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Red Flags ...

I have worked (in varying degrees, from light to heavy) with literally hundreds of new venture planning and startup teams, through my 20+ years at the University of Arizona, as a private consultant, and as a startup team member. 

I have a personal mental checklist that I use to evaluate the success probability of a new venture: can it move from the planning stage to a financially stable self-supporting business.  Some science here, some "gut feel", some "told you so" experience coming through ... but here are some of my "red flags": things startup team members say and what I really "hear".

They say: "We don't have any competition!"  ... I hear: "We haven't done our homework to see what else is really out there."

They say: "We the first to ever do this!" ... I hear: "So who cares?  If it's never been done before, maybe that's because there's really no need to do it."

They say: "Everyone is going to want one of our new gizmogadgets!" ... I hear: "Our family and close friends think our gizmogadget is really neat!"

They say: "We're going to build a much, much better gizmogadget and sell it for half as much as the competition!" ... I hear: "We have no idea how much it will really cost to make our gizmogadget or how much it will really cost to market it."

... and there are more!  Check back every now and then, and I'll update this post.

Scientific Method

So what do those scientists do to solve a problem?  They're usually pretty good at doing that.  The Scientific Method has been around for years, and is well refined.  Here 'tis ... we can apply it to most any problem. 
  1. Purpose ... what do you want to learn?
  2. Research ... find out as much as you can!
  3. Hypothesis ... try to predict the answer to the problem, an "educated guess" ... "If I (do something), then (this will occur)".
  4. Experiment ... design a test or procedure to confirm of disprove your hypothesis.
  5. Analysis ... record what happened during the experiment ... collect data.
  6. Conclusion ... review the data and check to see if your hypothesis was correct
  7. Iteration ... change what didn't work and test it again.

Financial Objectives

Here's a photo of a whiteboard from my old office at the University of Arizona that shows a representative example of setting some "financial objectives" for a business venture ...

Android Apps I've found most useful ...

OK, I admit it ... I'm an "Android Guy".  My tablets, my smartphone, even my Chromebooks all have Android apps.  I'm a (usually) happy camper.  Here are some of the apps I've found most useful ... no particular order ...

Google Keep (notes and lists), Memento (relational database), Squid (graphics and notes), Evernote (notes and articles filing, document scanning), File Commander (file management), Open Camera (photography), Google Drive (file storage and document scanning), Google Calendar (time management), Here WeGo (offline maps and navigation), Skype (video communications), Google Voice (text messaging, telephone), LinkedIn (personal networking), Gmail (email), LastPass (password management), Night Clock (soft night clock), ClockSync (time), OpenTable (dinner reservations), OurGroceries (shopping, to-do, packing lists), OfficeSuite (off-line word processing, spreadsheet, pdf), Google Slides (off-line presentations), Google Docs (on- and off-line word processing), Chambers Thesaurus (offline thesaurus), Chambers Dictionary (offline dictionary), Amazon Music (off- and on-line music), Speedtest (internet performance measurement), Easy Voice Recorder (audio recording), Google Photos (photography storage), Amazon Kindle (books and materials), Touch RPN (RPN calculator), Blogger (blogging), AP News (news), Google News (news), Amazon (shopping), AIMP (mp3 player) ... [- Jim]

The Role of a New Business Development Team Member

Experienced mentors can help innovators and entrepreneurs effectively and efficiently move their venture concept through the research, ideation, test, and planning stages to resourcing, launch, stability, sustainability, and growth. The role of a new business venture development team mentor is wide-ranging:

1] Mentor: experienced and trusted adviser (typically an unpaid, voluntary, part-time role)
2] Adviser: an expert willing to share their knowledge and opinions
3] Business Plan Editor: a mentor is best used in an editor role, rather than a writer
4] Voice of the Customer: keeps a light on the customer pain-pleasure spectrum
5] Voice of the Competition: ignoring the competition is never a good strategy, and there is always competition (alternatives, substitutes, replacements)
6] Voice of the Stakeholders: everyone involved with the venture must win
7] Voice of the Team Members: a balanced team is a productive team
8] Domain Expert: teaching from education and experience
9] Soothsayer: foresees the future based on experiences from the past
10] Angel Advocate: supports the team and venture, internally and externally
11] Consultant: professional expert advice (usually compensated to perform specific tasks)
12] Moderator: arbitrator, mediator
13] Coach: helps the team iterate and pivot as needed
14] Board Member, Director (not an ordinary role): helps govern the affairs of an organization
15] Teacher: instructor, guide
16] Innovation Stimulator: innovation is a continuing journey, not a destination
17] Collaborator: partner with the venture team
18] Friend: personal confidante and sounding board
19] Tool Technician: helping the team use the right tool at the right time for the right purpose
20] DXpedition Tour Guide: Discover, Define, Design, Develop, Deploy

Innovation Impact Roadmap



For 20+ years, I taught in the University of Arizona entrepreneurship program which, at one point, was ranked #1 in the world by several major business publications. 

On the whiteboard in my office, I drew a roadmap of the new venture creation process. It was, in essence, the syllabus for our entrepreneurship program in graphical form. [I was the keeper of the whiteboard, not necessarily the author of all that was there! I had some pretty wise and wonderful UA collaborators as well as entrepreneurship gurus from around the world from which the information was collected.]

Students and colleagues at UA would ask if they could take a photo of the whiteboard. Of course, yes! And I did the same. I took a photo, but ... I wanted to add a bit more here and there. And then I got carried away!! So ... the diagram you see today is the result.

One of the struggles we encountered, in teaching entrepreneurship concepts and building new ventures, is that the process is not particularly time-linear. It is often iterative, a back-and-forth process. Hence, a roadmap outlines the elements that need to be addressed, but not necessarily a hard path in doing so. At some point, the venture team should visit all the "attractions" on the map, but the order of the trip may vary depending on the nature of the venture.

The "main highway" is the mission statement, highlighted in yellow.

Essentially,this roadmap for innovation commercialization is an entrepreneurship checklist, ... the key elements that should be considered and addressed when putting together a plan for a new business venture.

PDF, JPEG, and PNG versions are available here: InnovationImpactRoadmap.com

--Jim

[7.26]

The Critical Success Factor

There are multiple factors that directly influence the health and wealth of any given business venture. These factors may be diverse and different depending on the nature of the business. The Critical Success Factor, however, is common to virtually all business ventures.

The Critical Success Factor: Earn a Profit Solving Customer Problems Better than the Competition. It is do, or die. A venture dies for one of three reasons: 1] It didn't earn a profit; 2] It didn't solve its customer's problems; 3] It wasn't better than the competitive alternatives.

Earn a Profit Solving Customer Problems Better than the Competition ... The Critical Success Factor for all business ventures.

Critical ... having the potential to become disastrous
Success ... attains prosperity
Factor ... a circumstance that contributes to an outcome

* Earn ... Teamwork!  A business employs a team of people working together to continually and profitably solve customer problems better than competing alternatives. Healthy, growing ventures follow a clear business model. An educated, experienced, collaborative, communicative team with key core competencies is paramount to success.

* Profit ... The monetary value captured by a business is appropriately called earnings. After all expenses are accounted, earnings become profit. Profit is a reward for doing a good job solving customer problems. A key source of growth funding for a business venture is earned profit. While the profit reward is "financial", the reward can and should have other elements, too. In a healthy venture culture it can actually be "fun" going to work and being part of the team, and their may well be some "fame" that results from delivering valued solutions to customers.

* Solving ... Solutions to customer problems are typically combinations of products, services, process, and methods. However, the world keeps changing as do customers and competitors. Solving customer problems, new and old, is a continuing process for sustaining a healthy venture.

* Customer ... Customers are the primary source of revenue for a business venture. Some business ventures may have only a few key customers, others may have many. A group of customers that share similar traits comprise a market segment. Many business ventures may serve multiple and varied market segments. A business venture exists to serve its customers.

* Problems ... Customer needs, wants, desires, and situations that can be adequately addressed  and resolved in a reasonable time and expense are good opportunities for a business venture.

* Better ... Continually improving value is critical to sustaining a competitive advantage. Scientists and engineers often think about innovative solutions in terms of the fit, form, function, features, and performance. The entrepreneur thinks in terms of the benefits customers will receive. Value is measured by comparing the benefits to the price. Value can be increased by delivering better benefits to customers, by lowering the price, or both. Customers decide what offers the better value. In the long run, the products, services, processes, and methods that deliver a better value win the business.  In short: Value = Benefits / Price

* Competition ... There are (almost) always competing solutions and ventures from other sources that are directly comparable to our solution. This competition includes indirect alternatives, substitutes, and replacements that could serve customer requirements. Best to assume we have competition, even if we don't yet know who or what. Competition is not always a bad thing ... competitors can help validate and build new markets, and sometimes competitors can become collaborative partners.

Potential Business Models

1. Design physical products/merchandise
2. Manufacture physical products/merchandise
3. Sell physical products/merchandise
4. Create information/content/data
5. Aggregate or distribute information/content/data
6. Provide personal or business service
7. Provide expert advice/consultation
8. Provide money/financing
9. Provide labor or human resources
10. Transport products/services
11. Provide infrastructure/telecommunications
12. Provide in-person or online marketplace for others to sell goods or services

LLC Operating Agreement Checklist

An operating agreement is the legal foundation document describing an LLC (limited liability company) ... this document serves the same function for an LLC as corporate bylaws serve for a corporation. Following is a checklist of items to be considered ...

GENERAL
1. Under what state law will the LLC be formed?
2. What is the name of the LLC?
3. Has the name been checked with the Secretary of State?
4. What is the purpose of the LLC?
5. What is the term of the LLC?
6. Is the LLC member managed or manager managed?
7. Who is the manager if manager managed?
8. Who is the agent for service of process?
9. Is the manager a limited liability entity?

CAPITAL CONTRIBUTIONS
1. What is the initial capital contribution of the managing member?
2. What is the initial capital contribution of the other members?
3. Will members be required to make additional contributions if necessary?
4. What happens if a member fails to make a required capital contribution?
5. What approvals are required to add new members?
6. Are members allowed to withdraw their capital contributions? If so, under what
circumstances?
7. Is a member entitled to interest on his or her capital contributions?
8. Does any member have any priority on distributions over any other members?

ALLOCATIONS
1. How are distributions to be divided among the members?
2. How are tax allocations made?
3. When are distributions to be made?
4. Will there be special distributions required to be made to at least pay for tax on each member’s pro rate income from the LLC?

MANAGEMENT OF THE LLC
1. How broad are the management powers of the manager?
2. What limitations are there on the powers of the manager?
3. If there is more than one manager, what actions require the consent of all of the managers?
4. Is the manager obligated to devote any particular amount of time to LLC matters?
5. Is the manager and its affiliates free to engage in other activities?
6. Is there any limit on the manager’s right to form other entities?
7. Will the manager be broadly protected from liability?
8. Will the manager be indemnified for acts taken on behalf of the LLC?
9. Under what circumstances might the manager be liable to the members for acts or omissions?
10. What specific duties does the manager have?
11. Will the LLC have officers?

COMPENSATION TO THE MANAGER
1. What fees is the manager entitled to?
2. What reimbursements is the manager entitled to?
3. Is the manager entitled to incentive compensation or a carried interest?

BOOKS, RECORDS, ACCOUNTS AND REPORTS
1. What books and records are to be maintained by the LLC?
2. What access rights will the members have to books and records?
3. What reports will the members be required to receive?
4. Who will be the tax matters partner?

VOTING RIGHTS
1. What voting rights will the members have?
2. What major actions can the manager take without other members’ approval?

MEETINGS
1. Where will meetings be held?
2. How can meetings be called?
3. What notices for meetings must be given?
4. What quorum is necessary for meetings?
5. Can actions be taken by written consent of the members?

ASSIGNMENT OF INTERESTS
1. Do the members have the right to assign their interest in distributions?
2. What rights does an assignee of a member’s interest get?
3. In what situations will assignment be prohibited?
4. What are the procedures for substitution of members?
5. What happens on the death, incompetency or bankruptcy of a member?
6. Is there a right of first offer or first refusal on transfers of interests?

TERMINATION OF A MANAGER
1. Under what circumstances can the manager voluntarily withdraw as the manager of the LLC?
2. What are the events that will result in the manager ceasing to be the manager of the LLC?
3. Under what circumstances can the members remove the manager?
4. What happens to the manager’s interest when it has ceased to be the manager?

DISSOLUTION AND TERMINATION OF THE LLC
1. Under what circumstances will the LLC be dissolved?
2. Under what circumstances can the LLC continue notwithstanding a technical dissolution?
3. How are distributions to be made on liquidation of the LLC?

MISCELLANEOUS
1. Which amendments to the Operating Agreement can be effected solely by the manager, without the consent of the members?
2. How are other amendments to the Operating Agreement to be effected?
3. When will amendments to the LLC’s Certificate of Organization have to be made?
4. What power of attorney is granted to the manager?
5. Is there an arbitration clause that governs any disputes among the members?
6. Are the members liable in circumstances other than for their capital contributions?
7. What competitive activities may the members engage in?

[Thank you, Small Business Kit]

How to Solve a Problem

  1. Define the problem
  2. Define a set of criteria for a good solution
  3. Explore potential causes of the problem
  4. Explore existing solutions
  5. Identify alternative approaches for resolving the problem
  6. Select the best approach for resolving the problem based on the criteria for a good solution (number 2 above)
  7. Plan the implementation of this approach
  8. Implement the plan
  9. Monitor the results
  10. Verify the problem has been resolved
[1.05]

Our Purpose in Life

Ahhh, that classic question: What's the meaning of life?  Hmmm ... suppose it really is "42"?! (You'll have to see Hitchhiker's Guide to the Galaxy for those details.)  In the meantime, here's a chart that may help you with your answer ...


The Entrepreneur's Creed

  1. Do what gives you energy ... have fun!
  2. Figure out what can go right and make it happen.
  3. Say "can do" rather than "cannot" or "maybe."
  4. Illegitimi non carforundum: tenacity and creativity will triumph.
  5. Anything is possible if you believe you can do it.
  6. If you don't know it can't be done, then you'll go ahead and do it.
  7. The cup is half-full, not half-empty.
  8. Be dissatisfied with the way things are, and look for improvement.
  9. Do things differently.
  10. Don't take a risk if you don't have to ... but take a calculated risk if it's the right opportunity for you.
[Thank you, Jeffry A. Timmons and Stephan Spinelli]

[1.10]

The SCORE SLATE Mentoring Guideline

The US Small Business Administration SCORE program has a well-refined guideline for business mentoring, using the acronym SLATE ...

S] Stop & Suspend Judgment
L] Listen & Learn
A] Assess & Analyze
T] Test Ideas & Teach with Tools
E] Expectations Setting & Encouraging the Dream

As important as what mentors do is what they don't do: they don't make decisions for the venture team.

[1.03]

Questions That Must be Answered in a Business Model

  1. Who are the target customers for this business venture?
  2. How will this venture create and deliver value for these customers?
  3. What, who, where is the primary competition for this venture?
  4. How is the enterprise different and better than the competition?
  5. What are the primary core competencies of this venture?
  6. What is the scope of products, processes, and activities of this venture?
  7. How is this venture organization structured?
  8. How will this venture capture value for profit?
  9. How will this venture grow, and over what time period?
  10. How will this venture attract and retain talent?