Wayne Rogers of M*A*S*H* fame discusses his entrepreneurial ventures.
Here are his five rules to “unconventional” entrepreneurial success:
Rule #1: Find people you can work with—and trust.
Rule #2: Dare to do what is not expected. Question the status quo. But keep a firm eye on reality. Creativity becomes useless when it crosses the border into fantasy.
Rule #3: To level the playing field, know what you’re up against. Make it your business to know the rules and regulations that affect your business.
Rule #4: Do your homework—and legwork. Improving standard business practices starts with understanding why they became standard in the first place.
Rule #5: Just ask the customer. It’s not rocket science. The customer has always been and will always be the best source for solutions to business problems.
Thinking of raising seed capital from an Angel Investor for your startup? There are a lot of steps between making that decision and signing a term sheet. You have to:
Attract an audience with an Angel.
Pitch your plan.
Be prepared for a litany of “No’s”
Once you get a maybe…suffer through due diligence.
Hassle and haggle over a term sheet as if you are a used car salesman.
Give away half your company for half the money you were anticipating.
Bonus – get kicked out of your own company when things go really well or really poorly.
So how do you assure you will receive an appropriate post money valuation based on the actual prospects of your company? You can’t! Well actually, you can but there is a secret.
All that B.S. about having the killer idea/app, the perfect team and the best market is a bunch of bologna. Why? Cause no one has a crystal ball. So going through the process of identifying a market, sales channel and forecasting sales and cash flow so you can complete a discounted cash flow valuation for your company is a waste of time.
Here is ultimately what every angel asks themselves.
If I invest $x dollars in this company can I expect a possible 10x return on that investment?
In otherwords, if you want $1 Million at 10% then they have to envision your company being a 100 million dollar company 5-7 years from now (100 million X .10 = 10 Million or 10x return).
So ultimately, they want to know the value at the exit which is typically in year 5 or year 7. In a lot of ways it is not important what happens between then and now but only is it ultimately possible? But, their crystal ball is as cloudy as yours. It all comes down to if you can sell them on the dollar signs at the end of the rainbow. Can a killer idea, ultimate team and global market contribute to that argument? Of course but it is more about how well you present your idea than it is about the idea it self.
Still one of my favorite startup videos all these years later.
A summary one of my students put together:
Guy presents on the top 10 pieces of advice when starting a business – The Art of the Start.
#1 – If you want to be successful the best reason to start a business is to make meaning, not make money. If you make meaning you will make money. If you just want to make money you’ll attract the wrong type of employees.
- Increase quality of life – be creative and productive
- Right a wrong – find something wrong and fix it so it is right
- Prevent the end of something good
2 – Make a mantra for your organization – mission statement.
- Mission statements should be something employees can repeat and understand.
- As an entrepreneur, create a mantra – three or four words describing what we stand for, why we work here, and why we exist.
3 – Get going – Most people first want to prove there is a market. Just get going!
- Think different – do things 10 times better than everyone else.
- Don’t be afraid of polarizing people. Great products polarize people.
- Find a few soul mates. The concept of a solo entrepreneur is overrated. You need people to balance you off – need marketing, operations, accounting, etc.
4 – Define a business model
- Be specific. Questions to ask yourself: who is my customer and how do I get my money out of her purse?
- Keep it simple. Do not innovate on business models.
- Ask women about your business model. Men want to kill things. They always say yes it’s a great idea!
5 – Weave a MAT (milestones, assumptions, tasks)
- A new company is a fresh start – pure, clear, a start from scratch. This makes it hard to prioritize.
- Come up with a handful of milestones such as finish the design, decide on the software, etc.
- Write down the assumptions of your company – customer ROI, cost to install software or product, etc. These change the business model. Important: write down and test.
- Do tasks.
6 – Niche thyself – need to know this about marketing
- Great value to customer but not doing something unique allows you to compete on price.
- No value, only person doing it (unique) makes you stupid
- No value, many other companies are doing this (not unique) makes you even more stupid.
- High value, unique product – want to be here!
7 – You must follow the 10/20/30 rule:
- You should have 10 slides in your powerpoint pitch – title, problem, solution, business model, underlying magic, marketing and sales, competition, team, projections, and status and timeline.
- These 10 slides should be able to be presented in 20 minutes.
- Smallest font you should use is 30. This forces you to actually know your presentation and just put the core of your presentation on the slide. Do not read your material! Find out who the oldest person is in the audience and divide his/her age by two and that is your optimal font size… unless you are pitching to young people!
8 – Hire infected people. Hire people who not only have work experience and an education, but also love your product. Most people only consider these two factors. You should look at if they love your product.
- Ignore the irrelevant. You can be successful just because you love the product.
- Hire better than yourself – need A players.
- Apply the shopping center test. Go to Stanford shopping center. You see the job candidate but he/she has not seen you. If you don’t have the first reaction of seeing the person and wanting to go meet him/her then do not hire the person!
9 – Lower the barriers to adoption:
- Flatten the learning curve
- Don’t ask people to do something that you yourself would not do
- Embrace your evangelists – people that carry the battle forward for you. Evangelist is based on the Greek word “bringing the good news .”
10 – Seed the clouds.
- Let a hundred flowers blossom. Let people use your products in different ways. Just take the money! Don’t let this bother you.
- Enable test drives to make sales. Let people take your product home to test it. You are telling them that they are smart for taking it home and testing it.
- Find the true influencers. The higher you go, the thinner the air. Focus on the people that do the work!
11 – Don’t let the bozos grind you down. You may be tempted to believe them but don’t!
I’m a Dave Ramsey fan. For the last year or two I have been an avid listener of the Dave Ramsey podcast and I even went to a couple of simlucast events: The Total Money Makeover Live and his new one EntreLeadership…which I guess there is a new book coming out for the latter in 2011.
So, Dave’s big thing is “Debt is Dumb, Cash is King” and this translates well into business as well and personal finance. Now, I have not quite drunk the kool aid enough to lecture my clients when they come in looking for help with a bank loan…but it has changed my thinking. Now, I gently nudge them to find out, do they really need that loan? Or, do they need that much of a loan?
Anyway, during lunch the other day I was goofing around Googling random stuff and I came upon a pretty new blog about this very topic: http://www.debtfreestartups.com/
What and awesome idea! Putting together resources for starting a business without getting a loan. And, the opportunity to create a community of people who want to thrive in business on their own merritt and resources, bootstrapping their way to the top!
So, I contacted Nate over at the site and shared our free business planning software with him as a tool for helping entrepreneurs get started on a tight budget so now I am a part of that community too.
How about you? Are you ready to start your debt free startup? Well, head on over to http://www.debtfreestartups.com and get rocking…and don’t forget to come back to work on your business plan.
Thinking of raising seed capital from an Angel Investor for your startup? There are a lot of steps between making that decision and signing a term sheet. You have to: 
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