Paul Wallbank – Brilliant Communications

Tag: business advice

  • Frenemies in the age of tectonic shifts

    Frenemies in the age of tectonic shifts

    “Apple lives in an ecosystem,” Steve Jobs told the 1997 MacWorld conference. “It helps other partners and it needs the help of other partners.”

    A few minutes later Jobs unveiled Apple’s deal with Microsoft, much to the disgust of many of the company’s true believers in the audience – something not helped by Bill Gates appearing on video midway through the presentation.

    “We have to let go of the idea that for Apple to win, Microsoft has to lose;” said Jobs after the booing died down.

    I was reminded of Jobs’ and Gates’ deal when talking to Pat Gelsinger, the CEO of virtualisation software company VM Ware at their annual VM World conference in San Francisco this week.

    Gelsinger was discussing the myriad deals VM Ware has made with companies that are their superficially their rivals as markets radically change. The company has even gone as far to embrace the open source Open Stack that was originally set up as competition to VM Ware’s proprietary technology.

    “The idea of frenemies – or co-competition – isn’t new to the IT industry.” Said Gelsinger, “as we are in this period that we’ve called the tectonic shifts that are underway.”

    “All of us need to be somewhat careful about who’s our friends and who’s our enemies as we go through that period and be as nice as we can to everybody because who’s our friends and who’s our enemies in six months or twelve months could change a whole lot.”

    That lesson has been harsh in the IT industry as various unstoppable businesses have found the market has shifted rapidly against them. A process that’s accelerating as cloud computing changes the software industry.

    “I always quip that ten years ago or fifteen years ago Sun would have been buying Oracle. Those shifts can occur quite rapidly,” Gelsinger says.

    VM Ware itself is on the brunt of one of those shifts as its core business of creating virtual services in company’s data centres is being disrupted by cloud computing companies like Amazon, Google and – ironically – Microsoft.

    Adapting to that changing market is the key task for Gelsinger and VM Ware’s management team, “our philosophy has been about doing the right thing that technology enables us to do.” Gesliner states, “do the right things for our customers and enable the ecosystem to join us on the journey.”

    For companies like VM Ware and Microsoft no-one predicted that one of their biggest threats would come from an online book retailer, yet Amazon Web Services has upended the entire software industry.

    The challenges for VM Ware today or Apple nearly two decades ago are being repeated in many other industries as competitors appear from unexpected directions, which is why it’s important not to ignore and sometimes co-operate with your competitors.

    We shouldn’t also ignore the other main reason why companies like Apple, Microsoft and, possibly, VM Ware have survived massive market shifts over time – a deep and loyal customer base.

    Understanding and responding to your customers’ needs is possibly the greatest management skill needed in every business today. Are you listening to what your market is telling you?

    Paul travelled to VM World in San Francisco as a guest of VM Ware

    Picture of Steve Jobs and Bill Gates via Joi Ito on Flickr

    Similar posts:

    • No Related Posts
  • Validating your market

    Validating your market

    Last week I interviewed Anthony Foy, CEO of Workshare about his business and the growth in the online sharing and collaboration markets.

    When researching Workshare the obvious message is the business can be best described as a Dropbox for enterprises.

    It always pays to be cautious when comparing a business to a competitor as often the managers or founders don’t like mentioning marketplace rivals.

    Frequently, it turns out the rival in the market helps you define what your service delivers.

    A good example of this was a gay and lesbian dating service run by a pair of acquaintances.

    Naturally the obvious comparison was with the Grindr app but the two founders – who we’ll call George and John – had completely different views about this.

    George’s view was “don’t mention the G word” as Grindr was the feared rival while John’s view was that their opposition validated their market and actually made it easier for them to explain their business.

    John’s view turns out to be that of Anthony Foy’s – that Dropbox actually makes it easier for Workshare to articulate its business.

    Investors, customers and staff understand what Dropbox does so there’s no need to for Workshare to convince people there’s a demand for what they do or to explain exactly what their service does.

    This has proved true for many successful businesses. Facebook needed Friendster and Myspace to prove the market for social media existed while Google had Yahoo! and Altavista to show there was a need for an online search engine.

    Just because you aren’t first to the market doesn’t mean you won’t be successful. Sometimes your competitors are your greatest asset in helping the rest of the industry understand exactly what you do.

    Similar posts:

    • No Related Posts
  • Keeping sane in business

    Keeping sane in business

    Last night some of Australia’s best small and medium businesses were celebrated at the 2013 Telstra Business Awards. There were lots of happy winners, particularly Tasmania’s Bruny Island Cheese Company who won the overall prize.

    Speaking at the business awards, previous winner Jason Wyatt of Sydney’s Bike Exchange mentioned some the “stumbles on the way” and keynote speaker Mark Bouris described some of those ups and downs.

    “Accept the downside and dream of the rewards on the upside” advised Bouris.

    Sometimes though those upsides are hard to find, behind the glamour and glitz of having a successful enterprise the toll on proprietors’ mental health can be tough and this month’s Inc magazine looked at the psychological downside of running your own business.

    Running your own business – whether it’s a plumbing service, cheese company or a tech start up – is hard work and risky with not everybody suited to the often demanding lifestyle.

    If you aren’t suited to running a business, or you’re unprepared, then those mental health costs can be high.

    My own experience is instructive, in fact it’s a case study of what not do as a business founder covering everything from being undercapitalised to choosing bad business partners.

     

    Find good business partners

    Running a business alone is a mistake, partly because few have the full range of skills required to successful run an enterprise and mainly for the fact being a sole trader or boss is a lonely, isolated experience.

    A business partnership though is like a marriage and it’s just as important to choose those co-founders as carefully as you would a spouse.

    Good business partners have the skills that complement yours – if you’re good at sales or the technical side of the business then you’ll probably need someone good at the administrative or accounts side. Business is a team effort.

    What’s very important is that all the partners in the business respect each others’ strengths and understand their own weaknesses. This makes a powerful team.

    Probably the most therapeutic thing about having trusted business partners is that you have a sympathetic sounding board. At the very least you kick back on a Friday afternoon and have a bitch about your customers, staff and the government. That in itself is very important in keeping sane.

    Watch the money

    One of the biggest problems in business, and one I’ve encountered many times, is that many people don’t understand the difference between cash flow and profit. They see the money in the bank and they spend it.

    If your business partner has blown the company’s working capital on a flash car and an overseas ski trip for the family, you can bet the clients, staff and creditors won’t be expecting them to clean up the financial mess.

    Should you find yourself in that situation with your partners, get out of the business early before it wrecks your relationships and sanity.

    Have sufficient capital

    Stories abound of the successful business that was founded in a garage by a couple of penniless college grads and bootstrapped from nothing but they are the exception, not the rule.

    While it is possible to bootstrap a successful business – I did it with PC Rescue – it’s a tough, hard road and having insufficient capital exponentially increases the chance of failure. Get some money from family, friends or fools.

    Don’t hold out though for the million dollar capital raising though, the Silicon Valley investment model is only suitable for a tiny subset of business and it is possible to be over capitalised as we saw in the dot com boom of the early 2000s.

    Stressing about money is one of the greatest problems for business owners and founders, having a little bit of capital makes commercial life a lot more enjoyable.

    Watch your business plan

    It’s fashionable to say business plans are useless – that is bunk. A business plan gives you some idea of how you expect to spend your money and where the revenue will come from. It’s a good reality check.

    However, the 19th Century German general Helmuth von Moltke said “no battle plan survives first contact with the enemy” and it’s true that even the best business plan won’t survive first contact with the customer.

    That’s fine because tweaking your business plan in the early days will give you more understanding and control over your business. More control means less stress.

    Pivot when necessary

    Some of the world’s most successful businesses were started as something completely different, Microsoft being one of the best examples. When it turns out the market doesn’t like your original idea but there’s a similar but different opportunity, grab it.

    Executing a business pivot can be time consuming and stressful, but it’s far better for your finances and mental health than riding a failed business plan into oblivion. If you’re the type that enjoys building businesses, then you’ll probably find a business pivot is fun.

    Take a holiday

    I cannot emphasise this enough. In PC Rescue I went ten years without a holiday. It was a stupid mistake and both my family and my own health suffered for this.

    Create limits

    Micheal McQueen points out that Baby Boomers are poor at creating limits to their worklives, for many it’s a matter of pride in working punishing long hours.  In small or startup businesses there’s no shortage of opportunities to work twenty-two hour days.

    The difference with working 90 hour weeks for the law firm or bank is that managers have a nice salary, sick leave and workers compensation. As a proprietor you don’t and in doing so you’re putting undue on yourself, your business partners and your family by working too hard.

    Delegate

    One key to success is finding good employees – this is something I totally suck at. While I’ve had the privilege of hiring a few good people, I’m spectacular at finding duds.

    Being able to delegate is one of the key skills to business survival, it allows you leave work at a decent hour, take that holiday and – most importantly – get time to think strategically. If the owners, founders or managers can’t delegate then the business potential is limited and the risk of burn out is far higher.

    Sack the troublemakers

    Something that always bemuses me is how small business owners constantly moan about staff. While it’s true one dud staff member can cause untold damage to a business, bad customers are far, far worse.

    Pareto’s law – otherwise known as the 80/20 rule – comes into play here. 80% of your troubles will come from 20% of your customers and rarely will the slow playing, demanding troublemakers be your most profitable clients.

    If you’re in business long enough you’ll eventually encounter the psychopaths who actually enjoy stringing out invoices or creating commercial disputes. It’s your duty to your own sanity to get these people out of your life as quickly as possible.

    So sack them, write off their debts and get them out of your business. Your time on this earth is too short to be dealing with bad payers, the crazies or the one percenters who get their kicks from screwing other people around.

    Watch the warning signs

    “Five years in tech support will turn you into an axe murdered, I did twelve” is a joke I often make.

    There’s a strong element of truth in that line though as IT support in particular is a stressful, thankless trade and running a business in that sector exposes you to a lot of negativity.

    While I genuinely enjoy customer service, tech support and running a business I hadn’t realised just how that negativity and stress was affecting me.

    It was only when I noticed the signs of stress in a couple of my good contractors that I started researching depression in the IT industry and did the Beyond Blue K-10 anxiety and depression checklist. The results weren’t pretty.

    The exit from PC Rescue and IT support in general started shortly afterwards.

    In retrospect I’d stopped enjoying the business and dealing with customers about five years earlier and that should have been the warning sign to get out.

    “Love what you’re doing” was Jason Wyatt’s advice at the Telstra Business Awards and he’s absolutely right – the moment you stop loving your business is when it’s time to start looking for something else.

    Similar posts:

  • You’re doing it wrong

    You’re doing it wrong

    Earlier this week Smartcompany released the results of their 2012 business technology survey. One of the things that stood out was less than 30% of businesses are happy with their online results.

    Almost certainly this is because most businesses diving into social media are doing it for marketing or advertising reasons – so they expect to make sales shortly after they start posting updates.

    While social media can be a good marketing tool, it’s almost always time intensive and often it doesn’t work at all.

    For most businesses social media is much more useful as a market intelligence tool or a communications channel.

    Talking to your customers and helping them with their problems is probably the thing social media does best.

    While it can be argued that good customer support is the best way to build a brand and market a business, that’s a major change in thinking for many organisations.

    If you think social media is all about marketing – or customer support isn’t about your business brand – then you’re doing it wrong.

    Similar posts:

  • The five year business plan

    The five year business plan

    Recently I was talking to an old business partner about why our venture failed, we agreed we’d spent too long on trying to keep an idea alive way past the date it was clear it didn’t work.

    This formed the idea of the Five Year Business Plan. It’s not a detailed plan, just the broad cycle that the typical start business follows.

    Years one and two: The formative years
    The first two years are the most exciting, exhilarating, toughest and frustrating periods of running a business. This is when you test your assumptions, discover what works and ditch what doesn’t. You make mistakes, learn and build upon the lessons

    Not only is this the time your business develops, it’s also the time you learn about yourself and your business partners. Some of the lessons you’ll learn about debtors, staff, suppliers and customers will break your heart and make you tougher. You’ll also probably require cash reserves to see your way through much of the first two years as well.

    In many cases the assumptions are too wrong and cash demands too great. If the cashflow isn’t standing up, sales are too short of projections or the development is too slow, it’s often best to draw a line in the sand and move on before you invest too much of your life on an idea that doesn’t work.

    Consolidation: Years three and four
    Once through the formative stage, the third and fourth years are about consolidation. Having got your business running well, now is the time to be proving the model and making money.

    This period is where you start booking real profits, build goodwill and start laying the groundwork for your exit strategy.

    Year Five: The next steps
    In the fifth year, you’re looking at where the business will go next. Some entrepreneurs will look at cashing out to a buyer while others want to franchise out their systems or build the business into a world beater.

    With a four year track record and solid profits you’re in the position to seek buyers, investors, franchisees or lenders to execute the next stage of your business, and personal, growth.

    This five year plan is nominal as not every business will follow it. For instance a franchisee will probably short circuit the first two years as they are buying many of the systems and products a start up entrepreneur has to develop and that’s why a good franchise costs money.

    Also, the phases may vary depending on the industry, the state of the economy and just plain dumb luck but by understanding where the business is in the cycle, you can time the right moves for your business from when to grow and when to close it down.

    In many ways, starting a business is like being an early explorer like Christopher Columbus, Marco Polo or James Cook. You have a rough map with some ideas and assumptions on it but no real idea of what you’ll discover. That’s part of the challenge of being entrepreneur.

    Similar posts: