We advise our clients not to argue over pie in the sky until there are peas on the plate! Just achieving positive cash flow is such a challenge, all the proponents should be focusing on that first.

We have seen too many businesses fail to achieve positive cash flow, but boy did they have infrastructure. No positive cash flow but big overhead – staff, offices, an HR department, lots of people with lots of titles. Why? Because, they say, “That’s just how it’s done.” It isn’t, really! The way it’s “done” is to achieve positive cash flow first and then earn all the other corporate luxuries. You really can’t afford to load yourself up with tons of bricks, mortar, structure, administration, employees and employee benefits until your company is solvent.

The big advantage of focusing on cash flow as your first and only goal is that you will have a better chance of being around long enough to have the luxury of arguing about pie in the sky. By focusing on achieving positive cash flow in the beginning, everyone’s mindshare will be free of office politics, communication issues, and turf wars. Also, and probably most importantly, you won’t be using up precious startup capital on premature overhead.

We like to say, “The day after launch, it’s the cash flow report and not the business plan that runs the business.” Stick to the inglorious task of making sales happen – all of you. Everyone in the company must focus on sales, either making them or supporting them.

We actually blame this “pie in the sky” phenomenon on the funders as much as the proponents. The proponents may have gotten the idea that other things were more important than achieving cash flow from the movies, the entrepreneurial success stories, and the press.

That’s dangerous enough, but now add to that misconception VCs who should know better. Many seem to be overly impressed with the business plan, the structure, and administrative staff.  Maybe that is why so many VCs try to hedge their bet by investing in 14 or more businesses hoping one will ROI.

We think the ROI would be much better if everyone focused on sales. Then the VCs wouldn’t have to bet on so many startups hoping just one would succeed. More would!

Oh, and as far as the prelaunch, pie-in-the-sky infighting is concerned, a focus on sales would provide the sobering realization that the divvy may have to be based on commissions, and other costs of sales like programming, representation, and allowances just to get off the ground.

The idea that, “Oh well, if we don’t achieve positive cash flow, we’ll just ask for more money” is not only counterproductive, it encourages a negative and unproductive mindset. This kind of thinking diminishes the value of quick, sustained, and growing sales. It also gives a false sense of security in the short term, and winds up costing more of the proponents equity in the long run.

So let’s get some peas on the plate before we talk about divvying up the pie in the sky. Bon appetite!

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 Premature Infighting Over the Divvy Can Result in Nothing to Divvy appeared first on The Barefoot Spirit.

Today we are constantly bombarded with stories of the new business that launched this week. There’s the press release, the launch, launch party, and even the launch lunch! Seems like everyone in the startup world is always celebrating. We don’t know why. Their concept has yet to be proven. The market has yet to accept them. They are a long way from positive cash flow. And their crew (staff) has yet to prove themselves seaworthy. The business plan is about ready to be scrapped for the cash flow plan. And no acquirer is in sight. What lie ahead are uncharted waters with many perils waiting to make themselves known. What’s all the celebrating about?

Are they celebrating the fact that they raised the capital to open the doors and stay open for a quarter or a year? This is a temporary fix. Sooner or later businesses must make more than it costs them to stay in business.  Are they celebrating the creation of a business that promises to change the world? Promises are not bankable.

So what is the sober approach to a launch? We think apprehension, humility, and down right fear are some good starters. We think understanding the basic navigational skills are essential. We think starting small with a careful shake down cruise to knock out the bugs is crucial. Here’s our short list of business navigational questions that beg to be answered.

1. The Port. Why are you launching this business? Do you want to create a certain lifestyle? Do you want to build a legacy? Or do you want to monetize on your brand equity? If it’s monetization, who are the 3-5 potential acquirers and why do they want your business? How big does it have to be before you become an acquisition target? And how long will it take you to get there? This is the port your Entrepreneur Ship is headed for. You won’t do a good job of navigation until you know your destination. Where are you now and where are you going?

2. The Currents. What’s going on with the market? What are the trends in your space? Can you overcome the pushback from the gatekeepers? Are you agile enough to take advantage of opportunities as they present themselves? Can you change course quickly to avoid disaster and can you recognize favorable alternatives and have them buoy you along? Can you stay the course when you own staff begins to doubt you? Do you have a map and do you know how to get though the obstacles?

3. The Captaincy. Can you choose the right crew? Can you orient them, train them and inspire them? Can you engage and empower them to be their best? Can you create a team that can pull together to get through the rough seas ahead? Can you “sell” your decisions to your own people? What about your vendors? Are they strategic allies? Will they watch your back? Are you willing to learn, improve, and not make the same mistake twice? Are you a leader? Can you make the tough decisions? When you have a bold new idea, will you be able to captain your shipmates, or will they move towards mutiny?

The answer to these questions and much more are waiting for you, not in the classroom, but in the board room. They are not coming to you from a professor, but from seasoned, and successful business navigators who have actually done it. We have experienced firsthand what you are about to. You can learn by our mistakes, see them coming on your own horizon, and successfully navigate around them. It cost us plenty, but it can save you time and money. Before you launch your entrepreneur ship, get the admiralty skill and experience to bring you safely to port from folks who have successfully navigated the rough waters. Don’t wind up like one of the ships in the Spanish Armada!

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 Preoccupation with the Launch Can Sink Your Entrepreneur Ship appeared first on The Barefoot Spirit.