it.
Posted on March 09

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A lot of good questions have been coming into our inbox. Here's one of our favorites: Q: "What are the latest trends in doing a successful business?" A: When it really comes down to it, the "new economy" is the same as the "old economy". There's a lot of hype you should watch out for. A lot of books you see today on Amazon.com's bestseller's list is a rehash of old books and ideas. I believe the only new idea you might find useful is Clayton Christensen's Disruptive Innovation Idea: producing a simpler product to a different crowd. Regarding the old rules, here are the basics -- and you can see it happening in the latest and greatest of today's hottest companies (e.g. Google, Starbucks, Yahoo!, et. al):

Do you attract the right team?

Without the right people, your business means nothing. The more people you can attract that fit your company's values and mission, the greater your chances of success. Sergey Brin and Larry Page didn't build Google; they're people did. Likewise at P&G, HP, and all the other companies you see out there beating the S&P.

Where can your company excel?

When we started our business, we knew we were good at programming; but, excelling in it would take time -- and most likely, prove fruitless. So, we focused on where we believed we could excel, and be "best in the world:" business-driven technology. We see numerous companies today trying to go head-on with companies they can't compete with, and with companies that stomp them on resources. They'll soon find out they can't win. To do well in business, find where you can excel. And more importantly: where you can't.

Why does your business exist?

Money is important, but like what one guru says: it's like water, it's not the point of life. A business that is driven by a purpose beyond money capture extraordinary results; and paradoxically, according to Jim Collins's intensive six-year study, produce higher revenues. [Authors Note: We'd love to help your business. To ask us a question, please contact us.]
Posted on March 08

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Posted on March 07

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