The lack of a good business design process is the number one reason why most businesses fail today.  Almost everything else, like poor market, running out of capital, unexpected risks and poor sales, is just a symptom of this root problem.

• Where Do Entrepreneurs Go Wrong?
   

The sad fact is, most businesses should not be run as originally envisioned by the founders for two main reasons:

1)   You never, never, ever know enough when you found a business not to make many, many adjustments along the way, and

2)   It is highly unlikely the founder has exactly all the right experience for this new business across the many business disciplines needed.

With the many thousands of business models possible for any given product or service, expecting to pick the best purely based on one person's previous experience out of the gate is almost absurd.  Only if this business is tremendously simple and the founder has spent decades in that...

The lack of a good business design process is the number one reason why most businesses fail today.  Almost everything else, like poor market, running out of capital, unexpected risks and poor sales, is just a symptom of this root problem.

• Why Business Design Must ALWAYS Be The #1 Priority of Any New Venture?
   

Designing a business is more art than science because it is something that takes lots and lots of real-world experience.  Personally, I do not think you can learn it at any university, or by any amount of study, until after you have spent many years working in management to understand people and business well.  It would be like someone reading for ten years about painting, without ever picking up a brush, and then when they finally pick up a paintbrush to paint their first person or landscape; and expect to paint a masterpiece.  Pretty unlikely, huh?  We may be able to teach strategy in school, but even that is just a...

When The Liabilities Exceed the
Benefits of Being a Director

By Peter Cohen

In the last week, some corporate directors have written checks out of their personal accounts to settle suits against the companies on whose boards they served.  Earlier this week, 10 former WorldCom directors paid a total of $54 million -- $18 million from their own pockets, representing 20% of their net worth.  Today announced that 18 Enron directors agreed to pay $168 million, 10 of them paid $13 million from their own pockets, to settle their portions of securities class action suits.  These events probably mark the beginning of a trend that will cost directors of other bankrupt companies more money.

While these directors no doubt made these payments to avert the risk of even higher ones, their decisions alter the cost/benefit analysis for current and potential corporate directors.  It is no longer enough to show up at quarterly meetings, enjoy the CEO’s hospitality, and collect...

Advice From A Nobel Prize Winner On Human Capital Management

An Interview From The Line Zine e-Newsletter

Gary S. Becker, the winner of the Nobel Memorial Prize for Economic Science in 1992, is a Professor of Economics and Sociology at the University of Chicago and a Senior Fellow at the Hoover Institution and University. He is recognized for his expertise in human capital, the economics of the family, and economic analysis of crime, discrimination, and population.

Becker: I would start out with some obvious things that are still sometimes forgotten: the basic resource in any company is the people. Remember Bill Gates’ famous comment that if you took away the top thirty employees at Microsoft, it would be a pretty ordinary company. And what’s true for companies is true for nations as well. In the New Economy, the reliance on people hasn’t fallen, but has increased. We are much more a human capital-based economy than the economy was even thirty years ago.

The...

 Reprinted from the Red Herring: https://www.redherring.com

Although this is by no means a comprehensive list there are many classics here....

VC P.S: Ten Myths
and Realities of VC 

 By Lawrence Aragon Redherring.com

Bill Reichert's brother is a doctor. His father also was a doc. So were his grandfather and his great-great-grandfather. So how could it be that Mr. Reichert is sitting and talking about venture capital over a plate of bacon and eggs at the Peninsula Creamery coffee shop in downtown Palo Alto? As I join him in the high-cholesterol meal, I can almost see the family of physicians staring down, wagging their fingers. "I'm the first Reichert male not to be doctor," he says, munching on a piece of bacon. "We figure it was my other grandfather's genes that sent me on this path."

Not the path to the coffee shop. The entrepreneurial path. His mother's father, Robert McElroy, built two companies -- one that eventually became the multibillion-dollar American Hospital Supply. Following in granddad's footsteps, Mr. Reichert founded five companies of his own, including a software company while he was getting his...

10 Keys To Copy That Sells!

By Alexandria K. Brown, "The E-zine Queen"

Whether you're selling a product or service, the 10 tips below are your keys to writing great copy that communicates and persuades ... to get results! These guidelines can apply to Web copy, e-mail, sales letters, brochures, direct mail, and more. As long as your goal is to elicit a reaction from your reader, you've come to the right place.

1. Be reader-centered, not writer-centered.

Many ads, brochures, and Websites talk endlessly on and on about how great their products and companies are. Hello? Customer, anyone? Think of your reader thinking, "What's in it for me?" If you can, talk with some of your current customers and ask them 1) why they chose you, and 2) what they get out of your product or service. TIP: To instantly make your copy more reader-focused, insert the word "you" often.

2. Focus on the benefits -- not just the features.

The fact that your product or service offers a lot of neat features is great,...

Venture capitalists are not known for their humility, so take note of the following confession:

Venture capitalists are chickens. Compared to entrepreneurs, they're spectators in the great game of small business hardball. They would no sooner personally guarantee a corporate bank loan than they would jump off the cliffs of Acapulco. Contrary to popular opinion, however, they are not totally worthless - they work long hours, sift through more garbage than a trash collector, and have to get used to disappointing 99 entrepreneurs for everyone they please. They are veteran roller coaster riders, but never get used to those big drops. They are, above all else, risk reducers - they prospect in the land of the commercially unfaceable, and try to differentiate the superstars from the merely enthusiastic. Most of them are pretty good at it, a result of lessons learned, mistakes made, and successes observed.

Over the past 29 years as a venture capitalist, I've screened thousands of...

Why You Always Need An Experienced CEO Involved At Some Level

Would you walk into a legal trial without an experienced attorney to represent you? Would you let a new medical school graduate perform their first brain surgery on you alone? Of course not!? However, many entrepreneurs who start a company print “President” on the door and do just that. They tackle huge new problems without any experience as a CEO in one of the most complex, expensive, and risky things they will ever do! So they think they save money, but they often drive their risk up 1,000% and costs 10% to 100% or more!

Consultants are plentiful, the advice is easy to get, it can be free or VERY expensive, but is it from someone who has succeeded in the past doing exactly that job? Not just as a ‘consultant’ but with full responsibility for success? In this environment, mistakes can be fatal, so don’t make this mistake.

No wonder only 6 in 1,000,000 ideas will ever reach an IPO. Contrary...

Start-up and emerging companies should be prepared for the significant amount of due diligence that a venture capital investor and its counsel may require before consummating a venture capital financing. Even angels are requiring many of these things to be under control today at earlier development stages. The following is a sample Due Diligence Checklist, which acts as a compliance request to the Company of all relevant documents and information. In appropriate circumstances, some listed items can be scaled back.

Corporate Documents of the Company and Subsidiaries

Articles of Incorporation and all amendments thereto.
Bylaws and all amendments thereto.
Minutes of all Board of Directors, committee, and shareholders meetings and all consents to actions without meeting.
List of states and jurisdictions in which qualified to do business and in which the Company has offices, holds property or conducts business.
Material information or documents furnished to shareholders and to directors...