8 Deadly Wastes That Every Entrepreneur Must Avoid

Every entrepreneur I know is short on resources, including time, money, and skills. The last thing they can afford is to waste any of these, but in my mentoring and coaching activities, I see it happening all too often. Waste in a startup is any activity that absorbs resources, but creates no value or competitive advantage in the eyes of customers.

Much has been written about this subject in the world of manufacturing, stemming primarily from the 1990’s work by Taiichi Ohno, called the Toyota Production System (“Lean”). More recently, the concepts have been applied to the general business management context, in a new book by Certified Turnaround Professional, Thomas H. Gray, titled “Business Techniques for Growth.”

While his book goes well beyond controlling waste as an element of growth and success, I was struck by how relevant the waste points are for every startup and every small business. Thus I am morphing the points here, with specific focus on the entrepreneur, who would never think of themselves in the context of automobile manufacturing:

1. Offering too many products and services concurrently. In the startup world, this is often seen as a lack of focus. Trying to do too many things with too few resources, usually means the startup will not shine at anything, and will not survive the competition. That’s a deadly waste you can’t afford. My advice is to keep it simple, and do it well.
2. Inventory and features added too soon. Inventory is money sitting idly by, adding no value. For market changing products, build first a minimally viable product (MVP), and never build products for sale until you have real orders in hand. More features and inventory added early will be wasted as you will need to pivot to match the real market.
3. Bottlenecks to team productivity. Time utilization inefficiency is wasted time. Make sure you are not the bottleneck for your team. Many entrepreneurs insist on making every decision, and spend too much time working in the business, rather than on the business. The result is lower productivity all around. Hire real help and learn to delegate.
4. Lack of communication. Communication is the fuel that controls the speed of startups. Delays in sharing, or lack of communication from the top, result in time and effort wasted, adding no value to the business. As an entrepreneur, you need a visible business plan and weekly team meetings, so everyone is working on current issues and real goals.
5. Poor or too many business processes. Business processes can be your biggest time saver, or your biggest waste. Productive processes start with a plan, and end with metrics that measure value delivered. Entrepreneurs have to embrace creativity and change, yet move quickly with trained teams who can deliver repeatable processes.
6. Focus on activities rather than results. Too many entrepreneurs confuse action with momentum and results. Focus on the 20% of your important tasks that will deliver 80% of the results. Judiciously apply 20% of your energy where it will achieve 80% of the momentum you desire. Then always measure customer results, not work.
7. Defective products and services. Poor quality products and poor customer service are doubly deadly wastes. You lose the customer you paid to acquire, and the unhappy customer spreads the word to potential customers that you are spending marketing resources on, but will never win. Recovery efforts are wasted resource which rarely succeeds.
8. Underutilizing people skills. When people can do more than they are asked or motivated to do, the money spent on others doing that work is waste. The solution is to maximize your own staff productivity first. Recognize and reward the people who excel, provide training, and challenge the team to invent new methods for significant change.
Entrepreneurs and small business always operate on the edge. There is no cushion. Waste means death. Are you as an entrepreneur really ready to deal with the new technology, new regulations, and a new workforce schooled in the digital age? How much time have you spent learning to use the practical techniques and new tools available? It won’t be wasted.
From Forbes

Ten Choices You Will Regret In 10 Years

“If only…” These two words paired together create one of the saddest phrases in the English language.

Here are ten choices that ultimately lead to this phrase of regret, and how to elude them:

1.  Wearing a mask to impress others. – If the face you always show the world is a mask, someday there will be nothing beneath it.  Because when you spend too much time concentrating on everyone else’s perception of you, or who everyone else wants you to be, you eventually forget who you really are.  So don’t fear the judgments of others; you know in your heart who you are and what’s true to you.  You don’t have to be perfect to impress and inspire people.  Let them be impressed and inspired by how you deal with your imperfections.

2. Letting someone else create your dreams for you. – The greatest challenge in life is discovering who you are; the second greatest is being happy with what you find.  A big part of this is your decision to stay true toyour own goals and dreams.  Do you have people who disagree with you?  Good.  It means you’re standing your ground and walking your own path.  Sometimes you’ll do things considered crazy by others, but when you catch yourself excitedly losing track of time, that’s when you’ll know you’re doing the right thing.

3. Keeping negative company. – Don’t let someone who has a bad attitude give it to you.  Don’t let them get to you.  They can’t pull the trigger if you don’t hand them the gun.  When you remember that keeping the company of negative people is a choice, instead of an obligation, you free yourself to keep the company of compassion instead of anger, generosity instead of greed, and patience instead of anxiety.

4. Being selfish and egotistical. – A life filled with loving deeds and good character is the best tombstone.  Those who you inspired and shared your love with will remember how you made them feel long after your time has expired.  So carve your name on hearts, not stone.  What you have done for yourself alone dies with you; what you have done for others and the world remains.

5. Avoiding change and growth. – If you want to know your past look into your present conditions.  If you want to know your future look into your present actions.  You must let go of the old to make way for the new; the old way is gone, never to come back.  If you acknowledge this right now and take steps to address it, you will position yourself for lasting success. 

6. Giving up when the going gets tough. – There are no failures, just results.  Even if things don’t unfold the way you had expected, don’t be disheartened or give up.  Learn what you can and move on.  The one who continues to advance one step at a time will win in the end.  Because the battle is always won far away and long before the final victory.  It’s a process that occurs with small steps, decisions, and actions that gradually build upon each other and eventually lead to that glorious moment of triumph.

7. Trying to micromanage every little thing. – Life should be touched, not strangled.  Sometimes you’ve got to relax and let life happen without incessant worry and micromanagement.  Learn to let go a little before you squeeze too tight.  Take a deep breath.  When the dust settles and you can once again see the forest for the trees, take the next step forward.  You don’t have to know exactly where you’re going to be headed somewhere great.  Everything in life is in perfect order whether you understand it yet or not.  It just takes some time to connect all the dots.

8. Settling for less than you deserve. – Be strong enough to let go and wise enough to wait for what you deserve.  Sometimes you have to get knocked down lower than you have ever been to stand up taller than you ever were before.  Sometimes your eyes need to be washed by your tears so you can see the possibilities in front of you with a clearer vision again.  Don’t settle.

9. Endlessly waiting until tomorrow. – The trouble is, you always think you have more time than you do.  But one day you will wake up and there won’t be any more time to work on the things you’ve always wanted to do.  And at that point you either will have achieved the goals you set for yourself, or you will have a list of excuses for why you haven’t.  Read The Last Lecture.

10. Being lazy and wishy-washy. – The world doesn’t owe you anything, you owe the world something.  So stop daydreaming and start DOING.  Develop a backbone, not a wishbone.  Take full responsibility for your life – take control.  You are important and you are needed.  It’s too late to sit around and wait for somebody to do something someday.  Someday is now; the somebody the world needs is YOU.

From Mind Unleashed

What Entrepreneurs Love (and Hate) About Running a Business

While there are a variety of things that entrepreneurs love about owning a business, there are nearly as many that they despise.

Running your own business tends to be a love-hate relationship

While there are a variety of things that entrepreneurs enjoy about owning a business, there are nearly as many that they dislike, according to a new study from TD Bank.

When it comes to what they love, nearly all small business owners agree that flexibility and control is the best part about owning their own business. Specifically, 96 percent of those surveyed said that's what they love most about owning a business, with 44 percent reporting that's what prompted them to start their business in the first place.

"A lot of [new business owners] become entrepreneurs so they can be their own boss, control their work hours and find that perfect work-life balance," said Jay DesMarteau, TD Bank's head of small business.

Among the other parts of owning a business that entrepreneurs' relish include talking with clients and customers, filling product orders and performing services, making sales and setting appointments.

However, not every aspect of running a business is pleasant. Bookkeeping was the least favorite task for almost half of the owners surveyed, with marketing the business and banking and handling finances tied for second-most hated tasks.

In addition to what they dislike about running a business, there are three other things keeping small business owners up at night: Money and finances, business management and business growth.

While they might enjoy the flexibility that owning a business affords, it doesn't mean entrepreneurs aren't putting in their hours. The study revealed that nearly half of small business owners work more than 40 hours per week, with 40 percent working between 40 and 60 hours.

If they could impart one piece of advice to those thinking about starting their own venture, nearly half of those surveyed said having a well-thought-out business and financial plan is the top tip they would offer.

The research was based on surveys of 500 U.S. small business owners. Included were small businesses with less than $5 million in revenue, and less than 100 employees.

From Business News Daily

India has second-highest number of shadow entrepreneurs in the world

For every business that is legally registered in India, there are 127 shadow businesses that are not.  

India has the second highest number of shadow entrepreneurs in the world.

For every business that is legally registered in India, there are 127 shadow businesses that are not.

Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register their businesses.

This means that they do not pay tax, operating in a shadow economy where business activities are performed outside the reach of government authorities.

Researchers at Imperial College Business School have found that a large number of shadow entrepreneurs are operating in India who aren't registering their businesses with official authorities, hampering economic growth.

In a study of 68 countries, Professor Erkko Autio and Dr Kun Fu from Imperial College Business School found that after Indonesia, India has the second highest rate of shadow entrepreneurs.

While Indonesia has a ratio of 131 shadow economy businesses to every business that is legally registered, India has 127.

Philippines have 126, Pakistan has 109 and Egypt has 103 shadow businesses to every legally registered business.

This is the first time that the number of entrepreneurs operating in the shadow economy has been estimated.

Experts say the shadow economy results in loss of tax revenue, unfair competition to registered businesses and also poor productivity - factors which hinder economic development.

As these businesses are not registered it takes them beyond the reach of the law and makes shadow economy entrepreneurs vulnerable to corrupt government officials.

The researchers suggest "if India improved the quality of its democratic institutions to match that of Malaysia for example, it could boost its rate of formal economy entrepreneurs by up to 50%, while cutting the rate of entrepreneurs working in the shadow economy by up to a third. This means that the government could benefit from additional revenue such as taxes".

The study says that business activities conducted by informal entrepreneurs can make up more than 80% of the total economic activity in developing countries.

Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.

The UK exhibits the lowest rate of shadow entrepreneurship among the 68 countries surveyed, with a ratio of only one shadow economy entrepreneur to some 30 legally registered businesses.

The researchers also found that the quality of economic and political institutions has a substantial effect on entrepreneurs registering their businesses around the world.

Professor Autio said "Understanding shadow economy entrepreneurship is incredibly important for developing countries because it is a key factor affecting economic development. We found that government policies could play a big role in helping shadow economy entrepreneurs transition to the formal economy. This is important because shadow economy entrepreneurs are less likely to innovate, accumulate capital and invest in the economy, which hampers economic growth."

The researchers suggest that shadow entrepreneurs are highly sensitive to the quality of political and economic institutions.

Where proper economic and political frameworks are in place, individuals are more likely to become 'formal' entrepreneurs and register their business, because doing so enables them to take advantage of laws and regulations that protect their company, such as trademarking legislation.

The study said "We investigated the influence of economic and political institutions on the prevalence rate of formal and informal entrepreneurship across 18 countries in the Asia-Pacific region during the period 2001-2010. We found the quality of institutions to exercise a substantial influence on both formal and informal entrepreneurship. One standard-deviation increase in the quality of economic and political institutions could double the rates of formal entrepreneurship and halve the rates of informal entrepreneurship. The two types of institutions had a complementary effect on driving entry into formal entrepreneurship, whereas only direct effects were observed for informal entry. Institutions exercise an important influence on individual and firm-level strategic choice, and consequently on the type and form of the resulting economic activity such as entrepreneurship".

Informal entrepreneurs trade legal products and services, yet do not apply for business registration or file any incorporation documents with government authorities. The phenomenon of informal entrepreneurship is seen as a potential driver of job growth and economic development, especially in developing countries.

A recent survey by ILO found that employment in the informal sector provided, on average, approximately 40 % of non-agriculture employment across 39 low and middle-income countries. The informal sector accounts for close to half of all non-agricultural employment in Sub-Saharan Africa, 51 % in Latin America and Caribbean region, and the highest rates, 58 %, are observed in South and East Asia.

A large share of these would qualify as informal entrepreneurs. Informal entrepreneurship also speaks to another important issue for less developed countries, that of poverty. Nearly 1.3 billion people remain in extreme poverty (defined as a daily income of less than $1.25), many of which live in Asia and the Pacific region.

The Imperial researchers said "In this study, we argue that informal sector entrepreneurship, poverty, and inequality are conditioned by a country's economic and political institutions. Non-inclusive political and economic institutions can engender and perpetuate inequality and aggravate poverty. The institutional qualities of a society and its economy — such as economic freedom, the presence of policies that condition the operation of private sector, and institutions regulating the balance of political power and the structure of the bureaucratic system — play an important role in either facilitating or inhibiting economic growth and alleviating poverty".

From Times of India

Program turns beggars into successful entrepreneurs

UPLIFTING LIVES: Coordinator S. Mammu receives a check for the goat-farming project from IFIB executive Peter Chalakkal in the presence of Mamoon Al-Azami, left, and IFIB Secretary-General V.K. Abdul Aziz. (AN photo)

Islamic micro-finance, which is based on profit-sharing and does not charge interest, can play a significant role in alleviating poverty and transforming the poor into successful entrepreneurs, said Mamoon Al-Azami, a senior community development specialist at the Jeddah-based Islamic Development Bank (IDB).

“Nobel Laureate Mohammed Yunus introduced a new type of micro-finance through his Grameen Bank, inspired by IDB President Ahmed Mohammed Ali,” he said. 

“The initiative was aimed at turning beggars into salespersons. He gave them toys and other merchandise worth $5 to $10 and told them to sell them. It was a big success,” he said, while launching a seminar organized by the Indian Forum for Interest-Free Banking (IFIB). 

When Grameen launched its beggar-lending project, Yunus expected 1,000 or so beggars to participate, but 100,000 joined almost immediately and within two years, more than 25,000 stopped begging completely after becoming successful door-to-door salespersons. 

“The project not only helped in protecting the honor of these people, but also made them self-reliable,” he said.

In his keynote speech, Al-Azami told community leaders to work together to improve the condition of their societies instead of depending on others, including governments and politicians. 

He emphasized the role of Islamic finance in strengthening real economy. 

“Islam has encouraged lending, not to make money through interest, but to enhance social cooperation, cohesion and harmony.”

V.K. Abdul Aziz, secretary-general of IFIB, gave a presentation on the participatory micro-finance scheme. 

“It offers financial services to people who are denied access to the financial market and empowers people who can pursue projects with their own resources, and who lack assistance, subsidies and dependence.”

“It provides financial services to those who are traditionally non-bankable, mainly because they lack guarantees against a loss risk,” he said.

In the spirit of Islam that goes beyond mere profitability, this new financial system aims to maximize social benefits as opposed to profit maximization, said Aziz, a researcher on Islamic banking and finance.

“Micro-finance is a very flexible tool whose models can be replicated, but must be tailored on local socio-economic and cultural characteristics,” he said.

Speaking about IFIB’s goat farming project in Kerala, S. Mammu, a barrister and social worker, said it would not only solve the financial problems of the poor farmers, but also help investors make profit. 

Under the pilot project, five goats each have been given to 50 families regardless of their religions worth a total investment of Rs1.2 million. 

The beneficiaries will return three goats and their kids to the facilitator, who will sell them at local market price and distribute 33 percent of the profit to the financier, 33 percent to the farmer, 23 percent to management and 11 percent to the monitoring committee.

From Arab News

A Non-Depressing Story About Executive Pay

We didn't always make lots of money.

Photo by Emmanuel Dunand/AFP/Getty Images

How much do startup founders pay themselves? And how much should they pay themselves if they raise money from investors?

Career research company 80,000 Hours estimates that founders going through the Y Combinator accelerator program pay themselves about $50,000. If they go on to raise more money, that salary can double. If the startup flops, $50,000 could be the highest salary a founder makes.

"During the Y Combinator program, they use only a one-off seed investment from Y Combinator of $120,000 to pay living and business expenses," 8,000 Hours' Ryan Carey writes. The investment is expected to cover everything, including a small salary for the founder. "If they go on to receive angel investment [they] can pay themselves about $50,000 per year. With venture capital funding, this tends to increase to about $100,000 per year."

The most successful Y Combinator founders can make much, much more. Carey estimates that the founding teams of Dropbox and Airbnb are worth $6 billion combined, for example.

Carey's salary estimates for early-stage startups up with a Quora post on a similar topic. A founder who raised $500,000 used the Q&A site to ask, "Is a $100K salary too much for an angel/VC-backed startup co-founder?"

Foundry Group's Brad Feld thought a six-figure salary was too high for an early entrepreneur. Another person agreed, stating that while $100,000 is below what an engineer should make, it's "certainly above market for a seed-funded startup."  

"Salary should be sufficient to not create hardship—no sense in losing productivity because you can barely eat," this person concluded.

The general consensus seemed to be that a $50-$75,000 salary was reasonable. "$50K/year is plenty. Some families live on that," says VC Sean Owen.

David Rose agrees. "In my experience, that fact pattern (a pair of founders, $500K seed round) would typically see them each taking $50-$75K, at least until they either start generating revenue, or raise a larger round."

When you're profitable, you can start paying yourself a more impressive salary.

"An adviser once told me to keep the total annual figure (including taxes) under $100k per year until you're profitable, and VCs have seemed to accept this," another says.

From Slate

Why Entrepreneurs Should Try To Kill Their Startup Ideas

What's the best way to ensure your startup will succeed?

According to David Gomel, co-founder and co-CEO of Finom (a new matchmaking site for consumers and investment advisors), entrepreneurs can test their success by doing everything they can to do in their ideas.

"Instead of trying to figure out how to make an idea work, I think a lot of entrepreneurs would benefit instead from trying to kill their idea," Gomel told Benzinga.

"The success in their endeavor is really figuring out how your idea cannot work," he added. "We spent a lot of time going through every little unknown point early on, and taking meetings, and tried to figure out why [Finom] wasn't possible. We failed at that mission, but it gave us a lot of conviction that we could do something with this."

Finom may not be the norm. But if entrepreneurs succeed in killing their ideas, they shouldn't be too disappointed.

"The flip side of that is that if you do succeed in killing your idea, you've saved yourself a lot of money and time," said Gomel. "That's very important."

Be Out Of Synch

Entrepreneurs shouldn't necessarily work with individuals who are always in synch with each other.

"I think sometimes being out of synch with your partners is a good [thing]," Gomel noted. "It's easy to kind of always want to have your peak moments at the same time as the others. But sometimes it's helpful to have each other to fall back on when you're not at your peak and vice versa."

And it's not just about having different skills. Gomel said startups could also benefit from having individuals with different personalities/temperaments as well.

Shift Your Focus

When building Finom, Gomel said he and his partners tried to focus on an exciting area that was (up until now) mostly ignored by entrepreneurs.

"FinTech is [now] one of those spaces that a lot of people are putting a lot of time into," he said. "It's exciting to be in a space where there's a lot of attention."

Believe In Your Mission

Lastly, Gomel said, it's important for entrepreneurs to "really believe" in their mission.

"There are ups and downs through entrepreneurship, whether you gotta go through regulatory hoops or figure out financing or operations aren't working exactly as you expected," Gomel explained.

But when you have a "clear sense of purpose," Gomel concluded, it's easier to fall back on that -- as opposed to a business without purpose and without passion.

From Benzinga