Frequently Asked Questions
| Finance |
| What is the difference between Venture Capital, Bootstrapping, and Angel Investors? A client asked me this week: “A subject I have no knowledge or experience of - Venture Capital. Cash or credit could free up a whole lot of time for me to concentrate on the 'right' things. Is VC an option and if so what’s involved?” The answer: Typically, financial resources for start-up or expansion fall into three broad categories: venture capital, bootstrapping, and angel investors. Each has unique qualities, advantages, and disadvantages. Venture Capital (VC), is generally an investment by a large venture capital firm with access to funds in the millions or even hundred millions of dollars. The VC firm invests in your business with the understanding that in a few years you will sell or go public (with an IPO). At that point they recoup their investment. In general, VC is for large businesses with anticipated revenues in the tens of millions. The primary advantage of VC involvement is that you get cash, potentially a lot of it, right away. You get paid properly, and the money is not a loan so there is no debt servicing diverting resources away from growing the business. The biggest disadvantage of VC investment is that you don’t have control. These firms are single-minded in their model: evaluate, get in, sell it off, get out. If you want to build a company, keep control, and generate an income for a number of years, VC is not for you. Bootstrapping is the opposite of VC. Bootstrapping describes any way you can raise start-up or expansion capital from your own resources. This can include money you have saved, working capital taken directly from your revenues, money borrowed from friends and relatives, and even money borrowed from formal lenders. The primary advantage of bootstrapping is control. It’s your money (or your debt!) and you get to do with it what you want. When you sell the business, the proceeds, after paying off any debts, are all yours. Bootstrapping is consistent with a business you intend to ‘stay in’ for the long haul, where the primary goal of business revenues is an income for you until you are ready to sell or retire. The main disadvantage to bootstrapping is that cash flow is almost always an issue, making growth a challenge. Also, since borrowing money falls under the category of bootstrapping, debt servicing can become a revenue-consumer, throttling cash away from growth. Bootstrapping requires careful planning, and patience. Angel Investors are in some ways a variation of venture capital. Angel Investors are individuals with access to significant cash to invest in your business. The difference with Angel Investors is that they are not necessarily looking for control or that short term high yield return from a sale or IPO. An Angel Investor will make an investment based on an interest in your business or area (high tech, or restaurant, for example), personal relationship, or for a share of dividends, and/or long-term returns when you do sell the business. In many cases, Angel Investors invest for a combination of all of those reasons. The great advantage of Angel Investors is that you get an injection of cash for start-up or growth, but retain control. The exact degree of control depends on the percentage that Angel Investors hold of your company, and the details of any management agreement you have drawn up with them. The disadvantage of Angel investments are that the relationships can be tricky to manage, and are often unstable. They are dependent on the good will of the parties involved and/or the quality of the shareholder agreements between the investors and the company in areas like management rights and shotgun/sell clauses, etc. A good business lawyer like Scott Ritter Law Corporation is absolutely critical if you are looking at Angel investments, or any plans for raising capital through investors. In the end there is no ‘right’ answer when looking for sources of start-up or expansion capital. Work with your legal and financial team to determine the best avenue for your business, and work with your business coach to make sure that the route you choose is consistent with your growth plan. |
| Human Resources |
| I am really worried about staff turnover. What is the best way to keep good employees? There are a number of strategies to reduce turnover, and improve retention. Probably the top two are clear expectations and enlightened self-interest. More than any other area identified by employees as the main source of frustration is a lack of clarity around expectations. Employees often feel that expectations are contradictory, unsupported, and poorly communicated. What they would like are expectations that are consistent across the entire organization, that clearly contribute to the success of the organization, and that are clearly communicated to new employees and regularly reinforced. To retain your employees, work with them from the moment they start with you (heck, make it part of the interview process!) to help them understand what the mission and goals of the organization are, and how they can do their part to contribute to the success of that mission. And then apply those expectations consistently and often. I have clients ask me a lot, "How often do I have to tell them what our mission and goals are... Shouldn't they get it after the third time??" The answer is "How important is that mission? Because if it's truly important you repeat it a 1000 times if necessary." Is your number one goal in this to make a point ("You people really don't listen, and here's proof!") or to see your mission fulfilled? Because if it's the latter, then be prepared to be a broken record. Also, be prepared to find as many ways as possible to make the connections between your expectations and the success of the organization. The more people understand, the more they will buy in. And finally, find every way you can to provide opportunities for employees to make their own contributions to the ways you can fulfill your mission. There isn't much that motivates employees more than having an expectation that they came up with. Ownership is powerful. A second key to retention is to invoke enlightened self-interest. This is a fancy way of saying, find ways to make the goals of the employee consistent with the goals of the company. This is also described as a win-win strategy. If you can find ways, working with your employees again, to make them successful while you are successful, your buy-in and retention will improve dramatically. Make your employees want to hitch their wagon to your train. There are many ways of doing this, but one way that particularly appeals to Gen Y employees is career development. If employees believe that by working for you and with you, they are advancing their careers, they will stick around. The moment they think they are in a professional dead end, they will be looking for the exit sign. Professional development opportunities, coaching (in-house or from your business coach), peer mentoring, job shadowing, etc. are some key ways to retain especially younger employees longer. To really make sure that your boat is as leak-proof as possible when it comes to employee turn-over, work with your business coach to build a stronger organization, to maximize leadership values, and to raise your team's commitment to your mission and vision. A good coach will also refer you to a Human Resources specialist like Ginger Brunner at Dynamic HR Solutions Inc. for a really in-depth review of your HR possibilities. |
| Technology |
| Do I need a smartphone for business? 1. Do I need a smartphone for business? How would you answer these questions: • Do you work away from the office? • Do you have a schedule out of the office that changes week-to-week? • Are you in sales or any form of time-sensitive client support? If you answer yes to these, then you need a Smart Phone Information Sources http://cell-phones.toptenreviews.com/smartphones/ [excellent overview] http://www.smartphonetoday.com/ [important global resource] http://resources.bnet.com/topic/smartphone.html [bnet is a fantastic business resource] http://na.blackberry.com/eng/ [tech porn] http://www.apple.com/iphone/ [more tech porn] http://smartphones.about.com/updated.htm [about.com is an excellent general info resource] 2. So I need one. Which one? To answer that question, take a look at the following from http://cell-phones.toptenreviews.com/smartphones/: * Productivity/ Lifestyle Tools — Smartphones act as life management devices and include organizing features like calendars and task lists. Most sync with home computers allowing for document viewing and editing. They also include practical tools like calculators, map applications and GPS. Third-party apps are becoming a key component of a smartphone, allowing the user to customize their phones to support their lifestyles. * Voice/Text Features — Smartphones for business should include all typical cell phone features including speakerphone, three-way calling, voice dialing, call waiting, etc. * Internet Features — Most smartphones can access the internet and display full webpages. Top ranked phones will connect via Wi-Fi and 3G for faster browsing speeds. * Multimedia Features — The best business cell phones have at least a 2 megapixel camera with zoom features and the ability to play and record audio and video. * Technical Specifications — The most practical smartphones are compact, include good input and display options, and enough battery life to last through a full day’s work, and beyond. Based on these features, there are at this point only two manufacturers to seriously consider: RIM (BlackBerry) and Apple (IPhone). A number of other manufacturers are making better and better smartphones (Motorola, Palm, HTC, Google, etc.) but new platforms can take years to develop the productivity applications, other apps, security software, and synchronizing software for your computer, that you need to really get the most out of your phone. Which one you choose between the IPhone and Blackberry, is a pretty academic question. You will find rabid fans on both sides if you look. The new IPhone is almost as secure as a BlackBerry for all but the most sensitive (read government etc.) environments. Both have advantages and disadvantages. For me it comes down to deciding exactly which kinds of applications I would use the phone for (email, camera, messaging, productivity, etc.), and determining if the phone has the software and features for that application. Then you should actually try the phone out. Find a friend who has one and talk to them about it while you hold the phone and type on it etc. The keyboards, screens, user interfaces, etc. are all quite different, and responses to them largely based on personal preference. 3. What can they do for me? Think of your smart phone as a digital Swiss Army Knife You can use smart phone for telephone calls, email, and/or texting. But it is also a powerful tool that can make your professional life easier in many other ways. Here are some tips and tricks: • Unload your head – Load up your phone: calendars & tasks • Use your phone’s unique ring-tones or signals for different events. Want your phone to remain silent unless a key client or family member phones? You can set your phone to do this. • Want to get a discrete signal that your meeting hour is almost up? Set your phone’s clock or timer to vibrate at a certain time. • Want to remember where you parked your car at the airport? Take a snapshot of the area with your phone’s camera. • Record voice memos when you don’t have the time to write a note • Calculate tips or bill splits at lunch. • On some smart phones you can now find an address or retrace your steps using built-in GPS. • You can store and update shopping lists, check out movies playing in your neighbourhood, and access Facebook, YouTube, and Twitter on your phone. 4. How do I stop the madness of version creep? Did you know that your phone can synchronize your contacts, calendar, tasks, notes, and more, with your computer? If your phone and computer have Bluetooth built in, you don’t even have to plug anything in. Increasingly through off-site servers and Bluetooth, you have the ability to store key word processing, spreadsheet, PDF and other documents on your phone as well. By syncing your computer with your phone, not only will you keep your PIM items up to date, but you have created another form of back up! 5. I’m feeling insecure! What are the top security concerns? You will read a lot about maintaining the security of your data, especially contact lists and emails, on your smartphone. For many medium to large enterprises, this concern is legitimate, and there are a number of security precautions that need to be taken. For smaller businesses, theft is a much bigger concern than getting hacked. For anyone, large or small, identify theft is also a concern. Again here, actual theft of your phone is a bigger concern than getting hacked. Solutions: If you are part of a larger organization, there are (or should be!) security protocols and precautions put in place by your IT department. For everyone, the best precaution against identity theft is prevention. Limit the amount of information on your phone. Storing things like passwords and PIN numbers is not a good idea. As well, many areas of your phone can be password protected. While passwords can be a pain to have to type in, if you have security concerns, they are necessary. For smaller businesses and individual professionals here are a couple of thoughts: • Theft If your smartphone is stolen, the best thing you can do is 'bomb' your own phone. This is using a remote program to access your phone and wipe all of the data from it. This is another reason to choose a phone from either Apple or RIM. Both platforms have apps that allow you to set up a way to track your phone by GPS and/or send a command to wipe the phone clean as soon as you realize it has been stolen. Having key areas of your phone password protected also makes accessing data tougher for thieves. This is important as you may not realize your phone is missing for some time, and some phones take longer to erase remotely than others. • Hacking For most of us, having our phone hacked is a remote possibility. If that is a concern for you however, the most vulnerable areas of your phone are, or will be, your Bluetooth & WiFi connections, incoming email & sms messages, and apps your install on your phone. Some solutions: - limit the amount of sensitive data on your phone - turn off your Bluetooth and WiFi when you are not using them - download apps only from trusted sources - work with your IT department to make sure your phone has the latest security patches installed, and that all the security features are turned on. |
| The Heart of Independence (tm) |
| What are the four fundamentals at the heart of being truly independent? True independence is living a life where you initiate the overwhelming majority of your actions. True independence is about being the cause of action rather than being a reactive effect. True independence is causing events to happen rather than reacting to events that happen to you. If you want to initiate and lead rather than react and follow the fundamentals of Time, Space, Money, and Relationships are aligned with intention and executed with commitment. Make sure your time is managed and focused on activities that sustain your growth towards independence. Make sure the spaces around you are organized and designed to maximize your energy and efficiency. Make sure that your finances are managed in a way that support your increasing independence. Nurture relationships that energize you, that support your independence, and that initiate or support increasing independence in others. Time, Space, Money, and Relationships are the heart of a truly independent life. A coach can support you in aligning these four fundamentals through a commitment to acting with intention. As a coach I will work with you myself, and also add specialists in each of these areas to your network of support and accountability. One such specialist is Sheila Zeller of Open Connections. She is an extraordinary redesigner who will work with you to maximize your home and office spaces for organizational, emotional, and aesthetic values. With her support, your working and living spaces will energize you, and support your work in becoming truly independent. |
All content © Clemens Rettich Business Coaching, 2010 • Information subject to change
