One of the most important survival factors for any startup technology business is the ability to generate sales revenues as quickly as possible. Cash flow is king. The more that an entrepreneur is able to prove to investors that he is a good businessman (able to generate cash flow) then the more credible and believable his entire venture story will be. The quicker a startup business is able to generate some revenues, the less desperate they will be to get funding from investors. The less desperate they are, the more likely that they will succeed in getting funding.

The Devil is in the details. So how can a startup reduce the time needed to generate revenue? In some of the earlier blog posts, I have emphasized the importance of having a small, carefully selected and manageable niche (a description of a group of people or businesses) . If you can define (in extreme detail) exactly the prospective client who is a perfect match for your product, then you will have a higher sales success rate with exactly this type of prospect. The challenge is in the detail of your definition. How specific and exact can you get in your detailed description of this group of prospects?

Small is good. Most entrepreneurs fail to make their niche description precise and exact enough. They do this because they fear that a small niche will not provide enough customers to support their business. This is the fatal error. The smaller and more exact you can make the definition, the greater the likelihood that you will be able to solve their exact problems, and therefore get the sale. The paradox is that even though your local market may only contain one prospect that fits your exact highly-targeted niche, there are many prospects on a global scale.

The King of the Hill. I once heard about a watch repairman who was left-handed. For years he struggled with tools that were designed for right-handed people. Frustration drove him to create a toolset for left-handed watch repair people. When he went out to sell it he could only find one other left-handed watch repairman in his city, therefore his local market was tiny. He did, however, discover thousands of left-handed watch repairmen in a global market. During the first few years he established himself as the recognized leader in the market for left-handed watch repair toolsets. He was the KING OF THE HILL, even though the hill was not so big. Since he had all these loyal, happy, left-handed repairmen as customers, he decided to branch out and sell lots of different tools and other products to left-handed repairmen. Now there were already a lot of competitors in this (larger) market (there always are), but since he already had an established base of customers, he was able to use them to leverage his position in the market. This simple strategy can work for almost any startup company.

So why do so many technology startups struggle with closing sales?

• they fail to define an exact, detailed highly-targeted niche
• they waste effort chasing prospects that are convenient or opportunistic, but not part of their high % target niche
• their sales arguments get diluted because they are chasing many different types of prospects who each have different problems and needs
• their reputation gets diluted because they have failed to differentiate themselves from all the other “generalists” in the market
• they are not focused on solving the unique and obvious problems that their target niche prospects have, but rather general problems
• they fail to talk to members of their target niche and to truly understand the unique problems that their prospects face
• they fall in love with their own technology rather than seeking the solution to the customer’s problems

I challenge you to write a niche description for your startup that is precise and painfully specific. Make your niche small (so that you can dominate it), carefully selected (to take advantage of your unique skills), and manageable (a group that you can identify and locate easily).

Want some help in perfecting this? Contact Xelerator. We can offer seminars, workshops, coaching and consultants to help you with this process.

Rather than panic, rethink the strategy for your startup.

By Rick Salmon, Xelerator
When you read the news tomorrow, chances are that the biggest news headlines will be about the current economic crisis. Today is the day that Lehman Bank declared bankruptcy and the stock markets around the world are taking a beating. Time to panic? Time for startup entrepreneurs to give up on their ventures and get a normal 9-5 job?

There is an old Chinese saying that says that every big crisis offers an even bigger opportunity. What is the real opportunity here? What will this global restructuring mean for us all and what opportunities will arrive? While the answers may not be readily apparent, it is certainly worth taking the time to ask yourself this question and to let your brain figure out some good answers.

Here are some simple and practical tips on How your startup can survive world economic downturn:

1. Take a close look at your expenses. Jettison what is not absolutely necessary. In good times we have lots of extra spending money. In bad times, we have to tighten the belt. Simply spending an hour or so looking through all the expenses your company currently has will certainly uncover some areas where you can save money. The entrepreneur that ignores this task and lives on in denial is most likely to end up in big trouble. Money management is an essential and critical skill for all successful entrepreneurs. Take the time to carefully re-evaluate all your expenses. Remember that a delay is not a denial.
2. Rethink your revenues and path to market. Can you change your approach in order to get to a cash flow quicker? Most entrepreneurs have big plans for their startup and for their product development. Grandiose and lofty dreams are what make entrepreneurs fun people to work with, but sometimes they fail to see that the path to revenues must be as short and direct as possible. Especially in tough economic times, you must do whatever it takes to get some revenue streams flowing. In most cases it is better to have some income coming in than to be at the complete mercy of investor contributions. For example, instead of using the next 7 months to complete the development of your product, what about offering some consulting services to your prospective customers? My experience with the venture community is that they place high value on an entrepreneurs ability to generate revenues. Any and all activities that can contribute income will be proof that you are not only a brilliant entrepreneur, but also an astute businessman.
3. Narrow your focus (specialize and deliver). You have certainly heard of the 80/20 rule where 80% of your revenues come from 20% of your clients. In tough economic situations, it is more important than ever that you focus most of your attention on the 20%. This doesn’t mean that you should ignore the 80%, but it does mean that you need to put 95% of your effort into keeping the 20% happy and reordering your products and services. Narrow your focus by analyzing your market and picking the customers that are most likely to purchase from you. This means the ones that have the biggest problems – the biggest challenges. Focus on them. The more specialized your niche description is, the greater will be your ability to communicate effectively and powerfully to this niche. In tough economic times, your ability to communicate will be an even greater competitive advantage for you.
4. Fewer, not more customers. The idea here is that is much easier to sell to an existing and satisfied customer than it is to go out and find an entirely new customer. Many businesses make this mistake and end up using much unecessary effort rather than getting the full potential out of the customers they already have. If you have already delivered a quality product or service to your customer, then they already know you. They have experienced your company. What can you go back and offer them? What kind of additional products and services (your own or those of others) could you offer them? In all the businesses I have worked with over the past 15 years, I have never encountered one where the full potential of the customer relationship had been fully realized. Think hard about this. You will be surprised what you will discover.
5. Think Global, not just Local. If you understood step 3 and if you have truly defined a very specific, highly defined and small niche, then chances are that there are not too many of these “perfectly ideal prospects” in your local market. If the members of your niche are selected on the grounds that they have exactly the kind of problem that you (and only you) can easily solve, then it is likely your market is global, not just local. The more specific the offer, the bigger the geography you will have to search. The best part of this is that different geographies are affected differently by the current economic problems. In Scandinavia, the effects will be different than in Italy and Greece. The diversity of a truly global niche market will give you a certain amount of resilience and a hedge against local economic downturns. Everyone is affected by a global problem, but fortunately, we will all be affected differently. Think Global and create a small, specific niche for your products.
6. Talk with your bank. This simple little piece of advice is something that many startup entrepreneurs fail to heed. Today, we had a meeting with our bank. Not for any other reason than to check-in, let them know how we are doing and to ask their advice for the coming months. Bankers (and your investors) are there to give you advice. They like this role. Too many entrepreneurs never take the time to ask. OK, no one (including your bankers) expects you to follow all the advice you get, but just the process of asking helps further your case and demonstrates to your banker that you are willing to listen. Who knows, maybe they will also give you some good advice. Mine did.

If everyone is looking to the left, what would you see if you looked to the right for just a moment?

Remember that during this crisis, you may just discover something new and vitally important to the success of your business. Keep an open mind, don’t panic and rethink your strategy.

Sign up for Xelerator’s newsletter if you want more information or attend one of the free webinars in order to join the discussion with other entrepreneurs.

Xelerator has a blog site with news, information and useful articles for entrepreneurs and startup companies. Visit the blog at:

http://xelerator.blogspot.com

Remember to subscribe to the Xelerator blog and newsletter.

Two companies that Xelerator is working with were chosen as finalists in the Norwegian TechTour 2008. Both MobileAxept and RPR Technologies presented their business plans to a group of Norwegian and international investors and Venture Capital companies in Oslo and Stavanger.

The following is from the Tech Tour press release:

“The European Tech Tour will be coming to Norway in August 2008 to meet the most promising start-ups and early stage technology companies from Norway. Applicants will compete to become one of the 25 successful finalists invited to present their business expansion plans to representatives from the global venture capital world. Finalists will receive advice from these venture capital experts and enjoy numerous networking opportunities.”

Finalists are assessed and identified by the committee based on six key points:

1. Uniqueness of the technology
2. Solid business model
3. Vision
4. Capability to execute the business plan
5. Targeting relevant markets
6. Quality of management team and track record

MobileAxept was presented by Helge Krøgenes, who is a founding partner at Xelerator and CEO at MobileAxept. RPR Technologies was presented by Rick Salmon, who is also a founding partner at Xelerator and CEO at RPR Technologies.

Links to news articles about the Norwegian Tech Tour:

• Finansavisen, August 28, 2008 (Norwegian) Vekstkåte
• Finansavisen, May 18, 2008 (Norwegian) Page 1, Page 2
• EuroInvestor, Aug.28, 2008 (Norwegian) TechTour
• Argentum, Aug.27,2008 (Norwegian) TechTour winners

International Business Xelerator launched a new website xelerator.com today. The site is jam-packed with updated information to help technology startups get on the road to success in international markets.

The site has a dedicated news section to keep you up-to-date of upcoming Xelerator events. You can even subscribe to our RSS News Feed to have the news delivered to your desktop, pda or wap compatible mobile phone while it’s still hot off the presses.

Take a look at xelerator.com today and join in the conversation by leaving your own comments about the news on our site!

Wednesday, November 11, 2009

Rick Salmon appointed
President of Selection
Jury for 2009 European
Venture Contest

Will lead 45 jury members in selection of Europe’s Best Startup

Rick Salmon has been appointed as President of the Selection Jury for 2009 European Venture Contest Finals which will be held on December 14th and 15th, 2009 in Barcelona. The Jury will consist of 45 distinguished members representing the Venture Capital community in Europe.  Over 700 startup companies have competed in the contest this year and the top 25 have been chosen to go to the finals in Barcelona.

For more information about the Eurecan European Venture Contest, see:  http://www.e-unlimited.com