Of course, your VC has a right to quarterly reports. They want to keep track of their investment. If you’re not performing as agreed, they want to know right away. They want to cut their losses, which means you could lose your financing if you don’t make the numbers. Are you getting a little more nervous?

You know if you push your salespeople too hard it will take away from next quarter’s numbers. You know that if you load up your buyers you may lose them due to lack of service. And you know your reputation will be hurt if you don’t service what you sell. In fact, you may not have even fully realize the true cost of sales until you got several months away from that extravagant launch party. The reality of your business is just beginning to settle in. Now you know at least part of what you don’t know. But it’s too late and the report is due!

Just since you started, you have learned a ton. It’s stuff they didn’t teach you in college. It’s stuff that you wish you had known about. It’s stuff that requires actually experience.

You thought your VC knew more about your business than you. You thought they’d warn you. You thought they would be an enabling “partner”. You thought your business plan was validated because your VC funded it.

But no! You are on your own! And now it’s clear that your VC doesn’t really care. He’s spread out his risk like a gambler playing the odds. He’s bet on 10 to 20 start ups like yours, hoping for that one unicorn. Your business is just one roll of the dice. Will you make your numbers and stay in the game or will you crap out?

You are quickly approaching a no-win situation where if you make the numbers, you could lose your business. If you don’t make the numbers, you will lose your investor, and then your business.

The Department of Commerce says that 9 out of 10 businesses fail. That’s why most VC’s play the odds. But the same Department of Commerce also reports that businesses that make it to 2 years are more likely to make it to 5, and those that make it 5, to are more likely to make it to 10.

Having been through it from ideation to monetization, we understand why. In the first 2 years, we found out our cash flow plan was more important than our business plan. As time went on, we began to respect the cost of sales, which generally increased directly with growth. That’s why we created The Barefoot Startup, a more sensitive approach to starting and growing a business. It’s more grounded than bootstrap. It’s being in touch with the environment.   

Just like being barefoot, the Barefoot Startup directs you to learn to walk before you run. It directs you to be more sensitive to the terrain so you don’t fall down. It shows you how to be more flexible so you can make quick adjustments, thoughtful pivots, and remain light on your feet.

Don’t let quarterly reports hurt your chances. Starting a business is challenging enough. Discover and use your hidden resources. Outsource everything but accounting, sales, and quality control. Create revenue earlier with the relatively small, low-hanging fruit. In other words, reduce you need for capital right from the start, and you may not have to play the VC game at all. Ironically most VC’s are shying away from pre-revenue startups anyway. Demonstrating revenue proves your concept, but more importantly, provides a priceless business education. VC’s will line up to expand a proven concept and you will be in a much better bargaining position!

The credo of The Barefoot Startup is simple: Start small. Make your mistakes in a small place. Get your act together before you take your show on the road. And don’t scale to fail …or make your quarterly numbers! By keeping your (bare) feet on the ground and building a solid foundation, your chances of success will increase, and your need for outside capital will decrease!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Is your Startup Doomed by Your VC’s Quarterly Reports? appeared first on The Barefoot Spirit.

We faced this exact challenge. Our employees, business associates and clients all kept saying that we should break our journey down into its essential parts and expand upon those parts. So, for a year we kept tossing around ideas, thinking about how we could get these concepts across to startups.

Focusing on why so many startups failed seemed to be a good place to start. Did they all have something in common? What were the areas that most of the “failures” failed to master? Surprisingly, they all lacked competency in one or more of 4 key areas. So, we decided to focus on those areas and prioritize them in The Barefoot Startup’s GPS (Guiding Principles for Success). Here’s a brief summary:

1. Monetization Strategy. Crazy as it sounds, many startups never ask the fundamental question, “Why am I doing this anyway?” Is it a lifestyle? Is it a legacy? Or is it to monetize on brand equity? If you’re setting your course on an eventual acquisition, merger, or public offering, the steps you take at the beginning of your journey will be critical to your survival. They will determine your expansion plans and the steps you take to maximize your brand equity. This choice means that your goods or services must be scalable, and your business can run without you. It means that your files reflect your acquirer’s due diligence. And it also means that you know and establish the metrics and milestones you need to become an acquisition target or, as we say, “Get your peanut in front of the elephant!”
2. Cash Flow Management. The goal here is to reduce your need for capital. Do you know how identify and utilize your “hidden” assets. Ideally, your buyer’s will pay you before you need to pay for your supplies and overhead, and this is possible. But for most of us, we need to juggle! And we need to spend every dime on the bills before we pay ourselves. This is why outsourcing, reducing overhead, and pay-as-you go are so critical. This is why income and cost projections are so essential. You need to establish revenue, even if its small, before you ask for investors’ money. Do you know how to establish strategic alliances with your suppliers and your buyers, to reduce your need for capital?
3. Personnel Management. The goal is to reduce turnover, the #1 hidden cost of doing business, and to engage and empower your people. How you find good people and build great people are covered in our video. We believe it is essential to overkill on orientation from day one to demonstrate where the money really comes from, including all the hands, hoops and twists it has to go through to get to them. Paying for performance encourages better performance. Paying by the hour encourages longer hours, not necessarily resulting in productivity. Nurturing a culture of permission, encouraging innovation, and giving public acknowledgement for a job well done are absolutely vital to building a productive and supportive team. Sharing challenges with the entire staff on a know-the-need, rather than a need-to-know basis will unlock your personnel assets to solve problems on the fly.
4. Distribution management. Do you know how to get your product or service to the market, and more importantly, keep it there? Distribution is everything from supply chain management to sales. Sales is not just to your end user, but to your own people, your B2B customer, their B2C customer and eventually to their (and your) end-user. Understanding and delivering what each person in the chain requires can make the difference between access to market and being shut out. Not understanding the true cost of sales is the biggest single reason for startup failure. Start small, make your mistakes in a small place, learn from them, and get your act together before you take your show on the road. Don’t scale fast to fail fast!

Are you interested? We know that these 4 core competencies, so often overlooked, are so important that we spend an entire hour on each one in our online video course, The Barefoot Startup’s GPS (Guiding Principles for Success). Check it out.     

#BarefootStartup

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post The 4 Core Competencies of the Barefoot Startup appeared first on The Barefoot Spirit.