Some businesses can’t raise funds any other way. The Banks and VC’s won’t touch them. But if the Crowd likes their idea, Bam! – they get funded.  It seems so democratic, so what’s the problem?

Here are some hidden dangers to Crowd Funding that are becoming more apparent to the startups and the Crowd alike:

1. Experience. The Crowd lacks the sales and distribution experience that the Banks and the VC’s have painfully learned from poor investments in great ideas. The Crowd may love the concept, and envision one in every household, but the Crowd generally doesn’t know how to get it to market, run the business, or achieve positive cash flow. Typically, inexperienced startups will write a business plan and get the Crowd to fund it, while experienced business owners know that it’s the cash flow report that leads the business, not the business plan.
2. False Security. The Bank and the VC’s will grill the startup about exactly how the product will get to market and stay there. They will demand a cash flow plan that takes into consideration much more than the merits of the concept itself. Because of the sheer numbers of the Crowd, both the startup and the Crowd itself believe a great idea will be sought out by the market and sales become an afterthought.
3. Management. The Crowd tends to focus on the product and not so much the management of the company. When the Crowd is provided with a sample product in return for their investment, they believe that the startup will be able to manufacture and distribute the product in the future. In reality, it’s the management of the startup that will determine the success or failure of the product.
4. Popular Misconceptions. The Crowd tends to simplify the sales process. They go online or to the store and “everything” is there every day. Their judgement about success in the marketplace is based on what they see from their side of the screen and their side of the retail shelf – as consumers, not as producers. If they don’t see it, they think it hasn’t been done. It may have been done but never made it to their store. This simplistic and popular misconception is reinforced when the Crowd has a positive response to the startup’s offering.
5. Timing. The time between the offering and the actual availability of the product is almost always much longer than expected. The startup discovers the hard way that the costs and time of production and distribution are much greater than they anticipated. This tends to slow them down. Meanwhile, because of all the publicity, companies with more resources and better access to the market can jump on their great idea and be first to market, leaving the startup in the dust. In some cases the startup’s idea becomes outdated by the time it hits the market.

Startups can get a false sense of security after a successful Crowd Funding. It can deaden their ears to unwelcomed news – such as, it’s not so much about the idea, as it is about the management, delivery, and achieving a positive cash flow. It’s not about launching the business or how much is raised. It’s about whether the startup did the homework required for the time to market and true cost of sales – even if the Crowd gives you twice what you asked.

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 Crowd Sourcing Can Give Startups a False Sense of Security appeared first on The Barefoot Spirit.

By now, last year’s reports are finally in. Find something positive in those reports that you can share with your people. This is the perfect opportunity to show them how much you appreciate their efforts on your company’s behalf.

Send a “Valentine” that acknowledges them for a job well done. Show them positive numbers on your company’s sales and growth. Throw in a few concrete examples of important milestones that were achieved during the past year. Tell them you know it took team effort and couldn’t have been done any other way. And do it in writing. Here’s why:

• Appropriate Timing. What could be a better time to send an appreciative message to your folks than on a day when Valentine cards are already being exchanged? Your “valentine” will fit right into the spirit of the day. It will be unexpected but welcomed, which will make it even more appreciated. It’s really your last chance to thank them for the past year’s efforts that resulted in company growth.
• Improved Performance. Acknowledgement and appreciation are still the best ways to validate positive behavior and encourage your people to perform. Aside from income, one of the main reasons why they work for you is for recognition from an authority figure, and that’s you! If you put your appreciation in writing, such as in a valentine, it will mean more to them than simple verbal recognition.
• Promotion of Teamwork. It’s the team that is being recognized for their cooperation, communication and support for each other. This is a great opportunity to tie the work of especially the office people to the success of the salespeople. After all, the salespeople depend on excellent products, relevant marketing materials, and timely data to bring in the sales that pay everybody’s salary.
• Building Positive Culture. By demonstrating gratitude to your people you are also showing them that you and your company value gratitude. A valentine will reinforce that value and encourage your staff to do the same in their relationships on your company’s behalf. When your people get in the habit of sending notes of thanks to your customers, vendors and other business partners, your entire company will benefit.
• Reducing Turnover. One of the main reasons people leave your business for your competitor’s is not just for more money, it’s for more appreciation. Too many employees say they made the move because their last company “just didn’t appreciate me!” Don’t let that be the reason why you lose your top people. If you do, you’ll lose corporate know-how, critical relationships, the cost of replacement, and even your customers.
• Small Investment. Sending a note of thanks and appreciation is a very small investment with major returns in performance. Sometimes it can have a greater impact than a staff outing or even a special dinner. It speaks to them personally and it is documented proof of your gratitude. Your people will be more likely to give you the benefit of the doubt on those hard decisions you have to make that may not be so popular.

So write your people a valentine this year and tell them how much they and their efforts mean to you. Build your credibility by showing them that you are a real human being that respects their human need for acknowledgement and validation, and get ready for a fantastic year!

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 Send Your People a Valentine appeared first on The Barefoot Spirit.