Archive for category: Book Club

While the book title, The 7 Day Startup, might make you roll your eyes a bit, the author’s premise is simple: it doesn’t take that long to start a business. And the most important knowledge you will gain will come after you launch. So launch!

We won’t be able to talk about the entire book in this review, but we’ll share some of the key highlights that any business owner can review, even one who is long past the days of starting up. Don’t be intimidated by the “7 Day” title. Dan just dedicates one day to various tasks to complete before launching.

Tasks to Complete Before Launching

• The Nine Elements of a Great Bootstrapped Idea?
• WTF is an MVP?
• Choose a Business Name
• Build a Website in One Day for under $100
• 10 Ways to Market Your Business
• Set Targets
• Launch

Evaluate Your Idea

For any business that you want to pursue, there’s an easy nine point checklist Dan has put together. You don’t need to excel in each of these areas, but you should have a decent answer for each one. If you already have a business, you can use these questions to identify weak spots in your business to prepare it for sale.  

Does your business…

Have enjoyable Daily Tasks? It doesn’t make sense to start a business that is going to have you doing daily tasks that you don’t enjoy. What will be your day-to-day tasks for this business?

Product/Founder Fit? What skills do you have, what are you most known for, and where can you provide the most value? If this doesn’t line up with your business, that’s a problem.

A scalable business model? Do you have the ambition to grow your business and will it easily accept that growth?

The ability to operate profitably without the founder? Remember that if you can’t leave your business for 30 days and have it grow in your absence, you don’t own a business, you own a job. If you can’t do this with your business or business idea, you’ll have difficulty selling it.

The qualities of a sellable asset? One of the qualities of a sellable asset is the ability to run without the founder. Others include:

• Product design
• Intellectual property
• Your team
• Website
• Recurring revenue

A large market potential? This is also often called “total addressable market” (TAM). You don’t have to become a national company, but you can’t be too niche.

Tap into pain/pleasure differentiators? What do your customers really care about? Does your business go beyond a “cool idea” and actually solve a pain they have or give them a pleasure they desire?

Have a unique lead generation advantage? This could be as simple as great content like blogs and videos or higher level strategies like webinars and courses. What is going to set you apart from your competitors?

Have the ability to launch quickly? If it’s going to take you a year to launch, you won’t be able to learn from customers as you go. Choose an idea that you can launch and modify quickly. When you start getting real data from paying customers, you can innovate and get the product perfect.

What’s in a Name?

Dan points out that many people agonize over the “perfect” name for their business. Instead, he has six questions that get to the heart of what matters: a name that works.

1. Is it taken? (Have you looked to see if the name is used in your state or country?)
2. Is it simple? (Will the customer get it without you explaining it, or is this about an obscure name that you are tied to?)
3. Is it easy to say out loud? (Will customers enjoy sharing it with friends?)
4. Do you like it? (This isn’t the same as absolutely loving it, but rather does it sit well with you?)
5. Does it make sense for your idea? (Real winners in this category include Chipotle, Google, and Dropbox)
6. Is it broad? (Remember to give yourself some room to maneuver as you build your company.  You don’t have to be very specific to start.  Bob’s Bakery might work just as well as Bob’s Bagels.)

Where are the customers?

“Without question, the biggest mistake people make is obsessing over their idea and not focusing enough on finding people willing to pay for their product.”

“The popular stories you hear about startup validation go something like this: 1. I created a website with a brief video. 2. It went viral. 3. I bought a yacht.”

This is a point Dan keeps hammering home over and over in the book. Instead of spending time perfecting your idea, find out if someone is willing to pay for it. Here, he uses the MVP (minimum viable product) term made popular by Eric Ries of Lean Startup fame. If you can’t find people who are willing to pay for a bare bones version of your product, why would they pay for the version you are cooking up in your mind? “You don’t learn until you launch,” Dan says.

Instead of having everything be perfect on launch day, just focus on being competent. There’s only room to improve from launch day.

So, as Dan says, go for it!

Negotiations aren’t just integral to business transactions, they are part of our everyday lives. As Chris Voss notes in his excellent book Never Split the Difference: Negotiating As If Your Life Depended On It: “Everything in life is a negotiation… crossing the street, getting your coffee… you’re probably in 3-7 negotiations every single day.”

While we can’t get into everything Chris discusses in his book in a short article, we can discuss a few key takeaways to improve what you’re doing in business (and life) right now.

Mirroring

While Voss now runs a renowned consultancy called The Black Swan group, he got started in negotiations with the FBI in hostage situations.

One of the earliest and most basic techniques taught is mirroring. This consists of repeating back words used by your counterparty, but with a tone of question. For example, “This deal point is really important to us.” The mirrored response could be, “When you say ‘really important,’ what do you mean by that?” or “Really important?” and just let that tone hang.

By repeating their words back to them respectfully and in a tone of inquiry, you allow the counterparty to give you more information. The more information you have, the better position you are in to negotiate.

The 7/38/55 Rule

A UCLA study some years ago explored the importance of three factors in communication: content, tonality, and body language. The importance broke down across those ratios, i.e. 7% of what was said, the content, was important; 38% was the tone used in communicating that content; but a whopping 55% of what came across to the person hearing the content was captured in the body language.

We may all know this instinctively as part of living life in society, but hearing the numbers broken down really underscores that instinct. Tone of voice is more than five times more important than what you are actually saying! If we keep 7/38/55 in our minds more as we communicate, our communications will be better and our negotiations sharper.

The Accusation Audit

A fascinating technique Chris promotes is something called the “accusation audit.” It’s used to disarm people at the very beginning of a negotiation, by calling out all the possible fears and thoughts that the counterparty might be thinking. In a way, it’s calling attention to the elephant in the room so it can’t be an unspoken threat.

An example Voss gives comes from one of his clients who was getting squeezed from above by changing demands from a federal contract and thus had less money to pay out their subcontractors. Voss’ client had a meeting with one of the subcontractors and wanted to pave a way for things to move forward smoothly. She started out the meeting by saying, “I know you might think we are the big contractors squeezing out the little guy.”

By letting the subcontractor know from the outset that she understood their perspective and saying what was unsaid, Voss’ client was able to disarm and explain what the real situation was, which was something beyond their control, and then look forward to a mutually acceptable solution.

If video hits home with you more, Chris also has a Masterclass available.

We’ve got some great negotiating tips as well. Give us a call if you’ve got questions about a business negotiation you’re involved in.

The subtitle of Aaron Muller’s book is “How to Buy a Business, Grow Your Profits, and Make it Run Without You.” While entrepreneurship has perhaps never been more in the public consciousness, the phrase “lifestyle business” is still not commonly known in the general public, and this book goes a long way to addressing that gap while sharing some important lessons along the way.

Let Your Business Be Your Business

For those who are considering buying a business, there’s often some soul-searching: is this my passion? Muller’s response to that query is one we tend to agree with: “Finding meaning and purpose in your life is hard enough. Finding a profitable business that also gives your life the unique meaning and purpose you are looking for is doubly hard.”

It’s a lot to ask of a business to offer meaning and purpose for your life. Rather, you should focus on:

• Soundness of the business.  Are the taxes and paperwork in order? Are the financials up to date and do they show promising trends?
• Role in the business.  Are you being asked to be an owner-operator (someone working on the business each day or at least each week) or an absentee owner (someone who only periodically checks in on the business or if there is a major decision to be made)? Do you think this role would suit your talents and current desire to work?
• Growth potential.  Is this something that you can build on in the next 3-5 years to give yourself more options, i.e. build from owner-operator to absentee or from absentee to another exit.

Leverage Previous Mistakes

In a previous article we shared that a buyer of a business was able to more than double his income simply because he fulfilled the orders that the previous owner failed to do. The author shared a story about a business he once bought which had alienated many customers: “In fact, I even put up a banner on the building that read, “New Owner. Friendly Service.” Within one year, revenues increased by over 65 percent.”

Sometimes previous owners have made mistakes they haven’t told you about just because it’s too personally embarrassing. One of them might include poor attitudes with clients or times they simply could have done better on the customer service side of things. Never underestimate the power of a restart and the second chance a customer might give to a new owner.

Bring Your ‘A’ Game… and Teach It

“Whatever it is that is causing your customers to come, you need to transfer that skill to your employee,” Muller opines. He’s right. Whenever you are able to bottle your value-adds into training and company manuals, you’ve created a better asset for a future customer.  

At the heart of a lifestyle business is the unique proposition of creating a schedule you determine and an income you’re responsible for. Don’t be beholden to a 9-5 office paradigm. You can work the hours you want on the days that you want… as long as you set up the proper systems to do so. While the lifestyle you build for yourself may limit scalability and growth for your company, this will be a conscious choice you make that will also make the business an attractive acquisition for someone in the future, who like you, wants a lifestyle business.

We offer businesses of all “speeds” here at Apex, including lifestyle businesses.  Learn more today!

There are some books out there that can tell you the financial side of how people exited their businesses, but there’s not too much literature on the emotional process of selling.  

Bo Burlingham often refers to a sale as just another “phase” of the business. Dan Andrews and his business partner experienced a seven-figure exit some years ago.

Rather than feeling content, they felt something unresolved, and this book, Before the Exit, Thought Exercises for Entrepreneurs, is an extended reflection that resolved those thoughts.

The book is divided into two parts.  The second part is the one we’re used to – the origin story of how someone went from wage slave to plucky business owner.  But that story takes a turn as Dan honestly explains mistakes they made along the way to an exit.

The first part is a fascinating set of exercises. They’re meant to push an owner who is either currently considering a sale or who hasn’t thoughtfully considered an exit at all.  

The goal isn’t to tell you all the exercises (as the book is under 100 pages and we want you to discover them for yourselves) but to get you started thinking about the bigger question of why and not just how when it comes to an exit. Here are two of them:

Lifestyle Ladder

Dan discusses (in a Dave Ramsey sort of way) how an entrepreneur progresses forward in income.  At first, it’s simply a matter of getting out of debt to zero. Then there’s a certain amount of income in the bank – say $20-40k liquid.  

It’s the stage at which money is less of a worry, but you can still be a prisoner of your thinking when you were at a lower stage of the lifestyle ladder and severely deplete this cushion.  

Further up the ladder, you have 10 times that liquidity plus an income-producing asset that means you don’t have to touch the liquidity. At each stage Dan continues to probe the reader…What is it that you want? Will this business be a vehicle to take you there? Why or why not?

So many people just have their foot on the gas for so long that they seldom stop to think what it’s all for and what real numbers interest them when it comes to lifestyle or an exit.

Boredom?  Or incompetence?

Seth Godin famously advised a woman who asked how to grow her $10M business to $100M: “Find someone to run your business, go and apprentice under someone who runs a $100M business for two years, then come back and do it yourself.”  

We’re all familiar with the idea that “what got you here won’t get you there” but sometimes we’re masking our own inadequacies.

What’s going to take you to the next level?  

Will it require you to do some things or learn some practices you don’t know?  

Will you need to bring in some outside help?

Maybe you’ll need to reinvest?

Sometimes these possibilities don’t occur to the business owner who is tired of the fight and looking for the door.  

But if he/she is willing to do the work of thinking it through, there could be an even more valuable exit after more work has been put in. It all depends on what you want long-term and has to contextualize the pain of the short term.

As noted above, the book is a lonely one in a space not often discussed. The ideas and challenges it offers in such a short read make it very much worth your time.

We’ve already spoken about a John Warrilow book before, namely The Automatic Customer, which is all about how creating subscription streams of income is something incumbent upon (and doable for!) most businesses today.

But before he wrote that, he wrote a book called Built to Sell, which uses the story-telling devices used in The E-Myth and The Goal to drive home precisely what’s needed to build a company that can be sold.

We’ve said it here numerous times before – many businesses don’t sell, and many aren’t even eligible for sale, because the owners haven’t put in the work to build something that can be turned over to a complete stranger. But that’s precisely what’s required. It starts with getting rid of YOU.

Get out of your own way

Of course, you’re a big reason that the company has gotten to whatever level of success it currently enjoys. But for it to grow, and for you to be able to sell it one day, it can’t depend on you.

This means you can’t be synonymous with the business, and you have to have teachable processes in place, as well as products and services that can be sold and delivered by other employees.

Of course, you’re going to be one of the best, perhaps the best in your firm, in all of these areas, but that’s not the point. A potential buyer will be scared if he/she sees your name over all the sales, processes, and management. On the other side of things, how will you keep employees long-term if you never allow them to take on the big tasks you keep reserving for yourself?

Diversify your clients and your offerings

Warrilow really hammers home the idea of avoiding dependency on a single client. Any client who is responsible for an outsized portion of your revenues has implicit control over the direction of your company, yet they have no real risk. Warrilow recommends that no client should be responsible for more than 15% of revenues.

There are many other ideas he discusses, but two, in particular, we should focus on are:

• Avoiding price wars by doing one thing better than everyone else.
  If you’re a florist, perhaps you do wedding flowers particularly well and charge an excellent, non-customizable price. By creating a standard offering, you maximize efficiency in your workflows and also create a rallying point for your sales team. It’s also a great funnel for other services.
• Generate recurring revenue by creating products your customers need to repurchase.
  This is a theme he would fully develop inThe Automatic Customer, but it’s something that works well. Go back to our florist. Instead of offering one-off purchases only, what if she went to hotels and other places that always want flowers in their lobbies and offered a subscription service? It removes a sales cycle, guarantees a service for the client, and generates count-it-every-month income for the business.

The subtitle of the book is creating a business that can thrive without you. Note the word “thrive.”  If you know your business slows down or sags a bit while you’re away, you haven’t put in enough work into building your company to sell.  

Keep in mind, you don’t have to sell…BUT if you build to sell, not only will your life become easier, but your employees will make more money, and your company’s foundation will be more stable.