Category Archives: Getting Started

May 24, 2012 · 3:11 pm

Crowd Funding Considerations

Key Concept ~ President Obama signed the Jumpstart Our Business Startups (JOBS) Act into law the other day.  The Securities and Exchange Commission has 270 days to comment and advise on the new statute, so it will be interesting to see how they weigh in on this legislation.  While this may hold exceptional promise for many aspiring entrepreneurs, there are a few things you should consider before you secure this type of funding.

Last November I wrote a blog entitled, The Crowd Funding Conundrum, as the JOBS Act came to the house floor.  The legislation is designed to open up crowd funding for equity investments.  The bill waives the accredited investor requirements of the SEC ($250,000 per year income for three consecutive years or $2 million in net worth, excluding primary home asset) as well as the need for Private Placement Memorandums and many of the other controls and reporting requirements so familiar to the private equity world.  While the buzz is really starting to hum on the internet, entrepreneurs that have never gone down the private equity road would be well advised to understand the potential repercussions crowd funding can have on later-stage financing rounds, accounting expenses, reporting requirements, etc.

The bill caps the small investor’s sum at $2,000 and allows for up to $1 million in financing annually.  Here are some things you may wish to consider prior to going down the crowd funding path.

Shareholder Communications ~ Are you prepared and structured to consistently and uniformly address 500, 1,000 or 2,000 shareholders’ concerns?  You’ll need to be ready to do so.  Most entrepreneurs never see how much time a CEO spends on investor relations.  If you don’t have an investor communications strategy, and the capabilities to execute on it, this one area alone could quickly swamp your time.

Legal Structure ~ Are you an LLC?  An S-Corp?  A C-Corp?  Be sure you understand the differences in legal entity structure.  An LLC is not readily designed for investors and are state-regulated entities.  As such, the interstate reporting requirements, if investors are involved from around the country, are substantial.  An S-Corporation also is not designed for broad investment.  If you’re going to pursue equity investors, you really should be doing so as a C-Corporation.  Keep in mind, if you’re accustomed to doing business as an LLC, this will be a major change for you.

Company Pre-Cash Valuation ~ Do you know what your company is worth?  Pre-cash valuation is just that, the value of the company before it is driving cash flow or received equity financing.  This is highly speculative and requires some insights into early-stage growth, barriers to entry, competitive response, and time line to break-even.  Missing the mark on pre-cash valuation can have terrible repercussions on your liquidity event.  A down round (a subsequent round of equity financing in with the per share value has gone down from the previous round of funding) is the death nell to larger, more sophisticated investors.

Dilution ~ If you’re going for equity financing you’ll soon understand the implications of dilution.  This also has strong ties back to the pre-cash valuation.  Equity financing is the sale of a percentage of ownership in your business.  With each subsequent round, you will become more and more diluted in your ownership position.  Give up too much ownership (because you didn’t have an accurate pre-cash valuation) early and by the time the company is at scale you’ll have very little ownership left in hand.

Defensible Intellectual Property ~ Is your firm intellectual property (I.P.) based?  Is your I.P. protected by solid, defensible patents?  Are you prepared to reveal your trade secrets in open, crowd sourcing venues?  The investors will want to know what is special about your firm.  Even Angel Investors and VCs don’t sign non-disclosures.  How are you going to manage sensitive, competitive information as you seek out funding?

Due Diligence ~ The due diligence process in traditional, private equity funding is intense and extensive.  Don’t think you can sidestep the proper preparation you will need to conduct even with crowd funding.  Eventually you’ll want to go to the more traditional suppliers of equity financing and you’ll need to have this ready.

Entanglements ~ Want to kill a deal on arrival in the Private Equity world?  Show up with shareholder legal entanglements.  Crowd funding opens the door for possible conflicts from every direction.  I’m not saying crowd funding will lead to entanglements that will derail later stage rounds, but it will certainly elevate the probability of entanglements and conflict to emerge.  Remember, the crowd isn’t nearly as astute, experienced, and sophisticated as an accredited investor.

Exit Strategy ~ Equity investors get in to get out.  Working with a small group of Angel Funds helps align interests and expectations as to when the next round of funding will occur.  This is the liquidity event the investors are seeking.  What will be the objectives of 500, 1,000 or 2,000 individual investors?  How will you align them?

Expertise ~ One of the least talked about value of traditional private equity investors is the resource they represent, both through their expertise and networks.  If you go down the crowd funding path you will not get this additional support and guidance that can be key to an early stage company’s survival.

This is just a start of the conversation you should be having prior to considering crowd funding.  Here’s a great article on the new law from the Wall Street Journal that had some great advise and comments.  It also has a link to the full PDF copy of the JOBS Act you can download.

© 2012, Terry Murray.

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March 28, 2012 · 12:28 pm

The Transformational Entrepreneur Cited in the Academic Journal of Economic Literature

For Immediate Release – March 28, 2012 -

Terry Murray’s groundbreaking book, “The Transformational Entrepreneur ~ Engaging The Mind, Heart & Spirit For Business Breakthrough Success” was recognized and cited in the peer-reviewed, academic Journal of Economic Literature’s March 2012 quarterly issue.

Performance Transformation, LLC™ (Venice, FL) announced today that their founder and Managing Partner’s book, “The Transformational Entrepreneur”was recognized and cited in the academic Journal of Economic Literature for its contribution to professional business literature and thought leadership.

“We received the unsolicited notification letter from the Journal last week,” responded Mr. Murray. “It was both humbling and exciting at the same time.  I’ve been working on the business side of the life sciences, medical technology and health care sectors since 1988, so I have an enormous appreciation for the diligence of peer-reviewed, academic journals.  As a business executive, and not an academic, this is a distinct honor for my book to be recognized for its contribution to the field of business and economic professional literature.”

The Journal of Economic Literature is published by the American Economic Association (AEA), a professional organization of economists, academics, and business thought leaders with more than 22,000 members.

“My executive career has spanned some truly remarkable changes in the global business landscape,” added Terry.  ”Historically, there’s always been a lag in leadership, strategy and organizational philosophy in response to market shifts in value creation.  I entered the biotechnology world during its infancy.  This was the beginning of the knowledge-based economy and coincided with the boom in personal computing.  Yet the methods, perspectives, and philosophies we were trained for in business school all emerged out of the Industrial Age.  We literally had to discover a new approach to business as usual along the way, but it is only today, some 25 years later, that the strategic imperative of human creativity in business is beginning to move into the mainstream.”

“The Transformational Entrepreneur” will also be indexed in the American Economic Association’s internet database, EconLit, which is accessible at libraries and universities around the world, as well as to licensed institutions and AEA members.  The electronic bibliography indexes over 120 years of economics literature from around the world.  The database complies professional journal articles, collective volume articles, working papers, dissertations, and books of note on the subject of economics and business practice.

“The shift in the source of value creation truly began in the 1980s, but information technology bridged the productivity gap for thirty years, masking the need for a change in the approach to  leadership, strategy and organizational development.  By the turn of the century it was already beginning to hit a point of diminishing returns, right at the time the explosively disruptive power of the internet began to take off.  Even old world industries are doing business in ways they never could have anticipated ten years ago,” commented Terry.

Mr. Murray went on to say, “Perhaps because I was immersed in the knowledge-based economy for so long I saw the need for a more human-centric approach to business.  Research scientists, physicians and engineers, and their creative talents, are the raw material for value creation and competitive advantage in this new era of business.  You cannot lead creatives the same way we once managed assembly line workers.  Two years after I began writing my book, the IBM Global CEO Survey exemplified the perspective and approach I was writing about at the time, reporting that creativity and the ability to cultivate creativity throughout the workplace was the single most important attribute CEOs are looking for in future leaders.”

Terry’s book was published two months after IBM released the results of their bi-annual survey in December of 2010.

About the author ~ Terry Murray is an author, speaker, entrepreneur, and professional business advisor/coach with twenty-five years of progressive experience in strategic development, executive leadership, and the deployment of highly profitable business teams. His work with Fortune 1000 and startup companies has directly contributed more than $1 billion in market capitalization growth throughout his career.

He is the founder and Managing Partner of Performance Transformation, LLC™, a professional and strategic development firm focused on igniting breakthrough performance by optimizing and aligning authentic leadership, mindful strategy, and an engaging, creative organizational culture.  The company’s evidence-based programs and pragmatic approach employs their proprietary Accretive Coaching Process℠.  This innovative, developmental process integrates concepts from published research in the neurosciences, emotional intelligence, performance psychology, quantum physics and Applied Behavioral Economics with Equine Facilitated Experiential Learning.

For more information, please visit http://ignitingcreativityinbusiness.com.

© 2012, Performance Transformation, LLC™.


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December 19, 2011 · 3:44 pm

Five Strategic Tips for Driving Sales Growth in 2012

Key Concept ~ The seeds for sales growth are sewn long before you make the call.  Here are five strategic sales tips you may wish to consider as you prepare for 2012.

Remember all those manipulative selling techniques we were taught in the 1980s?  Do yourself and your prospects a favor and try to forget them.  If you really want to ignite sales growth in the coming year, be authentic, be transparent, focus on building relationships, and strategically position your sales efforts for success.  Here’s a list of five things you can start doing today to prepare yourself for a fantastic 2012:

1.) Review Your Prospect Targeting Methodology ~ One of my oldest clients, custom sales solutions company SalesForce4Hire, LLC®, devised a brilliant approach to targeting called IA2®.  In order to qualify a buying influence as a true prospect they must have the intellectual capability to embrace your value proposition, the ability to pay for your product or service, and the authority to make the purchase.  If a target only has one or two of these attributes they are considered a buying influence and not a true prospect.  By focusing your energy on true prospects you will achieve greater efficiency in your efforts to drive sales growth.  This doesn’t mean you ignore buying influences.  In many cases, especially with high-priced products or services, a group of individuals will have input into the purchasing process.  But by focusing first and foremost on the final authority you’ll be able to accelerate the sales cycle by not spending excessive time trying to cultivate buying influences that cannot make the final decision.  Learn their concerns, and look for the secondary emotional gain they will achieve by doing business with you.

Remember, the lessons from the field of Applied Behavioral Economics have demonstrated 70% of economic decision making is emotionally-driven, with the remaining 30% based in rational thought.  Research published in the Harvard Business Review supports the strategic nature of this perspective.  Companies that embrace the lessons from Applied Behavioral Economics were shown to experience 85% greater revenue growth and 25% greater profit growth over their competition that doesn’t embrace this perspective (in a one year period of measurement for the study).

2.) Assess Where You Achieved Sales Traction ~ Take a close look at the profile of the prospects you converted to customers in 2011.  Can you identify why?  Knowing where you succeeded and where you didn’t, and why, will help you fine tune your efforts going into next year.  Was there are certain market segment that embraced your value proposition faster than others?  What resonated with your new customers?  Have you followed up with them to truly understand why they went with you, or even more importantly, why they didn’t go with you?

3.) Look For Correlations ~ With this information in hand, can you discern if any correlations exist?  Are there similar reasons certain prospects went with you or decided upon another vender?  Try to gauge customer resonance from their perspective.  Remember, while you may be in business to sell your particular solution, your customers are in business for an entirely different reason.  Compare and contrast your customer base and look for commonalities that you can leverage elsewhere as you move forward.

4.) Prioritize You Focus ~ Once you’ve conducted this analysis, decide where you’re seeing your greatest return on investment and prioritize your efforts going forward.  This is probably the single most challenging decision small business owners must make.  It is so tempting to chase every dollar, but when you mindfully evaluate where you’re seeing the best traction and why, and discipline yourself to focus on prospects that are in alignment with you, you’ll move your firm towards sustainable growth.  Why?  You’ll build a base of customer-advocates for your firm.  The power of word-of-mouth, peer-to-peer endorsements, and cultivating a source for future referrals is invaluable.  You literally cannot buy that kind of press.  Stay focused, get as close as you can to your customer base, and listen to them to help guide your growth.

5.) Employ Execution Metrics ~ The old adage, if you can’t measure it, you can’t manage it, is especially true in sales.  While we lead people, we manage processes; and sales is one of your most critical processes.  Use the identified correlations, sales trends, and other tangible gates to measure and manage your sales pipeline.  As you begin doing this, you’ll develop keener insights into your marketplace and how you’re sales processes are aligning and motivating desired behaviors with your prospects.  This process improves over time, but it is imperative that you initiate some sort of metric to provide visibility of your firm’s sales trajectory.

I’m confident if you begin employing these five tips you’ll quickly see an uptick in sales and a lower cost of customer acquisition.

IA2 is a registered trade mark of SalesForce4Hire, LLC®.

© 2011, Terry Murray.

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December 16, 2011 · 10:21 pm

The Changing Landscape of Angel Investors ~ Five Strategic Tips to Differentiate You from the Crowd

Key Concept ~ I read an interesting article on the Wall Street Journal’s website today discussing the shifting landscape of Angel Investors.  Having worked in the investor-driven startup world for more than a decade, I’ve witnessed many of the changes firsthand. Here are five strategic tips that will help you differentiate your venture from others competing for the same Angel dollars.

After a recession-driven down swing for seed-funding, the Angel Fund sector has bounced back.  Data reported by the University of New Hampshire’s Center for Venture Research (a wonderful resource that I’ve used for years…and my alma mater) indicates 39% of the $8.9 billion Angels have invested through the first two quarters of this year has gone to seed-stage funding.  This is up considerably from the 26% of the $8.5 billion invested through the first two quarters of 2010.

While this bodes well for entrepreneurial start-ups, the bar has been raised.  Angel Funds are being more diligent in their scrutiny of potential deals.  A gap still exists for later-stage funding due to the retreat of Venture Capital from smaller, albeit highly viable, deals.  Much of this is due to two things; Sarbannes-Oxley (which elevated the accounting costs for taking a company public via an IPO), and the rather anemic IPO market of the past few years due in part to the volatility of the stock market and nervous investors.

Having conducted due diligence for both entrepreneurs seeking funding, as well as for several Angel Funds themselves, I’ve been able to capture a perspective from both sides of the street.  Here are five key strategic tips you should consider before you seek funding that will help you clearly differentiate your venture from competing opportunities:

1.)  Conduct Your Own Internal Due Diligence Before Seeking Funding ~ Start pulling together your due diligence binder today.  You will need to address and document all aspects of your business prior to securing funds.  You don’t want to be running around during the Angel’s due diligence process looking for information or documentation.  If you’re unfamiliar with the facets of due diligence, you’re welcome to take a look at an earlier blog series I wrote on Sales and Marketing due diligence from an Angel Investor’s perspective.  You will also need to address your operating procedures, regulatory compliance, insurance, strategic plan, and financial pro forma, as well as document historical performance.  Going through this process before you seek funding will help you master every detail of your business prior to meeting with potential investors.

2.) Address and Document Leadership Team Competencies ~ Research demonstrates that upwards of two thirds of startups that fail do so because of deficiencies in management, execution, and leadership.  Unfortunately, I’ve witnessed this on more than one occasion.  I can honestly say I have never seen a startup fail because the technology failed.  If failure occurs, the fault almost always lies at the feet of senior management.  Yet, very few startups are conscious of  how to differentiate their leadership team’s critical competencies.  In evaluating leadership teams, Angels primarily rely on past performance, success in similar markets and environments, and intuitive discernment.

Here’s where you can take it up a notch.  Conduct validated assessments of the leadership team and document the results.  I suggest assessing leadership competencies, leadership style, emotional intelligence competencies, and a personality/psychological assessment.  Include 360◦ assessments as well.  If you identify any deficiencies, address them through the use of professional development plans and executive coaching, or in extreme situations, find a more suitable replacement.  This single tip will put an enormous distance between your self and competing investment opportunities.

3.) Validate Your Sales Assumptions ~ No one would think to go to market without first building a prototype, but companies rarely test-drive their sales processes prior to a major market launch.  By employing a small, scalable pilot project in a representative market or two, you will be able to extrapolate critical information pertaining to growth.  Testing your assumptions in the real world will validate the sales cycle, potential barriers to entry, customer adoption rates, your cost of sales, and the effectiveness of your value proposition.  This will also enable you to fine tune your infrastructure and sales support functions to optimize your customer’s experience.  Engage your target prospects early in your development process to ensure you’re on the mark as well.  A 3◦ calibration early in development, based upon validated customer input, can help you avoid a 45◦ adjustment months down the line.

4.) Prepare a Professional Pitch ~ This is one of the most critical gates an entrepreneur must navigate.  You must understand what motivates potential investors and tailor your presentation accordingly.  If you make it to the pitch (usually a series of pitches of ten minutes or less conducted for the fund members) you need to knock it out of the park in your first few at bats.  While the Angel Fund sector is growing, it is still a relatively small neighborhood.  Angel Funds now share information and spread investments across multiple funds to disperse risk.  The point is, they talk.  If you flame out once too often, you’re done.

A couple of things to keep in mind…follow the 10-20-30 rule.  No more than 10 pages, no more than 20 words per page, no smaller than 30 font.  And follow this formula; tell them what you’re going to tell them, tell them, and summarize what you just told them.  And pitch with passion!  The discipline of Applied Behavioral Economics shows us that 70% of economic decision making is emotionally-driven, with the remaining 30% based in rational thought.  If you’re not passionate, no one else will be.  And finally, if you’re not a professionally polished presenter, hire someone or find someone to make the pitch for you, with you by their side.  I’ve seen promising ideas fizzle before they’re funded because of poor communication skills.

5.) Strategically Align Your Exit Strategy with the Portfolio Needs of Large Competitors ~ Keep in mind, investors get in to get out.  Angel investors have, in recent years, gravitated towards more market ready companies than seed-funding. Companies that are in the starting gate and need the capital to fund sales.  This is starting to come back around, but remember, Angels like to fund revenue generating activities…not overhead.  Don’t go into this thinking you’re going to be the next blockbuster IPO.  That road is long, hard, expensive, and requires adequate scale to justify an investment bank’s time and investment in underwriting.  Instead, look to the major competitors in your market.  Where’s their sweet spot?  Where are they focusing?  What potential gaps might they have in their portfolio to achieve their goals?  Can your business fill that gap? For most investor-driven startups, the exit will be in the form of a Merger or Acquisition (M&A).  Buying small companies that have delivered innovation is a active strategy of large companies.  Not only is it often cheaper for them to buy versus develop, but it is quite often faster, too.

If you follow these tips you’ll already be ahead of 90% of your competition for funding.

© 2011, Terry Murray.

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December 8, 2011 · 6:49 pm

Helping Our Veterans Succeed as Entrepreneurs

Key Concept ~ I came across an article today about VETransfer, Inc., an entrepreneurial incubator specifically tailored to support our veterans attempting to launch their own businesses.  I strongly encourage all of us to support such initiatives!

Photo Courtesy of Precision Photography of Honolulu.

Some of you may know my firm, Performance Transformation, LLC™, runs a pro bono program for veterans, active military, and their dependents called Warriors in Transition.  The program is designed to impart Emotional Intelligence competencies in support of our military personnel and their families as they attempt to navigate the deployment cycle and transition back to civilian life.  To date, we’ve conducted these workshops in Florida, Arizona, and Hawaii and will be expanding in other regions as we enter 2012.

The program Mr. Lasser and his team have created at VETransfer, Inc. is to be commended!  Research into entrepreneurial success rates clearly indicates that entrepreneurs that served in the military are more likely to succeed than those that never served.  In my experience, much of this variation can be attributed to the fact that veterans lead from a perspective of service and self-sacrafice.  This, combined with the self-discipline, emotional resiliency, attention to detail, and teamwork that is literally drilled into service members uniquely prepares them for the challenges entrepreneurs inevitably face.

I encourage all of us to support initiatives like VETransfer, Inc.  Over two million American citizens will have been deployed to Iraq or Afghanistan once these conflicts wind down.  Our veterans deserve the same opportunities they’ve helped preserve for the rest of us through their selfless service.

© 2011, Terry Murray.

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December 6, 2011 · 3:50 pm

“Screw Business As Usual” ~ Sir Richard Branson on Embracing a Transformational Approach to Business

Key Concept ~ Sir Richard Branson, Founder and President of Virgin Group®, just published his new book, “Screw Business As Usual”.  In his book, the iconoclast entrepreneur identifies the global shift in attitudes towards businesses and explores how doing good and doing well as a business can be a force for positive social and environmental change.

Last year at about this time, we were diligently working on the final touches for “The Transformational Entrepreneur ~ Engaging The Mind, Heart, & Spirit For Breakthrough Business Success” in order to meet our publication deadline in February of 2011.  After more than twenty years of executive engagement, with corporations, investor-driven startups, and as a strategy consultant, and three years of writing, rewriting, and editing, we were almost ready for press.  Writing the book afforded me the opportunity to express a business philosophy that had evolved in a broad landscape of industries and companies over a substantial period of time.  A philosophy that goes beyond traditional business practice to fully embrace the human continuum in the workplace.

My eclectic background enabled me to see many businesses from a variety of perspectives, which eventually brought a certain clarity as to what drives business success or failure.  I came to realize the key to success, both now and in the future, lies in an organization’s ability to fully engage their associates and customers by aligning and optimizing their leadership, strategy, and organizational culture.  In doing so, an organization mobilizes and unleashes the creativity, adaptability, and resiliency that often resides just below the surface in many companies; in the heart, mind, and spirit of each human being that works there.  When this occurs, an accretive, collective, organizational consciousness emerges that creates a momentum all its own.

This isn’t woo-woo conjecture.  One of the key tenets of Quantum Physics is Non-Locality.  Through experimentation, quantum physicists have been able to demonstrate repeatedly that electrons can make a quantum leap across space and time without the benefit of a signal.  This quantum fabric, if you will, interconnects everything.  At the sub-atomic level, energy, matter, and even information don’t behave in accordance with the Newtonian physics of gross bodies, or what we see everyday in our reality.  These subtle bodies, of which we can place consciousness, follow the laws of quantum possibilities.  There is an inter-connectivity and continuous interplay occurring constantly that we can barely conceive.  Mystics speak to this, quantum physicists do so with their equations, and entrepreneurs and business leaders can tap into this perspective as well.

When we become aware of our inter-connectivity, a new empathy can emerge.  One that elevates our perspective, our consciousness to another level. When we lead from this higher consciousness, our authentic, transformational leadership combined with mindful strategy and a creative, engaging culture will ignite breakthrough performance.  Doing good is good for business, and this is the main theme of Mr. Branson’s new book.  He points to a new consciousness emerging around the globe.  One that is shifting expectations towards businesses that will demand an appropriate, competitive response.

Here’s a brief excerpt from Mr. Branson’s interview with Forbes discussing his book:

“Now as we’ve moved into this new radical age of transparency fueled by social media, people all over the world are demanding that business reinvents itself and becomes a force for good in the world. The entrepreneurs and businesses that will thrive are those who will embrace this new “age of people” and make sure that they listen, learn and deliver to all their stakeholders, including Mother Nature.”

This resonates with the intention of Transformational Entrepreneurship.  One in which the vision of doing well intersects with the intention of doing good.  Make no mistake, this is the coming wave in business.

I highly recommend this book!

© 2011, Terry Murray

 

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December 5, 2011 · 5:34 pm

Stoking the Fires ~ Sustaining Your Intrinsic Motivation

Key Concept ~ Walking the entrepreneurial path is very similar to undertaking The Hero’s Journey.  It is fraught with risks, confronts you with the unknown, and on many levels, it is a path you must walk alone.  During our most challenging times we must dig deep within to find the strength and courage to persevere.  Feeding and sustaining your intrinsic motivation can help you maintain your focus and energy on achieving your goals.

Spring comes at an odd time here in Florida.  Now is the time we begin to feel cooler weather, lower humidity, and flowers burst into color all around us.  Our streets and shops are filled with tourists and snow birds, relaxing and enjoying this glorious time of year here in Florida.  When you combine this with the fact that my office looks out over the water, and through an open window at that, it is easy for me to find myself in that same mental state we all found ourselves slipping listlessly into each spring during our school years.  I find my eyes closing as the breeze wafts over the bay, the migratory birds nesting and swooping amongst the Ospreys circling as they fish the waters below.  Our local Bobcat wanders along the shoreline on occasion, the sight of which drops my shoulders as I exhale a calming breath at the wondrous, natural world, just outside my window.

It has been a vital year for us.  One filled with workshops spanning from Florida, to Colorado, to Montana, and Hawaii.  A year that saw the publication of my first book, the launch of two blog sites, and the production of numerous videos, not to mention the substantial growth in the number and quality of our entrepreneurial coaching clients.  The temptation at this time of year is to simply head to the beach, roll out the towel, and settle in for a long, winter’s nap in the warm sun.  Unfortunately, the rest of the world moves to a different rhythm.  This is the planning time of year.  The time of the year when our firm must be firing on all cylinders in order to position ourselves for our work in 2012.

Inevitably, we all experience this at some point.  When we just want to relax a bit, taking our foot off the accelerator, and coast for a while.  Unfortunately, the vast majority of us entrepreneurs cannot afford to do so, especially at crucial times during the year.  So how do we rekindle the fires that burn within?  No flame burns eternally without a source of fuel.  For entrepreneurs, that fuel is our intrinsic motivation.

When my embers begin to burn low, I remind myself why I took this path in the first place.  First and foremost, I want to make a positive difference in the lives of entrepreneurs.  I want to help accelerate their success and hopefully make a small, but substantial change in the way we do business.  Through my work, I try to illuminate a better path towards success.  One that benefits the greater good while providing opportunities for sustainable, business success.  There’s a movement afoot, quietly gaining momentum for this perspective in the world.  In fact, Sir Richard Branson, the founder of Virgin Group, LTD®, just published his own book, “To Hell With Business As Usual”, calling for the same perspective to emerge.  Not simply because it is the right approach to take, but because it is good business!

Second, I want to be able to have the flexibility, on occasion, to sit and stare out my window at this time of year.  So even when I find my mind wandering a bit and I struggle to stay the course, I remind myself as to the reasons I chose this path in the first place.  We can get so busy, so immersed in our drive to move forward, that we can lose sight of the good and positive impact we’ve had during the course of the year.  Take a minute to reflect on this, and remind yourself why you decided to become a Transformational Entrepreneur in the first place.  It will help stoke the inner fires that sustain your efforts towards the realization of your goals.

And every once and a while…go to the beach.

© 2011, Terry Murray

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November 15, 2011 · 4:08 pm

Reading the Tea Leaves ~ What Buffett’s Investment in IBM Says to Entrepreneurs

Key Concept ~ Warren Buffett, the Oracle of Omaha, recently bought a $10 billion, 5.5% stake in IBM.  The Berkshire Hathaway boss has traditionally steered clear of technology plays, so what is it about IBM that has captured Buffett’s attention to the tune of $10 billion?  And what might this indicate to entrepreneurs and small business owners?

It’s been all over the news, mixed in with Mr. Buffett’s comments that Europe may struggle to pull out of their financial crisis.  Berkshire Hathaway has taken a 5.5% ownership stake in IBM, this coming just weeks after the announcement that Buffett had also taken a $5 billion position with Bank of America.  What’s interesting to consider is Buffett’s thinking behind his investment strategy.  His track record demonstrates his approach goes well beyond buy low, sell high (Mr. Buffett has been quoted frequently on his optimum holding time for equities ~ forever).  So what is it about IBM, where we are today, and the direction of where business is going that prompted Mr. Buffett to make this investment?

Historically, Warren Buffet has not played in the technology sector.  He buys companies whose value proposition he fully understands and can embrace.  So what is it about IBM that has attracted his attention and investment and what message, if any, might this have for entrepreneurs?

Let’s visit the IBM home page to start.  Today, there are four main topic areas highlighted.  Two of the four have to do with technology while the other two speak to “Building a Smarter Planet” and “THINK – The Future of Leadership”.  IBM isn’t about technology, it is about the use of technology to achieve transformational performance.  It is a company that seeks to create value through delivering a highly analytical approach to leveraging technology within the context of an organization’s mission.

So, what does Mr. Buffett’s investment infer?  From my perspective, it clearly and emphatically states that Buffett sees value and growth potential in finding new, innovative approaches to delivering value to customers in broad markets.  That’s what IBM delivers.  For entrepreneurs, that’s what Performance Transformation, LLC™ delivers.  It isn’t about perfecting your SEO, or expanding your social networking (although each of these may be a component of the greater strategy).  It is about taking a strategic approach to aligning and leveraging your organization’s core competencies to maximize growth, productivity, and profitability.  IBM does this by seeking ways to optimize the use of technology.  Performance Transformation does this by helping clients optimize their human talent and engagement.

The takeaway for me is Buffett sees that the business opportunities for today and tomorrow exist just below the surface in existing companies.  That there is still value to be mined from many of the resources companies already have on hand.  For me, Mr. Buffett’s investment is an endorsement for taking a fresh, innovative approach to business as usual.  Of being more strategic in our thinking.  Of looking for new ways of creating value for our customers and prospects.  Of emphasizing leadership development and working smarter.  Looking around, I think we can all agree, there’s plenty of opportunity for improvement.

© 2011, Terry Murray

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November 3, 2011 · 4:29 pm

The Crowd Funding Conundrum

Key Concept ~ The House of Representatives is scheduled to vote on legislation that would allow unaccredited investors to make equity investments in privately held, small startup companies.  If passed, will this be a boon for liquidity in small businesses or might it introduce unforeseen complications and a new era of wholesale fraud?

The chatter in online, small business discussion groups has been escalating for some time.  Websites have popped up to promote opportunities for entrepreneurs to access private equity in a wholesale, one pass swoop.  And now, on Friday, the House of Representatives may vote on allowing non-accredited investors to make private equity investments in small, startup companies.  Currently, in order for an investor (that isn’t a friend or family member) to participate in a private placement memorandum the SEC requires that the investor has a net worth (excluding their primary residence) in excess of $2 million and/or an income of at least $250,000 per year for the past three consecutive years.  The apparent intention of these Security and Exchange Commission regulations is to protect unsophisticated investors from losing their life savings in exceptionally high risk investments that historically only deliver a positive return on investment in one out of ten startups.  The crowd funding crowd has come back with the argument that anyone can go down to the local casino, or the state lottery outlet, and squander their money there, so why should the government be trying to protect these potential investors from the democratization of investor-driven startups?

To fully understand this, let’s look at a few underlying factors that have brought us to this point and explore some potential implications if this bill is to become law.

What Brought Us Here ~ The Shift in the Private Equity Financing Landscape

I entered the startup community in 2001 as employee #2 at a firm that was to become BioPhile, Inc., out of Chartlottesville, VA.  As a spinoff from the Medical Automation Research Center at the University of Virginia, we secured our seed funding from a medical institute and a small collection of Angel Investors.  This was typically how seed funding, beyond the friends and family stage, was secured ten years ago.  Over the course of the last decade, however, the private equity landscape shifted.  First, Sarbannes-Oxley was passed, which raised the bar for accounting standards for publicly traded companies (thank you Enron, Arthur Anderson, and Tyco).  This inadvertently added approximately $1 million in administrative expenses for a typical initial public offering (IPO), the historical liquidity event for Venture Capitalists to capture their capital gains from their investment.  Add to this the volatility we’ve seen in the public trading markets since 2007 and a veritable choke point was introduced for IPOs, and accordingly, the Venture Capital world retreated to very large deals or deals where the exit strategy revolved around a potential merger or acquisition (M&A) by a larger, established company.

At the same time, individual Angel Investors began forming groups to pool their investment resources, spread their risk, and institute a more standardized approach for conducting due diligence.  As the VCs began abandoning the market space they once dominated, the Angel Investor groups began migrating up the private equity food chain.  Once the source of seed funding, Angels now began looking at deals that were market ready.  Deals that would use their equity stake to commercialize the product while seeking a M&A liquidity event.  Angels began seeking a more rapid investment-to-liquidity cycle with more deals of smaller investments.  You can equate it on some level to a retailer that has embraced supply chain management to improve their inventory turns.  From the investor’s standpoint, it is an excellent strategy.

This shift, in combination with the credit crunch for small business loans, has created a liquidity vacuum at the seed funding stage for startups.  In many cases today, the critical driver in the creation of new jobs, entrepreneurship, must now bootstrap their way to the threshold of commercialization if they are to survive.

The Net Effect

The supporters of crowd funding are asking why this shouldn’t be the answer to filling this investment vacuum?  Well, in my experience working both sides of the street for the past ten years, I can honestly tell you that the vast majority of startups I’ve seen were not ready for prime time when they first sought investors.  Strategically, they simply hadn’t done their homework yet.  They were often going on false assumptions based upon passion and unfettered optimism.  Even the Small Business Administration reports that only 48% of startups even begin writing a business plan, never mind how many ever finish one.   I can also say I’ve never seen a startup fail due to the technology failing.  Research demonstrates when a startup fails you can trace the failure back to poor managerial execution more than two thirds of the time.  My question to the crowd funding crowd is who’s going to conduct the necessary due diligence on the technology, the market opportunity, the competitive landscape, and the startup’s leadership team’s business acumen to determine whether or not the potential investment has legs?

Even sophisticated, accredited investors miss these critical factors the majority of the time.  But they can afford to do so because they have the financial runway to incur this level of risk as part of their overall investment portfolio.  This may be one of those be careful what you wish for scenarios for the crowd funding supporters.  On one hand, yes, this may help drive innovation and job creation down the road.  But it also opens the door for unprecedented fraud to emerge.  Or at the very least, enable less than competent management to sustain the development of products and technologies that are poorly positioned for success.  Let’s not even get started discussing how a small company will administer the legal paper, hundreds, if not thousands of owner/investor relationships, or how this might effect the current investor threshold that automatically turns a private company into a de facto public company (and thus triggering the long, expensive shadow of Sarbannes-Oxley compliance to enter the picture).

Please don’t get me wrong, I’m not a fan of Big Brother government trying to tell me what’s good and bad for me.  I’m an adult and I can make decisions for myself.  I’m just concerned that crowd funding could become the financial equivalent of a flash mob, but with long-term consequences that may actually sustain inevitable failure at the cost of a more mindful approach to success.

© 2011, Terry Murray.

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October 17, 2011 · 9:16 pm

Building Your Market Presence, Brick by Brick by Brick

Key Concept ~ Getting your value proposition into the market is not a sprint, it’s a marathon.  Creating a mindful communication strategy is just the start.  Sticking with it, and executing with authentic intention and persistence can create a groundswell of visibility in a relatively short period of time.

As we turn the bend into the last quarter of 2011, we find the strategic planning season once again falling upon us like the colorful leaves of autumn.  It is a time of retrospection and reflection of what strategies are working well and those that may be best left behind.  Let’s face it, as intrinsically motivated entrepreneurs that are continuously looking forward, we often don’t take the time to fully appreciate what we’ve accomplished in the recent past and how these accomplishments are building our visibility and momentum going forward.

We at Performance Transformation, LLC™ began the year with the publication of my book, “The Transformational Entrepreneur ~ Engaging the Mind, Heart & Spirit For Breakthrough Business Success”.  This was no small feat, representing the culmination of more than two decades of real-world experience that took nearly three years to write and publish.  One must take into account, even the most highly publicized and promoted book can take upwards of nine months to gain traction in the book market.  And that’s what we’re starting to see.  Approximately six months after publication, we’re beginning to see how the cornerstone of our communications strategy is resonating strongly with its intended audience.  Entrepreneurs are embracing the book’s lessons and experiencing how, when these lessons are applied, their own success is accelerating at an unprecedented rate!

Here’s a synopsis of what we’ve experienced in just the past six months as a result of executing on our communications strategy:

We presented at the annual American Society for Training and Development Conference in May.

We’ve conducted nine interviews on both local and syndicated radio programs around the nation.  We’re about to schedule an additional eleven in the coming months.

Our value proposition has appeared in Forbes, on MSNBC, on The Investor Business Daily’s site, and on NewsBlaze.com, venues that have approximately 40 million views per month!  Our work has also been picked up by literally dozens of other local, business oriented websites around the country and the world.

Our articles are being published by larger and larger internet venues, most recently on AOL Jobs, which has nearly 4 million views per month.

“The Transformational Entrepreneur” is beginning to receive unsolicited book reviews, and positive ones at that (you should know, traditional publishers pay book reviewers and book reviewing companies to hawk their titles…it is a subtle manipulation of public opinion to drive book sales…most reviews are not independent, they’re paid for)!  The book reviews are beginning to be picked up by other sites as well.

In just a little over six months, our blog postings, press releases (which we employ judiciously), and published articles have enjoyed tens of thousands of unique views.  The top three sources of our traffic are Linkedin, The Wall Street Journal Online, and Google.  And we don’t even invest in Google Adwords or pay to be on any “lead development sites”!  Our search engine optimization is organic, based upon our cumulative activity on the web.

In just the past three months, we’ve been on the road a solid two months, conducting our workshops and programs in Florida, Colorado, Montana, and Hawaii.  We’re also forging partnerships with additional organizations in Florida, Missouri, Illinois, and New England for next year. 

My point is, you can do this too!  And for a lot less money than you may think.  The world is changing in unprecedented ways and your communications strategy must reflect this new environment.  The key is to hone your value proposition and execute from a position of discipline and structure while still being nimble in your thinking.  You’re welcome to drop us a line and we’d be happy to explore how our approach can help accelerate your market presence and resulting market traction as well.

© 2011, Terry Murray.

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