Exit Strategy–Forget It!
Published by Bob Foster· 2 Comments
An exit strategy is of interest only to a very small percentage of the over 6 million new businesses that will start up this year. Yet, there are millions of words written, videoed, and recorded extolling the necessity of having an exit strategy in a startup’s business plan.
A new business should be concentrating on making a successful start—not on how to best “exit” their business. Here is what Mark Cuban, billionaire startup entrepreneur and Venture Capitalist, has to say about the first two most important rules of starting a business:
- “Don’t start a company unless it is an obsession and something you love.”
- “If you have an exit strategy, it’s not an obsession.” –Mark Cuban
The main point here is that when a person is starting a business they must not only be passionate (obsessive?) about their business, but they must stay focused on getting their business started–not ending.
In most cases, an exit strategy will form “automatically” as the business grows and begins to mature. Here is how this will usually happen:
- The vast majority of new businesses that start up each year will fail. This is a hard statistic to swallow, but unfortunately, it is true whether an exit strategy exists or not.
- Many of the surviving businesses will grow and be approached by someone inviting them to consider merger or acquisition. No exit “strategy” is involved here, but it might be decision time.
- Some of the surviving businesses will be successful and the owner/founder will tire of the business and put it on the market for sale—never planning this as a specific exit strategy when they started their business.
- In a few cases, as a business grows and matures, a founder/owner may decide to retire and simply close their business. This is a deliberate decision, but usually not part of an exit strategy plan when they start their business.
- In some instances, a business may take off and grow beyond all expectations, forcing the owner(s)/founder(s) to develop an exit strategy that might even include an IPO.
The one exception to the above “automatic” exits is the company that wants to pursue Venture Capital. Venture capitalists will want the business owner(s) to provide a projected exit strategy showing an incredible return on money invested, before they will even consider investing in the business.
Actually, Venture Capital involves a very small number (less than one-half of one percent) of the over 6.5 million businesses that will start up every year.
Incidentally, the same holds true for Business Plans. If you want to read why business plans are useless, check out this post.
Well, what does everyone think about this concept? Agree? Disagree? Let me know.
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Writing a Business Plan
Writing a business plan is one of the most difficult and least understood functions of starting a business. This is primarily the fault of the popular writings of business gurus, academics, and pundits who believe that all startups are high-tech businesses that need to seek out venture capital.
Whenever an aspiring entrepreneur asks me about writing a business plan, I tell them to forget it—they don’t need a business plan. Moreover, when I go into a failing business, one of the first things I do is have them shred their business plan.
Before you get all huffy, understand that I don’t consider planning unnecessary—just the formal business plan that is meaningful for about as long as the daily newspaper.
With the business world so enraptured by the “darlings” of high-tech startups that are trying to become the next Facebook or Twitter, or the like, there is little consideration given to the remainder of the over six million new small businesses that will start up this year.
Unfortunately, most of these new businesses will fail because they either ignored, or short-changed the importance of planning.
Just to let you know that the concept of plan-less planning is not my original idea, here is what one of the world’s greatest strategists had to say about plans and planning:
I have always found that plans are useless, but planning is indispensable. —Dwight D. Eisenhower.
Far too many people get caught up in the “mechanics” of writing a business plan and neglect to do the real planning necessary to make their business successful.
If you are thinking about starting a small business, you may find it beneficial to read the section of my resource website titled Small Business Plan. This information source emphasizes the process of planning, for the simplest smaller small business up to a full-blown formal plan for investors.
If you’re still snickering, you might consider these words:
Plans are made to be tinkered with—and eventually torn up. Blind devotion to any plan is downright dumb. —Tom Peters.
Now it’s your turn—
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The Shark Tank
Published by Bob Foster· 2 Comments
Season 2 of the Shark Tank is upon us and, like season 1, it is filled with all the drama that the entertainment industry can muster. Actually, it is quite entertaining (no blood, guns, or violence).
Unfortunately, the show gives the wrong impression to aspiring entrepreneurs. It looks pretty simple to just stand in front of a group of investors while describing your product or service, and then have the investors jump at the chance to invest in your (their) new business…or not.
On the other hand, it may be quite instructional for teaching new small business owners about how NOT to ask investors for money.
That’s why I recommend watching the show. An aspiring small business owner can pick out all the mistakes the entrepreneurs make when presenting their ideas to investors. The great majority of entrepreneurs presenting on the show are so unprepared to ask for investment money, they usually come across as pathetic.
For some insights on actually financing your new small business, try the information on my main website. Click here.
Take a look at the show and then don’t make the same mistakes when you meet with an investor yourself…even if it is only your uncle Ed.
Shark Tank is on ABC Friday’s at 8:00 pm PDT.
I’m Back!
Published by Bob Foster· 2 Comments
Well, I obviously overshot my intended hiatus from my blog. Moving, getting my office set up again, plus some other projects, have all taken much more time than I anticipated.
But, the time off has given me the opportunity to step back and ponder on things relating to the world of small business…especially “smaller” small business. As a result, here are some things that were reinforced in my outlook on small business:
- There are many aspiring entrepreneurs in the world, but many of them are fearful of failing and therefore never start a business.
- The vast majority of business information available today is directed only at the high-tech “darlings” of the startup fraternity (everyone wants to be the next Google or Facebook).
- Five million businesses “disappear” each year in the U.S. and no one seems to care…at least not the government nor the media. (Watch for the upcoming release of my Working Paper on business failures).
- In reading many articles, business blogs, comments, forums, and the like, I am shocked at the level of naïveté, and the lack of business knowledge expressed by the participants.
- There appears to be very few basic or fundamental instructions for starting and running a small business that are comprehensive enough to help get a new entrepreneur started in their business.
So, while I was on hiatus from my blog, I decided to create a comprehensive website of business information and resources for the person who wants to start a small business–or who has just recently started a business–but is not real sure of their next move (or their first).
This new website is designed to work hand-in-hand with my blog by frequently providing updates and new information, in both formats, for the novice entrepreneur.
If you are new to the entrepreneurial world, and are wondering just what entrepreneurship is, what business you should start, or how to start a business…this new website just might have many of the answers you are looking for.
So, if you fall into this category of entrepreneur, take a look at the About page and the Why Another Blog page above, and, if you like what you see…then check out our Business Solutions and Resources website. Simply click here.
We also look for comments and questions from new entrepreneurs, so if there is some question you have about your business, drop us a line on the Contact form, or comment below, and we’ll do our best to answer it for you.
Older Than Dirt
Published by Bob Foster· Comments Off
With a couple of new major projects going on, and another move of my entire office, I will continue to be absent from my blog until at least mid-December. So, I thought I would post and leave up some comments and a little quiz about a time when life was simpler…for readers to see just how old you all are—at least in mind and memory.
The following comments and quiz were sent to me by a reader, and they do bring back a few memories:
… THOUGHT YOU MIGHT ENJOY THIS …
Someone asked the other day, “What was your favorite fast food when you were growing up?”
“We didn’t have fast food when I was growing up,” I informed him. “All the food was slow.”
“C’mon, seriously. Where did you eat?”
“It was a place called at home,” I explained. “Mom cooked every day and when Dad got home from work, we sat down together at the dining room table, and if I didn’t like what she put on my plate I was allowed to sit there until I did like it.”
By this time, the kid was laughing so hard I was afraid he was going to suffer serious internal damage, so I didn’t tell him the part about how I had to have permission to leave the table.
But here are some other things I would have told him about my childhood…if I figured his system could have handled it:
Some parents NEVER owned their own house, never wore Levis, never set foot on a golf course, never traveled out of the country or had a credit card. In their later years they had something called a revolving charge card. The card was good only at Sears Roebuck. Or maybe it was Sears & Roebuck…either way, there is no Roebuck anymore. Maybe he died.
My parents never drove me to soccer practice. This was mostly because we never had heard of soccer. I had a bicycle that weighed probably 50 pounds and only had one speed (slow). We didn’t have a television in our house until I was 19. It was, of course, black and white and the station went off the air at midnight after playing the national anthem and a poem about God. It came back on the air at about 6 a.m. and there was usually a locally produced news and farm show on featuring local people.
I was 21 before I tasted my first pizza—it was called pizza pie. When I bit into it, I burned the roof of my mouth and the cheese slid off, swung down, plastered itself against my chin and burned that, too. It’s still the best pizza I ever had.
I never had a telephone in my room. The only phone in the house was in the living room and it was on a party line. Before you could dial, you had to listen and make sure some people you didn’t know weren’t already using the line. Pizzas were not delivered to our home. But milk was.
All newspapers were delivered by boys, and all boys delivered newspapers. My brother delivered a newspaper six days a week. It cost 7 cents a paper, of which he got to keep 2 cents. He had to get up at 6AM every morning. On Saturday, he had to collect the 42 cents from his customers. His favorite customers were the ones who gave him 50 cents and told him to keep the change. His least favorite customers were the ones who seemed to never be home on collection day.
Movie stars kissed with their mouths shut. At least they did in the movies. There were no movie ratings because all movies were responsibly produced for everyone to enjoy viewing, without profanity or violence or most anything offensive.
If you grew up in a generation before there was fast food, you may want to share some of these memories with your children or grandchildren. Just don’t blame me if they bust a gut laughing.
Here are some MEMORIES from a friend :
My Dad is cleaning out my grandmother’s house (she died recently) and he brought me an old Royal Crown Cola bottle. In the bottle top was a stopper with a bunch of holes in it. I knew immediately what it was, but my daughter had no idea. She thought they had tried to make it a salt shaker or something. I knew it as the bottle that sat on the end of the ironing board to ‘sprinkle’ clothes with because we didn’t have steam irons. Man, I am old.
How many do you remember?
- Headlights dimmer switches on the floor.
- Ignition switches on the dashboard.
- Heaters mounted on the inside of the firewall.
- Real ice boxes.
- Pant leg clips for bicycles without chain guards.
- Soldering irons you heat on a gasoline blowtorch.
- Using hand signals for cars without turn signals.
Older Than Dirt Quiz :
Count all the ones that you remember, not the ones you were told about. (Ratings at the bottom.)
1. Blackjack chewing gum
2. Wax Coke-shaped bottles with colored sugar water
3. Candy cigarettes
4. Soda pop machines that dispensed glass bottles
5. Coffee shops or diners with tableside juke boxes
6. Home milk delivery in glass bottles with cardboard stoppers
7. Party lines on the telephone
8. Newsreels before the movie
9. P.F. Flyers
10. Butch wax
11. TV test patterns that came on at night after the last show and were there until TV shows started again in the morning (there were only 3 channels…if you were fortunate)
12. Peashooters
13. Howdy Doody
14. 45 RPM records (or even 78′s)
15. S&H greenstamps
16. Hi-fi’s
17. Metal ice trays with lever
18. Mimeograph paper
19. Blue flashbulbs
20. Packards
21. Roller skate keys
22. Cork popguns
23. Drive-ins
24. Studebakers
25. Wash tub wringers
If you remembered 0-5 = You’re still young
If you remembered 6-10 = You are getting older
If you remembered 11-15 = Don’t tell your age,
If you remembered 16-25 = You’ re older than dirt!
I might be older than dirt but those memories are some of the best parts of my life.
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Well, there you have your quiz to determine if you’re “older than dirt.” To the younger generations these things probably sound pretty funny and meaningless, but they represent a time when life was simpler and kids had to use their minds and their imaginations instead of some electronic gadget to do their thinking for them.
Take a look at the quiz and let me know how old you think you are in relation to these items. I’ll be checking in from time-to-time, and will be back in full force before the end of the year.
Up The Creek Without a Paddle
Published by Bob Foster· Comments Off
I think we have all been up that proverbial creek at some point in our lives…maybe several times. But now we have an answer—we know where to get our paddles so we can safely get back down the creek. Or not.
I hope you have a good week.
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