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Bud Stoddard has founded five companies and believes that all entrepreneurs deal with the same challenges. Recently retired, Bud now spends his time mentoring small technology companies. An avid runner and golfer, Bud lives in Natick, Massachusetts, in the summer and Estero, Florida, in the winter with his wife, Deborah.

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Reflections of a Serial Entrepreneur

iUniverse, Inc.

Chapter One

Starting a business is no doubt one of the most demanding challenges that you will undertake in your life. It's hard work! More important than the idea, the timing, the business model, or the financing, is your attitude. You have to want it badly and be willing to make many sacrifices. There will be endless hurdles, many disappointments, and lots of nos from potential customers. The only thing that will keep you going during these times is a persistence and perseverance second to none.

Not everyone is cut out to be an entrepreneur, so perhaps before you take the plunge and hit up Uncle Hymie for some start-up capital, you need to do a self-assessment and make sure you have what it takes.

This entrepreneur favors the idea that entrepreneurs are born and not made. This is a debate that we will not address here. Some, but certainly not all, of the things you will need are the following:

An ability to sell to a perfect stranger

Some financial acumen

A very good idea

The ability to execute your plan

People skills

Good communication, both verbal and written

An ability to attract the top people

A means to differentiate from all others

The will to win

A no-quit attitude

A commitment to success and the perseverance to get there

Being repeatedly late for dinner, missing a baseball game or dance recital, being late for a family gathering, and constantly apologizing to your spouse for being late or absent are a given. If you're not willing to disappoint family and friends, you probably won't make it.

Not on the above list but terribly important to success is a supportive spouse. I can honestly say that I would not have been triumphant in starting five successful companies had I not been married to a woman who had tremendous faith in me and would tolerate my apologies for one more missed soccer game. And don't make the mistake of assuming your spouse will support you. The wedding vows we took say for better or for worse and for richer or for poorer, but they don't say anything about starting a company.

You will likely come close to failure on numerous occasions on your way to success. Having the stomach to experience that and the guts to fight your way through it are the ticket to admission. This will not be easy, but it will be worth it. Therefore, before you write that business plan, take an inventory and make sure you really want it.

Chapter Two

The answer is, emphatically, yes. The next question becomes: what does my business plan include and how long should it be?

A phenomenon of the dot-com era was robust and lengthy business plans that often spanned forty pages or more and included excruciating details for angels and venture capitalists to sink their teeth into. In reality, much of what was in those plans never got read in detail. At best it got scanned by junior associates, as the more senior people had no time to read or interest in reading an overly laborious business plan. Many software programs were developed to write plans, and Excel spreadsheets included reams of financial data that often projected out five years or more. There was too much detail as to expenses, as well as grandiose revenue projections that often resembled a hockey stick in terms of their sales growth and velocity. Lackluster ideas, like buying groceries, drugs, and toys on the Internet, were embellished by long business plans. A herd mentality resulted in funding those plans, only to cost all of the investors all of their money in subsequent times. Some months after the grocery shopping on the Net idea crashed and burned, my wife told me that she knew that would never work. I questioned her as to why. She told me she not only went to the supermarket to buy groceries but to see friends and neighbors and to chat. She couldn't chat (at least at that point in time) on the Web. Incidentally, she just established a Facebook account.

So, if the fifty-page business plan with reams of financial projections is not the answer, what should your plan include?

The first point I want to make is, who is the plan written for? Who is the audience? Number one, it is for you, the entrepreneur. It forces you to get your ideas on paper and sharpen your focus. Getting the business condensed into writing will help you focus on the business and what you are trying to accomplish.

The second audience group is the potential investors, whether they are friends, family, angels, or institutional venture investors. You need a sharp, meaningful plan to convince these people you have a good idea and a large market, and you are the right person to capitalize on that opportunity.

I would suggest a business plan of eight to fourteen pages. That is plenty if you choose your content carefully. There are a number of questions to focus on:

What problem are you trying to solve? Is there a need in the marketplace?

How big a market is it?

What is your product, service, or technology and how will that solve the problem?

Who are the founders and what qualifies them to execute on the plan?

How much capital do you need, what are you going to do with the money, and how will the investors be paid back?

Is there something unique and patentable in your plan? If you are a technology company, can you protect with patents on the software, the process, or the business model?

What is the go-to market strategy? This is a big one and should include all manner of distribution and customer acquisition.

What are the barriers to entry? How difficult is it for others to enter your market and compete with you?

Who is the competition, and what do you know about them? Is there a market leader at present?

What are the inherent risks?

Can you provide a three-year financial summary?

That's it, no more, no less. A page on each subject that answers the question is more than sufficient. If it is well thought out and well written, this is all you need. The plan will really help you, as the entrepreneur, to focus and answer the hard questions. It will also provide a template when you are ready to approach investors for funding. Develop a written plan and also a PowerPoint presentation, and rehearse your pitch until you can wake up in the middle of the night and nail it with no preparation.

An additional point needs to be made. It seems obvious that we should all have an "elevator pitch" and that it's easy. It is not. Have a concise (fifteen seconds and three sentences at most) pitch that will answer the question what business are you in?

I am continually amazed at the number of established or aspiring entrepreneurs that cannot answer that question. I have heard scores of entrepreneurs ramble on, and when finished, I still have no idea what they do. I am a reasonably smart guy, who understands business, so I get it. If you cannot give me a fifteen-second explanation that I understand, there is something wrong with your pitch. I know it sounds painfully obvious, but trust me when I tell you that many cannot do it. Start with your "elevator pitch" and nail it. It is harder than you might think.

One final point: Get excited. Passion, commitment, undying enthusiasm, however you define it is, without a doubt the most important trait of a successful entrepreneur. If you are not excited about your launch, how can you expect others to be? Enthusiasm is contagious.

Chapter Three

It would be very easy, in light of the current economic downturn, to postpone launching your business until the economy improves. In fact, far more people will not do it this year than will. It takes courage to launch at this time, but I say go for it. If you have a compelling business idea and the passion to execute it, there is no better time than the present. In fact, for many reasons, starting in a downturn provides some advantages. For starters, you may:

Attract top people more easily than in robust times.

Secure office or production space at a good price.

Get good deals on services like marketing, because firms are eager for new business.

Get funds at very low interest rates. Yes, banks are lending. Be able to barter for services.

Get special billing terms.

Grow share while others have gone defensive and pulled in their horns.

If your current employer is looking at downsizing, by raising your hand and volunteering, you may get a big enough package to fund your start-up. It is very easy to find a reason to delay, but it takes enormous courage to make the leap in uncertain economic times, which we are in now.

In these economic times I might do a little more market research to test my idea before taking the plunge. A simple and cost-effective way to do that research is by talking to potential customers of your service. This can be done by phone or in person, but I would prefer to do these interviews in person. There are three things I want to find out from the prospect during an interview. First, does the customer have a need for the product or service that I sell? Two, does the prospect expect to buy that product or service in the next few months? And three, would the prospect consider buying that service from a new company-yours?

A word to the wise is appropriate here. Many companies will not buy from a brand-new company. They just do not want the risk that you may fail, and you can probably not change their minds. Some companies are more open to doing business with a newer company, but you must convince them you are secure and will be around for a long time. If you are successful in doing that, you may have a chance to get the order. You must give them some special reason for doing business with you, such as a special price, extra service, free goods, a money-back guarantee, twenty-four-hour service or something different from what they can get from all of your competitors. (See more about being different in the chapter Differentiate or Die). If you offer a similar product or service at a similar price with similar service, you will lose; you will not get the order.

One more caveat. Many sales people think they are special, and their customers buy from them, not their company. They feel they have the customer's loyalty and would get their business even if they were on their own or went to work for a competitor. Do not overestimate you customer loyalty. When you go out and start your business and come back to those very same clients you will, no doubt, sense some reservations on their part. You have no track record, no customers, and no sales. You have been in business for a month and expect the client to give you their business. Do not make this nave assumption, as I assure you that you will be disappointed.

A great idea is a great idea, regardless of the state of the economy. If you are ready, if you have the capital, if you have written the business plan, if your spouse is on board, and if you want this venture more than anything else, then go for it, The time still is right.

Chapter Four

A good idea with great execution is better than a great idea with poor or adequate execution. Many large companies have done this successfully for years. In fact, it is a known fact that most unique innovation doesn't come from large, established companies but rather from small entrepreneurial start-ups (Apple may be the exception to this rule).

For years, large companies have sold unspectacular goods and services against competitors with far superior goods and services. There are a number of reasons for this ostensible phenomenon. Large companies don't innovate; prospects don't take risk in buying from the safe supplier; and the smaller, innovative company doesn't normally have the funds, marketing sales channels, and PR to get noticed against the bigger and less-spectacular rival.

But this commitment to mediocrity and to products and services that are "just good enough" makes these same market leaders vulnerable. If you have a superior, differentiated service, you can win the business and steal the business from the eight-hundred-pound gorilla. And you must differentiate. If you do the same thing they do, in the same way, with similar service, and a similar price, the established players will kick your butt.

Let me share a brief story about commitment to mediocrity at the large company. A decade ago I was working for a Fortune 500 company. I was there as vice president of strategic sales. This was a new experience for me, working in corporate America. The last time I had done this was my first job after graduating from college, at Proctor & Gamble. I was committed to the company, highly motivated, and doing my best to excel in my new environment.

Several sales and marketing types were in a conference room discussing customer service as well as penetrating and servicing larger accounts. During the conversation, the VP of marketing declared in no uncertain terms that we could not provide great service, as it cost too much money. I laughed out loud and seriously thought he was making a joke. Because I was the new guy, everyone else in the room knew he did not make jokes and was completely serious. It was a bit embarrassing, but I survived the moment. It was a learning lesson, but I then realized he was serious and the company was committed to delivering "just good enough" service. Mediocrity was not only acceptable but was a goal. Be "just good enough" and the customer won't go away.

Shortly after this defining meeting, I made the decision to leave the company and start a fifth company, one that would deliver killer customer service. The customer deserved it, and I would figure a way to do it cost effectively.

Not everyone who starts his or her own business has a great idea. That may not stop them, and it shouldn't, from launching, as they probably think they do have a great idea. In the last several months, in my new role as angel investor and a board member, I have read many business plans from companies looking for funding. I have been amazed at many of the plans and ideas they promote. The Web has changed everything, and many businesses are just Web sites. That is okay. Many of these plans don't have a sound, defensible business, won't make it in the marketplace, and probably shouldn't get funding. Many will. We are the land of entrepreneurship, and if the founder is committed and excited and can convince others of his/her passion, then that person deserves a shot.

I want to urge you to do due diligence on your idea and plan. Vet it carefully and fully. Talk to prospects, potential customers, suppliers and investors, and ask them if they would be willing to pay money for your product or service, and, if so, how much? Market research is easy and inexpensive and just may save you the embarrassment of losing the money that Uncle Hymie invested in your great business idea that nobody was willing to buy.

A good idea with great execution will prevail over a great idea with poor execution, but a dumb idea will just lose all your investors' money. Losing your investors' money is not a good outcome.

Chapter Five

It is no accident that I chose this time to write a book. One of the primary drivers for me was the state of the economy and the climbing unemployment rolls across the country. I have a few thoughts on this subject.

First, there is always the question of when is a good time to start a business. Should I start a company in good times or bad? When the economy is in a funk, should I wait until it improves before I take the plunge?

As I look back on my entrepreneurial history, although I didn't know it at the time, I started four companies when the country was in an economic decline. I was probably too nave at the time to understand macroeconomics and know things weren't very good. I started companies in 1978, 1982, 1998 and 2002. I borrowed money when the prime was 18 percent (this is not a typo) in order to buy the commercial building my first company was located in and bought an underground missile site in 1990 with the help of an SBA loan. Fortunately, in spite of my youthful navet and ignorance to where the Dow was, all companies were successful, and I sold three of the four at a significant profit, including my last company in mid-2008 just as the markets crashed again.

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Excerpted from Reflections of a Serial Entrepreneurby Bud Stoddard Copyright © 2010 by Bud Stoddard. Excerpted by permission.
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