On Internet Business

Raising funds for business ideas

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Kickstarter’s platform has got a lot of attention recently, as it exposes different forms of innovation: there’s the creative ideas that are seeking funding, and then there’s the way that the ideas are being funded – Kickstarter is a testing ground for ways to raise funds. The ideas that don’t get funded might be bad ideas, or they might be approaching funding in bad ways. Every entrepreneur can learn from the Kickstarter successes – and failures!

Funder fatigue

Some Kickstarter projects have had fantastic funding success, but increasing levels of unhappiness on social networks show that the same potential funders are getting hit, again and again, for funding and that they are becoming fed up with unsophisticated approaches from the website.

The problem is that if a product can’t communicate its values well, it’s doomed to failure, whether it’s a new toaster, a new band or a new b2b service. By this logic, failed Kickstarter campaigns are all about failing to convert potential audience to actual backers and that comes back to the classic question – how do you close the deal?

What potential Kickstarter funders resent

Being hit again and again (nagging)

If you hit the same potential funders as everybody else, you are likely to fail. First, they are probably recoiling from somebody else’s botched proposal or wrapped up in somebody else’s successful pitch – neither scenario bodes well for your approach. Second, even if they haven’t heard from you before, they will have heard from many others, quite a few of whom are like you – you’re competing with everybody for a little bit of something.

Alternative – what about asking other funding sources? It’s difficult to find new funding opportunities, but if you do, you’re likely to find a more receptive audience and one that is judging your idea and you, with a fresh perspective. And if you can’t find fresh funders, maybe you haven’t researched at depth? Consider whether you can ask potential funders to point you towards other funders – sometimes that request for a referral, rather than funding, has the paradoxical effect of getting you an enthusiastic hearing.

Unrealistic funding objectives/Padding of funding

Your potential funders should, and probably do, have a very clear idea what it takes to get a project/idea/business off the ground. When a funding request contains unrealistic amounts or unclear objectives big red distress flares go up for both seasoned dragons and enthusiastic friends and family.

Alternative – don’t just research your idea, research similar ideas and the costs entailed in getting them off the ground. If you can demonstrate the need for expenditure and that you’ve pared the unnecessary out of your approach, you stand a fair chance of getting funded.

Begging (last minute pleas and drama as the deadline approaches)

While deadlines add energy to business-based funding appeals, they can also lead to histrionic behaviour. Emails begging people to give £10 or $20 because if ‘fifty of you do, I can still make my dream come true’ sap the goodwill of the donor and make a nonsense of the project. The minute you ask for charity, you’re admitting that your business idea is an empty well down which you’re asking people to throw their hard-earned cash.

Alternative – set up the last minute first. Approach your last-step donors and get a commitment from them that if you get 80% of the money, they will give the final few % in the last seven days. Don’t rely on this cushion though, instead try to raise 100% and give yourself the last 7 days to go back to agreed funders and show them that your project is oversubscribed: a year or couple of years down the line, you can call on that cushion to expand your business or even fund another business idea.

New approaches photo by Office Now

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Economic slow-downs around the world but shopping on the increase?

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Online Retail

From the beginning of July there have been concerns expressed over the pace of the UK’s economic recovery after evidence that the manufacturing sector in Britain is growing at the slowest pace for nearly three years.  Ireland’s manufacturing industry is shrinking and the economic boom in China is also dropping in pace. While the UK is not reversing direction or even stagnating, the healthy expansion seen earlier in 2011 is definitely on the decline.

However, while the making of things might be dropping, the buying of things is still growing, as in the space in which things can be bought! The top ‘retail destinations’ in the UK – London, Glasgow and Birmingham are about to be joined by Leeds, where a vast circular shopping centre is under construction. As property developers continue to invest in massive retail parks and shopping centres, UK high streets are seen as being under threat and in decline. Many familiar names have vanished in the past two years: Woolworths, Jane Norman and Habitat from city centres and Focus DIY from out of town shopping parks. So what makes speculators confident that big shopping venues will continue to thrive?

Retail analysts believe that three forms of shopping will grow in the next few decades:
1.    Diversity shopping – shopping with added extras; shopping centres with open markets attached to them are proving particularly popular, especially if the markets have theme days such as ‘organic’ or ‘local’ or events like chocolate festivals, beer fests or Christmas fairs
2.    Super centres – the bigger the centre, the more scope it has for appealing to the entire family: shopping with bowling or trips to the cinema added in, dropping of the kids for swimming or karate lessons while you buy the groceries, or mall walks for senior citizens that finish with a cup of tea and biscuit in a café – all currently bringing in multi-generational shoppers on a daily basis
3.    Online retail – the biggest growth centre for many retailers has been online shopping: the recognition that customer service is key to good online retailing has changed the internet-based marketplace and driven standards up so that many online retailers have the same kind of reputation in virtual reality as high street shops once had through word of mouth.

The high street isn’t extinct, according to Anna Smee, director of business strategy at Hundred Consulting, rather it’s evolving, ‘… [it] has undergone a huge transformation in recent years, which is a result not just of the recession but the growing momentum of online shopping. We are seeing a shift back to specialist, often owner-managed retailers that offer a high level of personal service or an unusual mix of products that are not available in the big retail outlets on the outskirts of the UK’s towns and cities.’ And that could mean that the next Habitat or Woolworths will begin trading online, with a market stall that travels around big shopping centres, and builds a reputation for exceptional service before expanding through franchise or other entrepreneur-led systems to create a business empire based on an intensely personal experience for both shopper and shop-owner.

High street shopping courtesy of Maxwell Hamilton

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Managing appreciation in business

Posted by Michael under awards, Business Growth

An article by Gillian Hasley, eBusiness Manager at Monster UK, suggests some ways of demonstrating appreciation and support for staff without necessarily getting into classic incentive and bonus systems. It could be said that her solutions are somewhat simplistic but they do at least offer different ways of thinking and that’s vital in a recession when any organisation needs to balance the need to recruit and keep the best staff, while ensuring that spend on personnel issues is not excessive.

It’s a fact that incentives work: psychological studies have revealed that employees who receive a reward for their efforts will make continued future efforts and will tend to stay with their employer longer. Similarly, we’ve all heard staff who gripe and grumble about their employer and can’t wait to get away. Not only does the company lose those people, they infect others with their discontent and create a bad reputation for the organisation.

‘Thank you’ or ‘well done’?

Saying thank you is nice but saying well done is better. At a basic level, ‘well done’ encourages the individual, team or department to explore, explain and expand on what they did well – this makes them more likely to repeat the behaviour, makes others more likely to copy their actions and drives transferable skills through the organisation.

Match rewards to culture

In a formal business, having the CEO high-fiving the staff around the water cooler is not likely to boost company morale, while in the creative industries this is likely to create a warm fuzzy glow in all concerned! Getting the reward to fit with company culture is important or it can alienate key staff.

I happened to be at a charity fun-run recently and overhead a team from a major UK bank complaining about the thank you lunch that had been laid on for their department – some were women who were dieting for their summer holiday bikinis, others were undertaking a cultural fast day when the buffet was organised and another group were training for a marathon for charity and as a result were eating carefully as they were undertaking a long run that day. In all, from what they said, nearly a third of the hundred-strong department had felt that they were excluded in some way from enjoying the meal. From their grumbling they felt unrecognised and isolated, as if ‘they didn’t fit in’ or ‘weren’t part of the team’ – the opposite effect to the one intended.

Creativity can be its own reward

Asking your employees to suggest a reward system can be the best way to reward them! Designing their own rewards is an incentive in itself and gives those who don’t ‘win’ a feeling of being involved and included, as well as those who do. Be prepared for whacky suggestions and to explain why good ones are too expensive to fund: that too can build team spirit, because understanding why they can’t have what they want might encourage people to strive harder to improve business profits.

Explore IT

Many organisations fail to see what they already have in terms of incentive infrastructure. Risk can become endemic in businesses that run incentive packages for senior staff, as trying to ‘win’ the higher compensation levels leads to misconduct or risk-taking. Using IT systems like intranet and regular posting of returns from departments can allow everybody to scrutinise behaviour as well as results, allowing risky practices and potential frauds to be spotted by others working in the same area, who are most sensitised to unusual patterns in business.

For small scale rewards that improve business performance, consider setting up quizzes on the intranet or other work-based systems such as business apps for mobiles to ensure senior managers are up to speed on mandatory requirements and all staff are aware of changes to legislation or business practice. These little tests can have little rewards – a printable ‘free lunch’ ticket or an hour’s Time Off In Lieu: small gains that can really encourage people to invest in best practice.

Bilingual thank you cakes by clevercupcake

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Starting a business in a recession

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

A serial entrepreneur, Jenn Hauser, offers five tips to starting a new business over at Inc.com. A major insight into the entrepreneurial mind is the way that she constantly comes up with, and discards, business ideas – it’s not a ‘perfect idea for the rest of my business life’ approach but a constant thinking up and letting go of potential businesses.

Once an idea starts to take hold of her, she sets to work on it. But what does it mean to convert an idea to a viable start-up and how is it done? Her tips include:

1.    Take a step, any step – don’t allow an avalanche of planning to crash down on simple action. Whether you begin with sorting out financing, writing out a product description or checking out the competition, you’re making a start and any start leads organically into the process of business creation. It’s not so important where you begin, as that you begin.
2.    Keep it simple and forget perfect – here the message in the article is slightly confused, I think. What Hauser says is that you need to find the key point of the business idea and forget all the frills around the edges. It’s not always easy to pick out the key point though, and sometimes the frills are what makes all the difference – simplicity is great, as long as it doesn’t miss identifying the key advantage or USP that makes your business idea niche or viable if the marketplace is already crowded. Work out what’s key and forget perfection and you’ll have something to run with.
3.    Don’t reinvent the wheel – here Hauser is right on the money. Too many start-ups think they have to start everything from scratch. Look at what you can rent, lease, or use without starting from the ground up.
4.    Tell people you’re starting – of course, you don’t want to give away your great idea, concept or niche, but you don’t have to. You can simply talk about the process without talking about the ‘product’. As you talk to people you start to network – they know somebody who can help or who might be interested in what you’re doing. They offer their own experience, ask questions that help you refine your approach and maybe even suggest contacts or competitors for you to look at.
5.    Tell people what you need – Hauser suggests that when you’ve told people what you plan, you should tell them what you need – this is a good idea but it could, if you’re not careful, turn off your contacts. Don’t be needy. Say what you’ve already got before mentioning what would help. And remember that when somebody tells you what they are doing, you may be able to help them and should offer. Two way streets get more traffic!

It’s interesting to look at these start points in relation to a new study by the Kauffman Foundation that suggests American start-ups have fewer employees when they launch and stay smaller than before. ‘…businesses have been starting smaller and growing less for the last several years,’ said one of the researchers. It means that the job deficit is not being addressed by the start-ups in the way that it was before 2007 and that although the level of start-ups has held steady or even edged up since the recession, when including new employer businesses and newly self-employed workers, the research suggests it did not grow enough to generate the new jobs needed to support overall economic growth in the USA.

This may mean that more and more of us need to become entrepreneurs, running small enterprises even on a part-time basis, and that getting started may be the key to personal success and fulfilment as well as business and economic prosperity.

start-up diagram by dgray_xplane

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SeedSummit standardises Term Sheets

Posted by Michael under Business Growth, Entrepreneur Resources

For any entrepreneur, it’s important to review term sheets thoroughly. But for first-time entrepreneurs and those who are already deep into their new venture, the time it takes to master the contents of a term sheet can put a brake in business development.

Term sheets are non-binding templates used to shape more detailed legal documents that will determine the terms of an investment. Usually term sheets are required for seed investment used to undertake research, develop a prototype or conduct market tests on a new product.

So SeedSummit, a Seedcamp forum, has brought together 21 European investors to create ‘reader-friendly’ umbrella documents that are intended to reduce the lead time on completing investment deals, cut legal costs and provide transparency.

The underlying ideas are to create efficiency in funding, allow like-for-like comparisons and underpin an integrity level that could lead to later standard setting across national boundaries in Europe. The documents are the SeedSummit Term Sheet and the Enterprise Investment Scheme (EIS) variant which is specifically designed for the UK marketplace and both are being viewed by Seedcamp as the prototypes for a further development of more complex legal instruments, building on the original American term sheets agreed in 2009.

SeedSummit says, ‘We hope these documents help bring coherence to the …European market. By bringing the players to reach a common agreement for the benefit of the entrepreneur we hope to save entrepreneurs time and money and to ensure that the limited funds they are raising are used for the most important thing: building product for their customers.’

Interestingly, none of the business accelerators (early stage development programmes that offer mentoring on an in-depth level – often with competitor start-ups working with/against each other in parallel with the mentor – plus small and tightly focused amounts of equity-based funding), have contributed to the templates’ development which suggests the more traditional incubator systems are finding it necessary to shorten the time between idea spotting and investment to keep up with the incubator approach.

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Innovation for business survival

Posted by Michael under Business Growth

Over at Real Business, there’s an article about the role of innovation that’s worth considering in the current demanding economic climate. Quoting Carl Schramm, head of the Kauffman Foundation, it suggests that surrendering to imperatives can be the best way for a business, a country or an economic system to cope. It’s an heretical idea, the antithesis of what economists do and yet we know from decades of hard evidence that ‘planned economy’ is a synonym for ‘stagnant system’  Schramm’s argument is disruption and change are natural and innovation is their solution – not to ‘master’ change by overriding it but to manage it by riding it.

This feels wrong to established businesses: the ‘big beasts’ that have the power to influence politicians and to lobby decision-makers, but it’s worth examining. Propping up the status quo, as the Real Business article puts it, is futile. And if we believe that we live in an evolving world, where businesses, like organisms, find a niche and use survival skills to remain in it successfully, then the ‘ride the change’ approach makes more sense: it drives improvement by offering a range of ways to change things, some of which will work better than others and will therefore become the evolutionary norm. It changes the balance between risk and reward by making the facing of risk its own reward because of the value of innovation, while the current economic paradigm tries to hold by risk by focusing on the rewards already gained in the status quo system.

And it would mean that instead of total melt-down, big business had the chance to evolve from within in a crisis, by embracing innovation at all levels, not just top down, by rewriting the business DNA at the departmental level. Imagine a Royal Mail that delivered post on skateboards in cities, or a jobcentre that skyped interviews with claim benefits … by allowing innovation to flourish internally, huge organisations could evolve where they needed to and keep working structures as they stand.

Could it ever happen? In some firms it’s already standard, but for most of the big beasts, it looks like they will have to go the way of the dinosaur, and make way for smaller, faster-moving business entities.

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Strikes and business

Posted by Michael under customer service

As Britain copes with the effects of the public sector strike called by four unions, the Chief Executive of the London Chamber of Commerce has gone on record, saying the strikes will harm business.

Around 750,000 public sector workers are on strike, and the range of interruption to business—from long delays at airports, to the need for parents to organise childcare or remain home with children whose schools are closed—is likely to have both immediate and more long term effects, possibly knocking on as far as the Olympics in 2012.

The London Chamber of Commerce predicts ‘… a nightmare for businesses as staff absence and losses in productivity will be inevitable.’

The Wall St Journal highlights the risk of harm to the UK’s inward investment, in a week when the Chinese Premier has been making happy noises about China investing more in the country, and points out that the dispute is likely also to divide the public.

For businesses, a ‘national’ strike can be a challenging scenario, but the smartest organisations are using the opportunity to re-invest or re-invent forms of work so that they can actually innovate around potential future scenarios.

Several of the largest UK firms have offered parents a ‘work from home’ day where they can focus on their annual appraisal or complete training modules and one of the biggest accounting and consultancy companies is urging both staff and clients to ‘Skype it in’, providing teleconferencing and other facilities so that business can continue as usual. It’s more difficult for freight firms and other large physical plant companies to find ways to get around such issues, but there may be opportunities for every kind of business to seek out savings or new technologies that will help them address a period of unrest.

Closed sign courtesy of charenton_

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Six ways to benefit from the Bribery Act

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

From next month, British-based firms of every size will be facing the biggest shake-up in UK bribery law for over a century.

Whether you’re an SME or already a multinational, there are new forms of risk to assess and build into your business strategy. The most notable is a crime labelled ‘failure to prevent bribery’ which puts the onus on the business to prove that it has assessed the risk and implemented ‘adequate procedures’ to stop bribery being used within the company or by third parties acting on the company’s behalf. This crime leaves company open to fines that do not have a financial ceiling and also to the possibility of being barred from seeking government contracts.

While bribery may seem a remote issue to many firms, it’s important to recognise that the shape of the new legislation makes it a management concern and failure to implement good structures could lead to investigation and long-drawn-out interactions with the Serious Fraud Office or the Ministry of Justice. It’s also crucial to recognise that investigations are increasingly driven across national boundaries so a concern may be raised elsewhere in the world that is then acted on by a UK agency.

Dealing with the Bribery Act

Creating the right processes begins with business governance, and involves setting in place controls, ensuring there is a business culture of integrity and ensuring that individuals at the all levels in the organisation have been given training in values and behaviours that make the company averse to the risk of bribery.

1.    Start with a risk identification programme to find the areas of greatest risk
2.    Make sure you have a policy that is explicitly anit-bribery and that it is driven down from the top of the organisation to the bottom as part of induction, annual review and continuing professional development
3.    Create an anti-bribery champion at senior level who is able to challenge all levels of the organisation on their actions and their values. Resource this person effectively to carry out their role and create an annual reporting structure that is transparent to all areas of the business. A company intranet is a good way to do this.
4.    Check that existing contracts with consultants, directors and employees as well as outsourced areas all contain a clause prohibiting any form of bribery.
5.    Ensure HR can carry out good due diligence on new employees and that an effective form of due diligence is in place for partnerships, joint ventures and even funding sources.
6.    Give whistleblowers respect, anonymity and the chance to report concerns safely. Act on such concerns swiftly and with due concern for the anonymity of the person who raises them. Document the company’s actions in responding to concerns.

While such legislation can seem like a brake on business success, a good corporate strategy can use this kind of review to drive better understanding of values through the company, making integrity an aspiration, not a nuisance.

Image courtesy of images_of_money

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When employees lie

Posted by Michael under Uncategorized

20% of people who responded to a survey from Inventium admitted to lying about their age and qualifications or their previous jobs and why they left them. Some even presented supporting documents that that didn’t belong to them. It’s clearly a commonplace scenario as nearly 70% of those surveyed admitted they had lied, or been tempted to lie, on an application form or in an interview.

And it seems that people in creative industries such as media and design are the most creative with the truth: 28% claim to have used material in their portfolios that wasn’t their own work.

For employers this is a major problem: the cost of recruitment and induction for new people is high – if there’s a prevalent tendency to lie about skills, capacities and experience, that already high cost ends up being doubled as the chosen candidate turns out not to be suitable or unable to cope with the role they’ve lied to get.

GH Smart’s Who: The A Method for Hiring is a way of dealing with this issue. It offers a structured framework within which recruitment works to find and keep the best staff for your organisation. It begins with making a scorecard that outlines key objectives and explains the job.  Then a list of key competencies is created – this is the skill-set necessary for an candidate to be good (not just able but good) at the job. Using these two, a brief screening interview is undertaken by telephone asking four key questions:

1.    What are your career goals?
2.    What are you good at professionally?
3.    What are you not good at or not interested in doing?
4.    Who were your last five bosses and how will they each rate your performance on a 1-10 scale when we talk to them?

Those who pass the call get a face-to-face interview with questioning that unpicks areas of weakness eg asking about high and low points at school and college and in last five jobs or roles, talking about previous bosses and how they would assess the candidate and exploring goals and aims. Questions starting with ‘what’, ‘how’ and ‘tell me more’ all open up areas for deep exploration. The responses can then be checked with former employers for reliability of response with demonstrates both integrity and self-awareness if the matches are good and areas of major concern if the match is bad.

Interview image courtesy of voguemarie2010

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Smart businesses have savvy social media…

Posted by Michael under customer service, Social Media

… but sometimes even the people who are supposed to know their stuff get it badly wrong. In the small but highly charged world of computer games, a bad review can be a substantial belly blow, but when a PR agency hit back, the story went viral.  The game was Duke Nukem Forever and the agency was the Redner Group, which responded to negative comments on the game previews by posting a tweet saying “too many went too far with their reviews. We r reviewing who gets games next time and who doesn’t based on today’s venom.”

While the tweet was swiftly removed, so was the game designer’s confidence in their PR choices. Redner Group no longer have a contract with the game company and as that was their biggest client, their future is looking less than promising.

The phrase coined to label this kind of behaviour is ‘social over-sharing’ – it means that a business or individual has lost sight of the boundaries that separate personal emoting and business communication and in the case of James Redner of Redner Group who posted the infamous tweet, he’s on the record as saying that he ‘felt like a father’ about the game and his overreaction was as a result of that emotional identification.

Dealing well with negative social media commentary

Social media is a two-way track. It’s more like a conversation than an ‘exercise’ so (a) you can’t control what comes back at you and (b) everything you say may be overheard by other people who respond immediately – be prepared for that! In the case of Duke Nukem Forever, journalists jumped all over the tweet as it looked to them like blacklisting. That may not have been Redner’s intention but when ‘conversation’ is ‘overheard’ there may be a wide range of interpretations that the business needs to recognise and deal with.

Define the problem. If you’ve got any constructive criticism at all, in amongst the negative stuff, say thank you. The revealing of genuine problems should always be something a business is grateful for. If you think the person has gone over the top, but there is some truth in their negative comment, try reframing the facts in more pleasant words and then respond to your reframed version. Example – ‘this product stinks: it took me four tries to put the thing together and the instructions are useless, too small and badly translated.’ Reframe – the product was more difficult to assemble than expected and the instructions are not as helpful as they could be. Response – thank you for pointing out that the instructions could be clearer: we will work on that. We’d like to know if you think better instructions would have made the assembly easier?

Trolling and Trashing. Trolling is the behaviour of online personalities who simply like to cause conflict. Trashing is where a person comments on your product negatively in order to promote a rival service or product. The only way to deal with trollers and trashers is to ignore their comments and remove whatever you can of their presence. The good news is that even determined trashers have a short attention span if you are on their case and don’t respond to them. Be sure they are a trasher though – one way to find out is to copy and paste their comments into a search engine: if you get identical hits appearing you know you have a trasher on your hands. Trolls are clever, manipulative and determined, but in social media terms, poorly tolerated so often you’ll find social media will patrol its own trolls and you just need to be on your guard against giving them the oxygen of publicity.

Troll image by meshmar2

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