The Truth Hurts Less... When you hear it earlier...

No one wants to hear "your idea is terrible", "that's not a business it's a hobby", "no one will ever invest in you, at least not now".

These are harsh things to hear and even harder to say. Investors and adviser's don't want to crush the dreams and passion of future entrepreneurs, however real entrepreneurs won't get discouraged by this honesty, they will be driven by it. If you don't believe in your vision enough to take criticism and keep moving you don't have the drive to make it successful anyway. I won't apologize for this statement as it is true. All businesses go through tough times and it is easy for the most confident and driven of individuals to get discouraged. If you can't push back on adversity you won't succeed.

Too often we want to encourage entrepreneurs and young thinkers to make them feel like they are smart and their idea is great. I believe in positive reinforcement for what is done right I also believe in honest harsh criticism for what is done wrong.

There are a lot of great ideas that don't make good businesses. I can't tell you how many times I've heard young entrepreneurs say "they loved it". My response is "will they pay for it?" We have all heard a friend talk about a concept that sounds amazing, like it can't fail... but that's because we haven't asked the tough questions. We bought into the passion and see that the concept does make sense but never stop to ask "how, how much, how long, how many, who, who is..."

• How: How are you going to execute?
• How Much: How much will it cost to execute?
• How Long: How long before you can start selling?
• How Many: How many customers do you need to be profitable?
• Who: Is your competition?
• Who Is: Who is working with you?

What is the point of all these questions? To determine if you have a plan of action for your idea and if it is a legitimate business or just a cool idea. One of the biggest mistakes entrepreneurs make is not surrounding themselves by people who know more, question often and don't believe the hype.

Hire someone you would want to work for, surround yourself with people who will challenge you, don't get discouraged... listen and learn.

Your idea may be a terrible business, but if you learn how to conduct due diligence on your own ideas you'll save yourself time and energy... and when you come up with that idea that does make a great business you'll be ready!

Where can we begin today?

We hear so much about all of the renewable energy and infrastructure heavy energy solutions such as solar, wind and natural gas. The question I have to ask is "are these the right first steps?" I want to begin with a few fundamental business questions.

1. How much will it cost?
2. How long will it take to implement?
3. What's the payback period?
4. Where does the proposed solution fit into the "investment-return" hierarchy?

When I do this what I keep coming back to is a strategy that calls for conservation first, alternative sources second. I will get to what I mean by conservation shortly... because I don't mean turning off your lights. The reason I believe conservation first is the right strategy is, assuming there is still a capital investment, the investment is lower and the payback period is much faster. In addition, reducing the amount of energy needed;

1. Reduces the costs for the alternative, infrastructure heavy sources because there is a decrease in energy demand so fewer solar farms, wind farms or shales need to be developed or mined
2. Makes the potential for increased energy costs more palatable to consumers and business owners (save 30% today, pay 10% more tomorrow)... a net savings of 20% is easier to swallow then an increase or a new tax
3. Puts additional money back into the economy today through realized energy savings

Now, what I mean by conservation is true conservation strategies such as insulation or automated central air and hot water systems. While light bulbs and the numerous other smaller solutions are valuable, I just believe that it is not enough of a motivation for mass adoption "$5 light bulb, $.50 light bulb, how much will I save with the $5 light bulb?".

The best example I can give in a natural progression is for the energy and solar consultants out there. The average homeowner can't afford a $20,000 + installation regardless of the tax breaks. However, what if you could offer a simple, $3,000 solution that delivers energy savings of $1,000 per year?

We are so focused on what we all want to sell, we aren't thinking of what makes the most sense to solve the problem. We know the objectives, reduce energy usage and find alternative sources.

Why Businesses Fail

...Mismanaging Money.... All businesses adjust, innovate and reorganize or restructure as their respective markets and the economy force change. The question is not if but when, how and on what scale. The problem is that many businesses do not have a financial plan to leverage new opportunities or adjust for economic shifts that threaten their survival. They simply manage their day to day, try to meet monthly bills or create products that have significant short term financial upside with no eye or concern for the overall risk-reward balance (AIG...) This mismanagement, as we have most recently seen, is not exclusive to a certain size or sector. The reason you hear the term "cash is king" so frequently is the importance of available capital, not debt financing but cash. The reason cash vs. debt financing is so important is because;

1. The opportunities created by external circumstances come and go very quickly. Having the capital on-hand to take advantage of these opportunities is the key to making the most of market and economic shifts
2. The weight of carrying heavy debt loads can run a company under. When the market is good carrying a little debt is considered part of doing business, when the market conditions are bad, ranging from a market crash to a major competitor, the ability to adjust prices, provide additional benefits/services or withstand a recession comes down to gross margins

Financial and business management must go hand in hand. It is all about strategy; a strategy that prepares for market shifts and the overall business objectives of revenue and market share growth.

Every financial plan should have 3 components;

1. A rolling 1 year financial plan that is reviewed and updated each month
2. A historical financial analysis by month, year and season with notes as to special conditions that impacted revenues or profits
3. A 5 year projected growth financial plan showing the revenues and capital required for the growth objectives

In the end, it is all about the numbers. They will tell you everything about your business, your customers and the market as a whole.

Consumer Engagement... What does it really mean?

Consumer engagement all too often is defined as "a means to a sale". But that is not what engagement is all about. Think about the steps in a successful, committed relationship.

1. Dating: All fun, mostly chemical with no ties, commitments or loyalty.
2. Boyfriend/Girlfriend: The decision to be exclusive. This decision usually stems from the belief that there is the potential for something more, that the partner has special qualities not easily found elsewhere. There is a commitment here, but the potential to find something better is still a real possibility.
3. Engagement: Showing a willingness to commit exclusively to one partner for a lifetime. This requires trust and a feeling of equal participation in the future of the relationship.
4. Marriage: The binding commitment to one partner for life.

I know that the divorce rate is very high, but focusing on getting to the point of engagement is the key as there are very few things that are truly permanent in this world.

To truly engage with any product or person there must be trust; trust that the reward is greater than the risk and trust that there is the ability to have an active role in the future of the relationship. Trust comes down to the person or brand; if you can't deliver, don't make the promise. If you can deliver, engage the consumer in the vision. Make them part of the decision making process and they will be a part of the process, rather than just a potential customer.

Viral marketing stems from consumer engagement. People share what they are most interested in; themselves. Allow your brand to become part of a desire to interact, enhance social status, improve health, etc... and you will find consumers sharing your message as if it were their own.

Facebook, the iPhone.. all of these are but mere channels to reach consumers. So the next time you think about how many different ways you can spam potential customers STOP! step back and ask, what message would I share willingly with my friends and family?