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Archive for the ‘Business Ethics’ Category

Taking Shortcuts in Order to Secure Investment Funds Is the Pursuit of Fools Gold and Insures Failure

Thursday, August 29th, 2013

by: Geoff Ficke

Just today, on a single Linked-In group I visit, I have seen at least five naked pitches seeking funding for a new consumer product, concept or invention. This occurs almost every day on these sites. The efforts are always clumsy, transparent, sophomoric, and can only lead to futility.

How do I know these attempts to secure investment funds lead to futility? Because they continue for weeks and typically become more desperate and shrill sounding. As a consultant who has worked in the Venture Capital and Investment Banking space for many years I can state with certainty that if an item or project is as good as claimed, this is not the way to excite a funding round from sophisticated, serious investors.

Social media is a wonderful new vehicle for spreading and gaining knowledge, acquaintances and opening exciting new doors but only if handled professionally. The same steps that must be accomplished when seeking funding from traditional sources must be followed in this new world unless the offer is to be dismissed as that of a carnival barker. Here are just a few tips.

  • Support the appeal for funding with a compelling set of bullet pointed factoids that reflect that you have performed essential due diligence.

This type of support is almost never on offer. Claims to wondrous product benefits are stated with no supporting research offered.

  • Offer to provide a customized Business Plan after completing a Non-Disclosure Agreement that will confirm the assumptions stated in the appeal for funding.

The shortcut most indicative of a project built on dreams and whimsy is one without a well constructed plan that demonstrates how funds will be used and the realistic return on Investment that can potentially be realized.

  • Be very careful not to scare off possible targets of opportunity with claims of scientific breakthroughs.

Just today I read an appeal for $1.5-3 million for a technology that targeted cures for numerous serious physical maladies. These maladies included the “O” word: oncology! Cancer centric treatments require hundreds of millions of dollars to pass unbelievably rigorous testing hurdles. A few million dollars would not buy enough Bunsen burners to start a project.

  • Research and create a customized Marketing Strategy and Sales Model that will support the assumptions needed to interest funding sources in investing in the project.

A perceived good consumer product idea is of no use unless there is a strategy in place to fully commercialize the good or service in the frenetic retail marketplace. This kind of professional service is readily available from consultants, universities and local government agencies. What is the Unique Selling Proposition that separates the item from competition? Who is the competition? What is the needed profit margin necessary to prosper in the space? These and dozens of other questions and issues will ultimately need to be addressed.

  • In order to raise awareness and interest from serious funding sources have perfected prototypes, manufacturing sources, logistics, dead net landed cost of goods per mass production of the item and pricing models available.

Many of the requests I review in social media have one or several of these steps nailed down. However, almost never do they have the full flotilla that would indicate that the prospective entrepreneur is serious and viable. This is a shortcut that we see in every form of funding request that we review.

  • The hardest money to raise, in social media, cloud investing or traditional Venture Capital is small amount requests.

Investors, whether individual or sophisticated groups, like to see sweat equity from entrepreneurs and this includes that they have money on the table. Small requests for $10,000 or $25,000 are referred to as 3-F money. These are funds that come from friends, family or fools. Typically this level of funding is much too small to be of interest to traditional sources of Venture Capital.

There are a near endless number of deals and projects seeking a finite amount of capital. If you seriously believe your project deserves consideration for funding then fully demonstrate your passion. Do not take shortcuts. If you do you simply obviate yourself and your project from any possibility of success.

Consider the Menu of Services a Project Will Require Before Interviewing Professional Consultants

Saturday, May 5th, 2012

by: Geoff Ficke

Consider the Menu of Services a Project Will Require Before Interviewing Professional Consultants

Google the word “Consultant” and millions of links immediately pop on to your computer screen. Refine the search term and a smaller, but still massive army of sites will become available for search. Consultants are everywhere and offering every imaginable service.

How does a business or entrepreneur in need of acquiring professional skills go about winnowing down and selecting the right team for their specific need? I am asked this question often while performing my work as a Consumer Product Development and Marketing Consultant. There seem to be two key elements to consider when making this calculation.

The first is to consider what skills you, or your group, possess in the area in which you desire assistance. If you are an excellent writer, and are seeking to build a web-site, preparing the copy and visual layout for the site might be work you could handle by yourself. In that case, the need for a web-master for construction and a site manager to control your PPC and SEO
campaign may be the totality of the help you need.

More detailed projects require different and more comprehensive skill sets. Does your team have the ability to create a Business Model, a Business Plan and execute each work element required to successfully push a product or service into the marketplace? Unless the answer to this question is a hard “yes” you should be interviewing Managing Consultants.

The second important consideration is to assemble a menu of services the project will require. Do the consultants you are interviewing have the capability to manage the whole project, or are they going to specialize in their area of expertise and hand off important work elements to others.

We work internationally, with large multi-national companies, and increasingly with entrepreneurs, inventors and small and micro-businesses. Large clients typically hire our firm for a specific piece of project work. Smaller clients tend to want us to act as Managing Consultants. Many people have successful businesses and careers, family responsibilities and, for
course, mortgages. They often want and need to stay with their chosen work.

A Managing Consultant should be able to take a project from idea or concept stage, to market launch. The capacity to manage product development, prototype and product design work, source manufacturing, organize fulfillment and logistics, create customized Marketing Strategies, handle Public Relations, produce creative elements, packaging design, develop funding possibilities, and Sales Models are only a few of the work product elements that successful Managing Consultants should be able to provide to their clients.

The Managing Consultant’s job is to provide their client with the best options for each item on the work product menu. We typically provide these options and then detail why, if this were our business, we would choose option No. 2 over options No. 1 and 3. We work for the client and all final decisions are made by them.

A good consultant should save clients Time, Money and Mistakes. Experience, professional contacts, a long rolodex and instinct are what separate the really successful consultants from the out of work, down sized corporate manager that has real experience only in structured environments. In the current economy, the market is chock full of this type of consultant. Performing proper due diligence when selecting Consulting help will make or break your projects chance for achieving success.

The Old Adage “You Get What You Pay For” Is Especially Important to Service Providers in Today’s Economy

Thursday, October 27th, 2011

by: Geoff Ficke

The Old Adage “You Get What You Pay For” Is Especially Important to Service Providers in Today’s Economy

The 19th century British essayist John Ruskin once presciently stated, “There is scarcely a thing in the world that some man cannot make a little worse, and sell a little more cheaply. The person who buys on price alone is this man’s lawful prey”. Great wordsmith that he was, Mr. Ruskin’s stylish prose has been re-engineered in more modern form to become the universal adage “You get what you pay for”. People universally understand this to be true, even if they do not always practice the rule in their own dealings.

I earn my living as a Consumer Product Marketing Consultant. My firm sells a full menu of services. We use a variety of associated independent vendors who sell their services in specific areas to our clients. Patent Attorneys, Product Development Engineers, Graphic Artists, Chemists, Nutritionists, Manufacturers, Display Designers, Prototype Builders, Pattern Makers, Lithographers, Packaging Engineers and dozens of other specialists collaborate with us to provide a turn-key Product Development service.

My job is to save clients time, mistakes and money. We are good and very successful, having been doing this type of work for over 40 years. The specialists we involve in each project are hand chosen for their expertise, past successes and the value they bring to our clients. I have never chosen a vendor because they are cheapest, but because they offer an excellent service at a fair price.

It is true that economic times are difficult. Many people have been neutralized by the economic chaos they see occurring around them. Some fear plunging into a new business venture until things calm down. Others use the uncertainty as an excuse for not moving ahead at all. Some attempt to leverage the pullback to negotiate reductions in fees, costs and development work provided by skilled professionals that may have suffered a loss of work over the past three years.

Here is a caution. It is very unwise to compete for project work by selling service at discounted prices or fees. There are still plenty of qualified clients seeking the best possible outcomes for their projects. They understand that it is silly to try to cut corners on quality and creativity to save a bit of money when they really want the best possible product to sell to consumers. If you discount your fees, and the perceived value of your service, you will only diminish your reputation for top quality work now, and when the economy rebounds.

We review hundreds of products and projects each year. This has been consistent during the recession, as it was before. We have never had to discount a fee to secure a client project. Once we describe our work template, experience and the unique concierge one-stop Product Development service we provide it is unnecessary to barter away a fair remuneration for the valuable work product we produce and our clients ultimately enjoy.

Several months ago we were approached by a pediatric nurse with an interesting Wellness Product. She had discovered an opportunity niche in her work with small children. The Juvenile Product she had conceived possessed all of the elements necessary to achieve commercial success. We walked the nurse though each step necessary to convert her concept to a market ready Consumer Product.

As we discussed Gantt Chart work items and the timeline involved we quoted fee ranges for each component. As the meeting concluded, the nurse asked if we would defer fees. We advised why we could not. Our suggestion was that she interview at least three other firms, listen to their ideas for the project and negotiate fees with them. If she wanted to go with another firm we would wish her good luck. If not, we would love to work with her to make the product real.

This week she called and asked if we had space available for her project. She advised that she had spent a good bit of time interviewing other firms and always came back to the fact that we offered the best combination of experience, convenience, creativity and value. The nurse was also impressed that we did not press or hard-sell her, and actually suggested that she speak with competitors. We have a new client. She has a good deal. A good deal is one where both parties receive benefits.

Whether you are an independent contractor, a real estate agent, engineer, designer, an artisan or any of hundreds of other occupations where you sell your service we encourage you to ask a fair compensation for your professional experience. If you are good at what you do you should be properly remunerated.

Discounting payment of fees is an indicator of weakness. As John Ruskin said, “The person who buys on price alone is the “seller’s lawful prey”. Sell quality work and be paid accordingly. Your work is worth it.

A “Stormonter” Will Always Be Obviated by Companies That Deal Strictly in the Truth

Wednesday, May 25th, 2011

by: Geoff Ficke

A “Stormonter” Will Always Be Obviated by Companies That Deal Strictly in the Truth 

Benjamin Franklin is remembered fondly as a Founding Father of the United States, a diplomat, scientist, inventor and founder of the United States Postal Service, among his many other successes. He is also credited with coining a number of words which found their way into wide use around the time of the Revolutionary War. This is a story that also displays the humor, quickness and twinkle that came to always be identified with Franklin and is useful to consider in today’s business world. 

During the Revolutionary War the British Ambassador in Paris was a Lord Stormont. He was a gossip, and took every opportunity to spread tales spun out of whole cloth that served to enhance British prestige and diminish the revolting young Americans. His goal, of course, was to discourage other European countries from aiding the Americans in their quest for freedom from the Crown and King George III. 

Stormont had begun to spread a rumor that six battalions of American soldiers had laid down their weapons and surrendered or run away in the face of a small British platoon. This was a lie made up from whole cloth. Nevertheless, the French were concerned enough to approach Ben Franklin and ask if this supposed act of cowardice had really occurred. 

“Oh no”, replied Franklin in his gravest tone of voice. “It is not the truth, it is merely a Stormont”. Almost instantly the wry, witty response had been whispered throughout the diplomat circles in Paris and the term “stormonter” became a popularly used synonym for lying. 

Stormonters (although the term is virtually unknown in modern English usage) are common in every area of life, especially in commerce. Marketers embellish their products features and benefits while often attempting to subtly, or directly, diminish their competition. I cannot count the number of times that I have experienced salesmen put down their competition by mouthing false statements. 

We all know that once a lie or untruth is spoken, it is ever more difficult to extricate yourself from the damage caused by such misplacement of truth. In sales and marketing, the principal components of every successful business, truth is paramount. Never put your product or business in a compromising position by even skirting facts as they truly are. 

Here are a few tips in how to position and defend your business against an untruth: 

  • Whenever confronted with a distortion of fact regarding your product, always, always compliment the competitor as having a fine product. Kindness kills.
  • Know your competition. When you know direct competitors it is easy to positively point out the difference in features and benefits your product offers, without slamming the competition.
  • Never be negative about another Company, product or management.
  • It is fair to ask for a performance test, market test, or blind consumer test versus another product. Proposed properly this will convey openness and confidence.
  • If you market a service you can gain trust by counseling a prospective to call several of your competitors and pick their brains. This always conveys superior confidence in a positive, reinforcing way.
  • Whenever someone tells you they are an honest person, put your hand on your wallet and run. Honest people carry an aura of trust that they do not need to shout. 

Ben Franklin turned Lord Stormont’s lies to his and his young country’s  advantage. In business we do the same things in many ways. Marketing consumer goods and services is a bit like an arms race. It is rough and competitive. But it should always be conducted truthfully. The chickens always come home to roost.