Month: October 2022

A lot of people want to become entrepreneurs but aren’t sure how to go about it- especially when their idea is doing something completely different than what they’ve done in the past. 

I’ve seen this as someone who counsels small businesspeople, as a former SCORE mentor of wannabe entrepreneurs, and as a mentor at Workbox. 

Many of the people I counsel are just starting out.  Some have lost their jobs, some have jobs but are unhappy.  A very large number of them want to start a business doing something completely different than what they have been doing. 

Some are civil engineers who want to run a restaurant.  Some are graphic designers who really want to build a handmade soap business.  Some are financial planners who want to start a daycare. 

When you’re unhappy where you are professionally, it’s really tempting to throw the proverbial baby out with the bathwater. Wouldn’t it be refreshing to start over, doing something completely new & different?

Well, yes! But, creating a new business is a really difficult thing to do. Doing a 180-pivot to do something radically different is very, very difficult to do, especially on your own. 

You probably don’t know much about the industry you’re hoping to move to. There is often a steep learning curve to learn the new industry and understand competitors, pricing, and what customers want. 

It is quite difficult to start and build a successful business when you already know a LOT about that industry.  You have little or no credibility in this new field, your contacts and network are not built here.  And your insights into the customer mindset are probably more limited, too. 

I attempted this a few years ago — twice, in fact, and failed miserably both times. And in both cases, my attempts were really just pivots, not 180-degree turns.

The first was my brainchild to counsel businesses on exit or succession planning. I was a practicing corporate lawyer with a solo practice, and wanted to expand my offerings — especially into consulting and away from the pure practice of law. I thought this was a promising option.

I went through an extensive training course and got certified. Unfortunately, like many of these courses, they were very focused on cramming in all the subject matter you need (and to be fair, there IS a LOT to consider in business exit planning). However, they spent almost no time teaching students how to create a business out of this new expertise.

And so, not surprisingly, I floundered. My client base consisted of small entrepreneurs and startup businesses. They weren’t interested in talking about exit planning — that was way too far down the road for them! I also had a couple of larger corporate clients, but any succession or exit plans were not discussed at the level of my client contacts.

I tried speaking at Rotary Clubs and Chambers of Commerce, and they were receptive to conversations. But I was not a trusted advisor to these businesses, and so those business owners were not really ready to have the kind of probing conversations that real exit planning requires.

The people who were somewhat successful at adding this to their practice were the financial planners and accountants who already had built relationships with many of these types of more mature small businesses.

But in talking to them, it turned out they really struggled as well. The real problem with this type of offering was that it took a LOT of conversations and a LOT of time to convince even those clients to consider grappling with these issues. Not surprisingly, most small business owners are so busy working in the business, which is their baby, that thinking of leaving it and moving on was not really something they wanted to consider.

A second flop was an attempt to sell record management software to healthcare companies. I was approached by a company who knew I had worked in several healthcare companies, and thought I might be a good fit.

I wasn’t. Yes, I knew my way around pharma and medical device and biotech companies. But my connections were in the regulatory and sales and legal functions.

And it turned out that all of the decisions to evaluate this kind of product were initiated and driven by the IT departments. Where I had almost no connections. And really no credibility with them. I didn’t have a background in software or IT.

I gave up after several months of unproductive attempts at meetings.

Moral of my sad stories? Even pivoting too far from your wheelhouse can be very difficult.

My stories of course don’t necessarily mean you’ll fail. By all means, you should explore your dream. 

But I would recommend considering perhaps finding a job working for a while in the market you want to pivot to, if that is remotely possible.  If you want to open a restaurant, work in one or two for a few months.  If you want to start a daycare, work in one.  If you can’t afford to do that full-time, then do it part-time or in the evenings. 

If that’s not physically or financially an option for you, maybe consider buying a franchise in the field you want to move into.  At least with a franchise, you will be buying into a proven system of building a business.  And some of them actually prefer a franchisor who doesn’t come from that industry, who may have pre-conceived ideas about the best way to do things.

True, franchises are not for everyone – they require a healthy down payment, and because they have a proven system, they often don’t have a lot of room for creating your dream menu or your unique t shirt designs. 

If you can’t afford the down payment now, maybe develop a 3-5 year plan where your goal is to start putting away enough to be able to pay that.

But if neither of those options sound reasonable to you – either because of other life commitments or because it doesn’t fit with your dream, then my personal advice is to go back to the drawing board. 

That doesn’t mean starting and building a business isn’t for you. But you may want to try doing something a little closer to your area of experience and knowledge. 

Consider whetting your entrepreneurial chops by first pivoting in a smaller way.  If you’re an accountant in a larger firm, try being a freelance bookkeeper, or open your own little accounting firm.  If you cut hair for a chain, consider opening your own shop. 

Here, you likely already have the necessary credentials.  You know how this slice of the business world works.  You’ve seen from your past employers and competitors what works and what doesn’t.  You may even be able to convince some of your existing clients to follow you.

But whatever you do, think it through carefully! You’ll likely save yourself a lot of headaches and money!

Today I’m baring the soul of one of my (several) startup failures, in the hopes it will save some of you out there from becoming a statistic like me. 

I’ve talked before about the CB Insights research, looking at the reasons startups fail. They analyzed more than 100 failed startups, doing a detailed port mortem.  While the reasons businesses fail are probably inter-related,they concluded a whopping 42% of startups failed because there WAS NO MARKET NEED.  

This was BY FAR the largest reason stated for business failure.  29% said they ran out of cash.  I would have thought this was the main reason businesses failed, but that actually happened in less than 1/3 of the cases.  23% failed because they didn’t have the right team.

Now, almost HALF of businesses failing because there was no market  for their idea, their services, or their product is a pretty discouraging statistic.  Especially because it means that we as the entrepreneurs got too excited by our own idea.  And, it’s usually the most easily fixable thing.  Market research & market testing can often be done pretty inexpensively, if there’s a will to do it & be objective about it. 

But many of us are blind anyway.  And that was me several years ago, when I decided to pivot my offerings at Globalocity, my little consulting business.  I had previously focused on international expansion assistance, especially with helping companies find & manage foreign distributors.  But business was slow.  And meanwhile, I had connected with someone who had spent his entire career on indirect channels to market, but was at an inflection point [note: in hindsight, I should’ve asked a lot more questions about that inflection point…].  We struck up a friendship, and he suggested we collaborate together and go to market with a comprehensive “indirect channels to market” consulting offering. 

We knew we had the right expertise with our combined experience.  And we were convinced there was plenty of demand.  After all, we knew anecdotally that lots of companies were unhappy with their current distributors, and there was lots of research showing this as well.  Plus my new partner had consulted with many companies over the years, helping them improve their distribution programs.

But what we NEVER established was (1) whether people would pay to have someone come in and help them improve their distributor network, or whether it was just a minor irritant that they’d rather just leave alone (2) if they would pay, how that offering needed to pitched and packaged (3) who our ideal clients were (were they startups? Big companies? Global companies?) & in what industries? (4) how to make our combined expertise seem like the “go to” solution and (5) how to find these ideal clients. 

But while we had lots of leads and discussions, we could never close on any significant engagements.

So, we committed the cardinal sin I mentioned earlier – we never established there was a market demand for OUR services as we went to market with them. 

And In looking back, we also both committed another couple of cardinal sins – the wrong business model and also the wrong team. 

I realize now I was counting on my new business partner — with his long career of working in this area and having many, many successful consulting engagements – to be able to help answer all these questions and find clients. 

But that turned out to be a bad assumption, for 2 reasons:  (1) he had never sold these services directly, and (2) he had no real interest in selling these services directly. 

His business model over his long career was to align with a very large consulting firm, and do all their training and workshops on distributor management. 

They organized all these trainings, and my partner showed up, delivered the trainings (which were quite popular), and then the consulting company was nice enough to let him scoop up any consulting engagements that followed from the trainings. 

It was a VERY successful biz model for him for a long time.  But it wasn’t a sustainable model.  The big consulting company found the workshops harder and harder to fill as corporate travel & training budgets dried up, and eventually, they got out of that business altogether.  And they were out, my biz partner was completely out, too (hence the inflection point in his career that I should have explored further).]

I also had not realized how very different that business model was.  For one, he had the cachet of the big consulting firm’s name behind him. 

Second, they invested all the time and resources into organizing these workshops, allowing him to show up, collect a nice fee for the training, and scoop up any business that was generated. 

And, their lead generation process and the high cost of the seminar ensured that these people were pre-screened to be most receptive to making further investments in ther distributor network. 

Best of all, it allowed him 3 days (for which he was already paid good $ as the trainer) with these clients to help them fully understand all the work that was needed to implement a good distributor program, and positioned him as the natural go-to expert. 

We had none of that infrastructure.  We tried doing lots of blogs and webinars and podcasts, but it wasn’t enough education to push people over the buying hurdle.  We didn’t have the cachet, and instead of people primed to pay, we got a lot of people who mostly wanted free advice .  And ultimately, my partner really didn’t pull anywhere close to his share of the load, because he never wanted to be on the selling & marketing side – he only wanted to be on the “doing” side. 

You might wonder why we didn’t go to another training company, and we did think about it.  But the large conference/workshop industry is a shadow of what it used to be, and these companies no longer allow their trainers to scoop up any consulting opportunities that come out of the training.

And, my new business partner was firmly convinced that we didn’t need them — that his name and experience and success landing great paying clients would translate out on his own. Unfortunately, it didn’t. He could convert the leads once they were in his class, but it turned out he had absolutely no idea how to find and nurture leads along a pure consulting pathway.

Eventually, we ran out of cash and ideas.  And so, we feel victim to ALL of the top cardinal sins I mentioned earlier. 

It was a wonderful learning experience, but was a financial disaster, and was very discouraging to boot.

And all of these were preventable, if only we’d done some market testing, and if we had both had a clearer definition of roles.  May you learn from my mistakes!

I’ve shared in another blog posts the story of one of my startup failures. 

I’ve seen so many business partnerships splinter that I thought it was worth looking in more depth at the important aspect of putting together the right founding team.

When I decided to pivot my offerings at Globalocity, my little consulting business.  I had previously focused on international expansion assistance, especially with helping companies find & manage foreign distributors.  But business was slow.

  And meanwhile, I had connected with someone who had spent his entire career on indirect channels to market, but was at an inflection point [note: in hindsight, I should’ve asked a lot more questions about that inflection point…]. 

We struck up a friendship, and he suggested we collaborate together and go to market with a comprehensive “indirect channels to market” consulting offering. 

On the surface, it seemed like a good partnership. Between us, we had enormous expertise on successfully finding and managing distributors and agents.

And we knew from experience that lots and lots and lots of companies struggle with this.  After all, we knew anecdotally that lots of companies were unhappy with their current distributors, and there was lots of research showing this as well.  Plus my new partner had consulted with many companies over the years, helping them improve their distribution programs.

But what we NEVER established was (1) whether people would pay to have someone come in and help them improve their distributor network, or whether it was just a minor irritant that they’d rather just leave alone (2) if they would pay, how that offering needed to pitched and packaged (3) who our ideal clients were (were they startups? Big companies? Global companies?) & in what industries? (4) how to make our combined expertise seem like the “go to” solution and (5) how to find these ideal clients.  And while we had lots of leads and discussions, we could never close on any significant engagements.

So, we committed the cardinal sin I mentioned earlier – we never established there was a market demand for OUR services as we went to market with them. 

And In looking back, we also both committed the 3^rd cardinal sin – the wrong team. 

I realize now I was counting on my new business partner — with his long career of working in this area and having many, many successful consulting engagements – to be able to help answer all these questions and find clients.  But that turned out to be a bad assumption, for 2 reasons:  (1) he had never sold these services directly, and (2) he had no real interest in selling these services directly. 

His business model was to align with a very large consulting firm, and do all their training and workshops on distributor management.  They organized all these trainings, and my partner showed up, delivered the trainings (which were quite popular), and then the consulting company was nice enough to let him scoop up any consulting engagements that followed from the trainings. 

It was a VERY successful biz model for him for a long time.  But it wasn’t a sustainable model.  The big consulting company found the workshops harder and harder to fill as corporate travel & training budgets dried up, and eventually, they got out of that business altogether.  And they were out, my biz partner was completely out, too.   {hence the inflection point in his career that I should have explored further]

I also had not realized how very different that business model was.  For one, he had the cachet of the big consulting firm’s name behind him.  Second, they invested all the time and resources into organizing these workshops, allowing him to show up, collect a nice fee for the training, and scoop up any business that was generated.  And, their investment and the high cost of the seminar ensured that these people were pre=screened to be most receptive to making further investments in ther distributor network.  Plus, it allowed him 3 days (for which he was already paid good $ as the trainer) with these clients to help them fully understand all the work that was needed to implement a good distributor program, and positioned him as the natural go-to expert. 

We had none of that infrastructure.  We tried doing lots of blogs and webinars and podcasts, but it wasn’t enough education to push people over the buying hurdle.  We didn’t have the cachet, and instead of people primed to pay, we got a lot of people who mostly wanted free advice .  And ultimately, my partner really didn’t pull anywhere close to his share of the load, because he never wanted to be on the selling & marketing side – he only wanted to be on the “doing” side. 

You might wonder why we didn’t go to another training company, and we did think about it.  But the large conference/workshop industry is a shadow of what it used to be, and these companies no longer allow their trainers to scoop up any consulting opportunities that come out of the training.

And, my new business partner was firmly convinced that we didn’t need them — that his name and experience and success landing great paying clients would translate out on his own.

Unfortunately, it didn’t. He could convert the leads once they were captive in his class and he could explain to them in detail what they needed to do to find the right distributors and manage them more effecitvely.

But it turned out he had absolutely no idea how to find and nurture leads along a pure consulting pathway. His idea was to try to send out tons of cold emails and play the numbers game.

My big idea was to do webinars. We had fun doing several. I learned a lot about how to organize and present the information. Most of all, I learned a lot about how to promote webinars.

We got several leads, but most of them weren’t really qualified leads. We had many, many conversations, but never closed on a single lead.

Eventually, we ran out of cash and ideas.  And so, we feel victim to all THREE of the top cardinal sins I mentioned earlier.  Pretty much a disaster. And all of these were preventable, if only we’d done some market testing, and if we had both had a clearer definition of roles.  And so, that ends the tale of one of my several disastrous new business ventures!  May you learn from my mistakes!