In most cases, a startup idea isn’t worth all that much. The idea itself may generate 5% of the value, while execution accounts for the remaining 95%. So when my plate is full, like it is now, and I come up with an idea, I’d rather share it than forget about it.

Today’s idea isn’t so much of an idea, as a problem: Scheduling meetings. Let’s say you and I want to meet. We’re busy, so we start planning via email. I throw out a few days that work. Then you reply with counter-offers. Then back and forth a few times until we find something that works. Sometimes we have to find a meeting place too, like a spot for lunch or drinks that’s convenient for one or both of us. It’s all pretty inefficient. And while I’m a 98lb tech weakling, it seems like this is a problem that could be solved with technology.

That’s all I’ve got. No clear solution. No business model. No idea how much it will cost to build. To say it’s half-baked would be generous. Then again, you’ve got to start somewhere.

Like the idea? Lemme know. I’ll earn my 5% helping you figure it out. Got an idea of your own? Instead of letting it gather dust, run it by some people for feedback. You never know…

Just read this comment in the google group “lean-startup-circle”.  Author Mike Brown from Indianapolis was kind enough to share:

“I see so many people saying, 1I’ll tell you what I’m doing after you sign an NDA.’ …Unless you’re talking about some really deep technology that REALLY pushes  the bounds of what we do (think Project Natal from Microsof), you most likely aren’t the only one doing what you’re doing.

… The sooner you get a working product that your users can play with, the sooner you can get feedback and in many cases ideas that will significantly improve your product. Going stealth I would argue (counters that approach). Think about it in terms of software development. With software… one primary goal is to get a working application in front of  your stakeholders quickly so that they can provide feedback as the application is evolving.  (That) avoids the problem of spending a year working on a project only to get feedback at the end from the customer that you totally missed the mark.

If you want to kill a startup, the quickest way is to spend a year developing a product that no one wants because you were in ’stealth mode’…. By letting people know what you’re doing, you’re likely to get a lot of feedback that you’d pay a lot of money to get otherwise. Such as ‘this reminds me of…[insert competitor you didn't know of]‘ or ‘I’m building something similar, want to team up to make a unified product” or “I like [feature x] but I really wish I could do it by [method y]‘. All of this feedback can be used to help you adjust your launch trajectory.

That’s the true definition of Lean (startups).

I’m all for getting advice about your startup idea and approach – before, during, and after you launch. But not all advice is created equal. Before you seek advice from a person, be sure to think about what they know, and don’t know. Here are a few types of experts you may want to consider getting advice from:

Functional experts. People with expertise in roles like sales, marketing, team building, product development, technology, law, manufacturing, etc. The more relevant their expertise the better. For example, if you are launching a training business that will sell to large corporations, get sales advice from someone who has sold similar types of services to similar types of companies. Advice from someone with expertise on selling consumer products to retailers may not be on target, and could even steer you in the wrong direction.

Industry experts. People with expertise in particular fields, like mass market retail, food and beverage manufacturing, or consumer e-commerce. Once again, the more specific, the better. And watch out for people who can’t see beyond outdated industry standards. For example, someone in publishing who doesn’t see how e-books, self-publishing, and other innovations threaten to change the rules of the publishing game.

Startup experts. Running a startup with limited resources is obviously very different than being an executive at a large corporation. If you haven’t started a business before, be sure to get the perspective of someone who has been there, done that.

I met with a successful consumer products entrepreneur today, and he told me how he spent the past few months unwinding a partnership–complete with legal costs, wasted time, and frustration.

Long story short, he took investment capital from a wealthy person with nothing to do and a desire to be involved in running the business. That person proved to be a lousy operator and awful partner. The story made me cringe, not only because I’ve heard it before, but because I made the same mistake many years ago.

I know, I know, you need capital now to start–or preferably to grow–your business. But be very careful about mixing investors and partners / employees. Think about whether you need to fill a specific role on your management team. Then profile the skills and experience of your dream candidate for that role. Before you even consider having an investor fill the role, be sure they are a great fit, and that they’re someone you know very well , trust, and want to work with every day.

1. It never feels like work, even when you are at it for 100 hours a week. When you are building a new venture, it can be more stressful to take a vacation than to go to the office.
2. You hold all the cards. You may not prosper or even survive, but you will be in the driver’s seat. Chances are, you will not get fired or downsized (though you should be willing to step aside and let more experienced management take over if that’s best for shareholders—including yourself).
3. You can turn on a dime. When you want to make a change in your business, you may have to run it by a few people, but generally you can act very quickly. No waiting for next quarter’s budget. No half-day meetings or extended approval processes. Just flexibility and speed.
4. You get to choose which people you work with all day. That includes partners, employees, suppliers, and even customers to an extent. Why spend most of your waking hours with people you don’t like, or at least respect?
5. You are constantly learning. You’ll be wearing lots of hats, particularly in the early stages. You may have to learn about accounting, finance, marketing, hiring, firing, training, sales, manufacturing, customer service, new product development, law, technology, product launches, market research…the list goes on and on.
6. If successful, you will experience a powerful sense of accomplishment and a source of self-confidence for years to come.

Here are a few traits of successful entrepreneurs:

1.Tenacity. Starting a company is not for the meek. Sure, some people get lucky. But odds are that you will experience failure in many forms along the road to success. That’s especially tough because entrepreneurs tend to be so passionate about their ventures, that their self esteem gets tied to their company performance. To succeed, entrepreneurs must have intestinal fortitude to get through the tough times.

Want to get inspired by some real world entrepreneurs of yore? Read Giants of Enterprise: Seven Business Innovators and the Empires They Built by Richard Tedlow – one of my favorite professors of all time. You’ll learn about people like George Eastman, who dropped out of high school when his dad died and clawed his way to a successful career as a banker. Oh, and by the way, he tinkered around with chemicals every night after work for 6 years before creating a photography business, and another 20 years before marketing the Brownie, which essentially created the billion-dollar consumer photography industry.

For a more recent example, consider Sir James Dyson. Dyson spent 15 years and his entire life savings trying to develop a bagless vacuum cleaner. During that time, he created 5,126 prototypes that failed. He also failed to sell his invention to the vacuum cleaner market leaders. Number 5,127 succeeded, and now he’s a billionaire. So much for “third time is the charm”…

2. Flexibility. I ride a bike to meetings in New York City when the dress code, weather and logistics allow for it. Each time, I know where to begin, and where I want to end up, but I can never quite predict the path I’ll take. My route shifts, as I try my best to dodge traffic, red lights and the occasional open taxi door. It’s not a bad metaphor for entrepreneurship. Truth is, while it’s important to have a viable idea as we’ll see in the next chapter, most great entrepreneurs don’t succeed the way they expected at the outset. They do a fair amount of planning to come up with a seemingly valid approach, test the waters, and then modify their strategy, tactics – even their entire business model. A survey of Inc. Magazine’s Inc. 500 Award winners showed that 65% of CEO’s that wrote business plans “strayed significantly from their original conception, adapting their plans as they went along.” So entrepreneurs need to be good at rolling with the punches.

3. Salesmanship. Selling is a big part of starting a venture. As an entrepreneur, you may or may not be the one selling your product or service to your customers or clients. But for sure you’ll have to sell yourself and your ideas. You’ll have to persuade suppliers to work with a company that doesn’t have an established track record. And you’ll have to convince employees to forgo less risky jobs, and quite possibly to take lower salaries and less attractive benefits. You may also have to convince investors or partners to bet on you.

This scares some people. They think great sales people are born closers, or at least have the charisma of a fraternity president. While that couldn’t hurt, what’s important is that you can inspire trust, and be charismatic and persuasive. I once had a Chief Technology Officer (CTO) who could practically write code in his sleep, but had always thought of himself as a back-office guy – someone you’d never put in front of a prospective client. A few years after we parted ways, he tried his hand at selling tech development and recruiting services, and was very successful. Turns out he could sell anything as long as it was related to his passion for technology.

4. Resourcefulness. Many entrepreneurs don’t have ample resources, like support staffs or cash reserves. But good entrepreneurs have a knack for making the most of what’s available to them. Many founders work part-time as consultants to keep the lights on during startup mode.

One of my clients, Amanda, is a perfect example. She started an email newsletter about personal finance for women. Her first goal was to build a subscriber base. She couldn’t afford to launch paid marketing or PR campaigns, so she got creative. She had all her friends sign up and encourage their friends to sign up. She used social media like Facebook, Twitter, LinkedIn, and her alumni networks to spread the word. And as her list grew, she swapped promotions with other email newsletters. She also syndicated her content to other websites for women, and on personal finance, providing free articles in exchange for links back to her sign-up page. She positioned herself as a leading expert on personal finance for young women, and used that positioning to generate press. Within months, she had thousands of subscribers, at the low, low cost of zero dollars.

If you have the entrepreneurial traits I’ve described, you are off to a great start. If not, you’ll just have to break the rules – something else most entrepreneurs are good at.

An estimated 31% of Americans have considered starting a business but haven’t taken the plunge. Many of these “wannabe” entrepreneurs aren’t sure what to expect, or whether they are cut out to start companies.

There are lots of misconceptions about what it takes to start a business. Many people hear “entrepreneur” and picture a 22 year old computer prodigy, or a newly-minted M.B.A. with a Blackberry full of venture capital contacts. Others picture a seasoned veteran, who has started several companies over the course of many years.

In reality, entrepreneurs don’t fit neatly into demographic buckets.

Myth 1: Most entrepreneurs are fresh out of school, or experienced veterans.

A quick glance at the age of the 2009 Inc. 500 list dispels that one:

Myth #2: Entrepreneurs from top schools have a big advantage.

If you want to raise Venture Capital funding, it’s helpful to have classmates in high places. Peruse the bios of Venture Capital partners, and you’ll see a lot of Harvard, Stanford and Wharton MBAs, for example. But most startups don’t raise Venture Capital; how important is a fancy degree to them? Not very. According to a Kauffman Foundation research study of 549 founders of successful high-growth businesses, only 6% went to Ivy League schools.

Sequoia Capital is the venture capital firm that backed Google, Yahoo, YouTube, eHarmony, LinkedIn, and PayPal, among many other winners. Here’s some of their advice about business plans. As you’ll see, the format and content they recommend is very similar to what I’ve suggested in previous posts. For example, forget the 30+ page word document, and stick to a short slide presentation that’s simple, clear and concise (easy on the text!). The content elements they recommend are also in-line with what I’ve suggested, though in a slightly different order. They don’t put the team up front, for example. One reason for that is the people who land a meeting with Sequoia tend to be well-connected entrepreneurs with proven track records, so they are already “known” to a large extent. I like their section called “Why Now”. I may borrow that one…

We like business plans that present a lot of information in as few words as possible. The following business plan format, within 15-20 slides, is all that’s needed:

Company Purpose

• Define the company/business in a single declarative sentence.

Problem

• Describe the pain of the customer (or the customer’s customer).
• Outline how the customer addresses the issue today.

Solution

• Demonstrate your company’s value proposition to make the customer’s life better.
• Show where your product physically sits.
• Provide use cases.

Why Now

• Set-up the historical evolution of your category.
• Define recent trends that make your solution possible.

Market Size

• Identify/profile the customer you cater to.
• Calculate the TAM (top down), SAM (bottoms up) and SOM.

Competition

• List competitors
• List competitive advantages

Product

• Product line-up (form factor, functionality, features, architecture, intellectual property).
• Development roadmap.

Business Model

• Revenue model
• Pricing
• Average account size and/or lifetime value
• Sales & distribution model
• Customer/pipeline list

Team

• Founders & Management
• Board of Directors/Board of Advisors

Financials

• P&L
• Balance sheet
• Cash flow
• Cap table
• The deal

If you’ve got any interest in marketing, you should be reading Seth Godin’s blog. Today, he talks about the lifetime value of customers.

When planning a new business, it’s easy to get mired in the weeds of complex financial projections – that are nearly almost wrong. But very often, so-called back of the envelop numbers are more useful and accurate. For example, unit contribution, and break-even volume. Understanding the costs of acquiring an average customer and the lifetime value of that customer are also at the top of the list, especially for companies with large numbers of customers. Here’s an excerpt from Seth’s take:

If you walk into a company-owned cell phone store to sign up for a contract, what are you worth? Given the huge gross margins at AT&T and Verizon and the standard two-year contract, I think it’s easy to figure on more than $2000 in lifetime value…

Few businesses understand (really understand) just how much a customer is worth. Add to this the additional profit you get from a delighted customer spreading the word–it can easily double or triple the lifetime value.

So, a chiropractor might see a new patient being worth $2,500, easily. And yet… how much is she spending on courting, catering to and seducing that new customer? My guess is that $50 feels like a lot to the doc. Instead of comparing what you invest to the benefit you receive from the first bill, the first visit, the first transaction, it’s important to not only recognize but embrace the true lifetime value of one more customer.

Write it down. Post it on the wall. What would happen if you spent 100% of that amount on each of your next ten new customers? That’s more money than you have to spend right now, I know that, but what would happen? Imagine how fast you would grow, how quickly the word would spread.

Here’s how you’ll know when you’ve really embraced this–a good customer at your podiatry practice (or supermarket or tax firm) walks out the door in a huff and you turn to your partner and say, “There goes $74,000.”

I’m finishing up a draft of my first book, working title: “The UpStart Manifesto: Planning New Businesses with Speed and Flexibility”. Like any good entrepreneur, I want it published yesterday. So I met with a close friend who is a seasoned veteran and a senior exec at one of the largest publishing companies. I found it fascinating, so I thought I’d share:

• If you epublish with us, it will take about 6 months before you can start selling
• We’ll then want the rights to publish the hard copy, which will take 12 months to reach the shelves/Amazon
• We’ll also demand 360 rights, which will impact the rest of your business (more on that soon; building an online school for startups with branding linked to the book)
• Oh, and we won’t do much to promote your book, or give you much of an advance, since you are not a proven commodity in publishing yet
• To top it all off, you won’t make more than a few dollars for every book (you promote and sell)

Needless to say, I wasn’t jumping over the table to sign that deal. So looked into self-publishing, which seems at first blush to be a better way to go.

My startup philosophy is about planning with speed and flexibility. By self publishing, I can move much faster, retain the rights to my other books and lines of business, and make much more money on each copy I sell.

The downside? I lose the cache of being published by a major imprint. That cache is important to traditional media companies, so it’s less likely I’ll appear on the Today Show or in the New York Times based on my book. Bummer, but I think I can still play well on the long tail, and if my distance learning business is a hit, I can use that to get big media coverage since it will be pretty innovative and unique.

Any gurus out there willing to share opinions?