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Anthony’s NotesA personal field guide
From the notebook

Go It Alone!

Bruce Judson

Book Cover

Highlights

  • 1 Overview: The New Go-It-Alone Business (Location 117)
  • To the founder or founders, a go-it-alone enterprise is small only in the numbers of workers it employs. It’s designed to generate substantial financial returns and to play a sizable role in the business world. (Location 123)
  • Achieving leverage and the amplification of your skills is the keystone to becoming a successful go-it-alone entrepreneur. (Location 147)
  • substantial go-it-alone business depends on the effective application of leverage and extreme outsourcing. (Location 149)
  • “the real tragedy in life is not that each of us doesn’t have enough strengths, it’s that we fail to use the ones we have.” (Location 183)
  • Quite simply, innovative go-it-alone entrepreneurs employ extreme outsourcing because they recognize that their most valuable asset is their time, which allows them to achieve an unprecedented degree of focus. They know that they may be capable of doing many things, but they are constantly setting priorities that will best build their businesses. (Location 192)
  • research that has demonstrated that simply having too many tasks, even if you have the time to do them all, is a distraction that can radically decrease your effectiveness. (Location 200)
  • succeed, your business must do something that is repeatable. In Beyond the Core: Expand Your Market Without Abandoning Your Roots, Chris Zook borrows a well-known phrase from golf legend Ben Hogan, “relentless repeatability.” (Location 208)
  • well-known adage that is often repeated to people who are launching business consulting ventures: Until you have generated at least one client that you did not know before you started consulting, you have not succeeded. (Location 212)
  • The essence of a repeatable business is the ability to create processes and systems that determine exactly how the business will work. (Location 215)
  • majority of the go-it-alone businesses described here started the same way: The founder solved a problem in his or her own life. (Location 236)
  • asking one simple question with two missing words: “In the past few weeks, when have you said to yourself, ‘I wish that there was a ___ so that I would not have to _,’ and how did you solve this problem?” The answer is often the basis for a strong go-it-alone business idea. (Location 239)
  • 2 Principles for Success (Location 242)
  • 10 principles, (Location 246)
  • Focus on Reducing the Risks Associated with a Potential Failure (Location 251)
  • today’s successful entrepreneurs are a surprising mix of prudence and courage: They aren’t afraid to try new things, but they first do everything they can to reduce all costs and risks. (Location 255)
  • Go-it-alone entrepreneurs actively manage risk. Indeed, it’s common for them to find a way to test the validity of their business idea before making it a full-time effort. (Location 266)
  • Successful entrepreneurs recognize that there is no such thing as a sure thing, so they work to reduce the possibility of failure before they launch their companies and to give themselves plenty of time to build the business. (Location 298)
  • Never Get too Far Ahead of your Customers (Location 302)
  • Some in the business community are obsessed with the idea that successful new businesses are inherently revolutionary. This false conception can cripple a start-up. (Location 302)
  • Products and services sell when they are just new enough to fulfill an unmet customer need without reinventing every other aspect of the customer’s life; revolutionary services rarely do. (Location 309)
  • “The path to success involves staying a little ahead of the competition but close enough that customers can understand your product and incorporate it into their lives and businesses.” (Location 313)
  • “Years of research shows that the innovations most likely to take hold are those that don’t demand excessive change from the customer.” (Location 315)
  • The lesson, again, is that to survive and thrive, go-it-alone entrepreneurs must build a paying customer base quickly. To do this, successful entrepreneurs focus on starting businesses that don’t require dramatic shifts in the behavior of customers, suppliers, or service providers. Though such businesses may turn out to be revolutionary change agents, they typically start out as evolutionary improvements with a value that customers can see immediately. (Location 335)
  • Flexibility in Action (Location 345)
  • In a compendium of his work titled The Essential Drucker, he writes that “when a new venture does succeed, more often than not it is in a market other than the one it was originally intended to serve, with products or services not quite those with which it had set out, bought in large part by customers it did not even think of when it started.” (Location 347)
  • “If a new venture does not anticipate this, organizing itself to take advantage of the unexpected and unseen markets: if it is not totally market-focused, if not market-driven, then it will succeed only in creating an opportunity for a competitor.” (Location 351)
  • new venture must be set up to capitalize on the inevitable unexpected opportunities and to avoid being hamstrung by an infrastructure designed to support the inevitable failed efforts. “Rather than dismiss the unexpected as an ‘exception,’ as entrepreneurs are inclined to do, they need to go out and look at it carefully and as a distinct opportunity.” (Location 352)
  • Go-it-alone businesses are total systems that by necessity are designed with the maximum possible flexibility. As a result, they are created from a perspective that significant shifts in the product, the service, and the customer base will be necessary — and frequent. (Location 366)
  • Innovation in Action (Location 368)
  • The mantra for each of the businesses discussed above could easily be the same: They develop a quick, inexpensive process for discovering what new products and services potential customers will buy. The benefits here are threefold: (1) They rarely waste precious dollars on failed launches, (2) They limit the time they devote to any unsuccessful initiative, and (3) They view their business as a constantly evolving, flexible system that can maintain its competitive edge. (Location 402)
  • Create the Ability to Scale (Location 406)
  • substantial portion of the founder’s time must be spent working on the business, not in the business. (Location 414)
  • Maintain an Experimental Attitude (Location 415)
  • All businesspeople should take this to mean that competitors can — and are working — to reverse-engineer whatever they are doing. (Location 424)
  • Just as you want to design your business with the flexibility to shift your product mix, you also want to be constantly operating live tests of potential improvements in your core business. For me, this means that at any one moment I am conducting somewhere between 5 and 10 different tests of how services are marketed on the Web. You can, in part, measure whether you are living up to this goal by the time you devote to the process. My rule of thumb is that at least 1 hour a day should be devoted to creating and administering tests of new business initiatives. (Location 426)
  • “Ask yourself if your company has a portfolio of…ongoing experiments. If it doesn’t…its future is at risk.” (Location 439)
  • Take Yourself Off the Clock (Location 443)
  • The important point is to recognize that the more you can create a product based income stream (such as a digital book), the higher your income potential — because you have eradicated the limits created when income is tied to time. (Location 456)
  • Master the Potential of New Technologies (Location 492)
  • Develop a Bias Toward Action, Starting with Small Steps (Location 516)
  • Many people live their lives in ready-steady mode, instead of ready steady Go! You must go. Kickstart yourself into focused action. Just take the first step. Gradually you will build momentum. Like the proverbial snowball rolling downhill, you won’t be able to stop after you make that early push. Remember, the big rewards in life only materialize when you start doing. (Location 527)
  • …I prefer the philosophy of: Ready, Fire, Aim…especially when you’re starting small. If you make a mistake, if you guess wrong, if your aim is off, you can fix it, and fire again, and adjust again, and again as needed. (Location 532)
  • We used the Ready, Fire, Aim philosophy to start and grow Subway. When you’re just getting started it’s sometimes necessary to make a quick decision, take a shot, and then make course corrections as necessary. If you’re willing to fire before you aim perfectly, you probably won’t hit your target precisely, but you’ll have taken that first step in the journey… (Location 534)
  • Affirm your Determination — Make a Commitment to Find a Way (Location 537)
  • “an unquenchable passion for an idea or a product” is the single “most important ingredient of a company founder. Force venture capitalists to choose between a well-heeled Ivy League student and a smart impoverished immigrant, and we’ll pick the latter every time…. Tenacity is a necessity” (Location 556)
  • Your Passion Is an Important Part of Determination (Location 559)
  • successful companies ignite the passions of those involved. He finds that to achieve lasting success, even large companies need people to be excited and energetic about what they are doing. (Location 563)
  • To prosper, you must combine two factors: your skills and a commitment that releases the excitement and energy that causes you to do your best work and to stick with the enterprise. As you build your business, you will inevitably need a healthy determination and a strong passion to work through the unavoidable ups and downs on the road to success. (Location 568)
  • “A belief is not just an idea that you possess; it is an idea that possesses you.” (Location 592)
  • 3 The Great Shift in What’s Possible (Location 596)
  • More on Central Operating Principles (Location 616)
  • Extreme Outsourcing (Location 617)
  • These services effectively allow your business to outsource major functions by (1) automating specific activities; (2) providing communications, sales, or marketing capabilities; (3) reducing the effort involved in formerly time-consuming efforts; or (4) managing complex tasks that would otherwise take up large amounts of your time. Sometimes specific activities are outsourced to individuals. (Location 621)
  • The Importance of Focus (Location 639)
  • concentrate on making the unique aspects of your business as terrific as possible. (Location 640)
  • The main reason most people struggle professionally and personally is lack of focus.” (Location 650)
  • “Focus on those ideas you do brilliantly, and from which you produce extraordinary results. If you don’t you’ll probably create high stress levels and ultimate burnout.” (Location 651)
  • Failure is the Inevitable Consequence of a Lack of Focus (Location 674)
  • “Many entrepreneurs go in too many directions at once and do not execute anything well. Rather than focusing on doing everything right to sell to their biggest markets, they divide the attention of their people and their time, trying to do too many things at [one time].” (Location 676)
  • Set Up the Business So That You Have the Time and Energy to Focus (Location 687)
  • Burnout Is Not a Necessity: It Is a Symptom of a Problem (Location 691)
  • It’s essential to measure progress by what you have accomplished, not by how hard you have worked at it. Moreover, for you and your business to prosper, you must establish a sustainable routine in which you can do your best work and flourish over the long-term. (Location 700)
  • Consider your Personal Energy Level (Location 702)
  • Creating Time and Energy for Constant Reinvention (Location 707)
  • The Outsourcing Advantage: Inexpensively Keeping You at the Cutting Edge (Location 718)
  • Outsourcing Doesn’t Mean a Function Is Nonessential (Location 723)
  • To determine whether outsourcing is appropriate for you, ask yourself this: Even if a function is critical to my business, can it be handled as well or better and cost-effectively by an available service? (Location 733)
  • Constant Focus on Experimentation and Enhancement (Location 762)
  • The Evolution of the Plug- and-Play Economy (Location 807)
  • The Rule of Decreasing Support Costs (Location 807)
  • the Rule of Decreasing Support Costs: Services that are available today at high expense for large businesses will be available in 12 to 18 months on a plug-and-play outsourced basis to small companies at low monthly usage fees. (Location 813)
  • The Rise of the Application Service Provider (ASP) (Location 824)
  • Many businesses are held back because of the way they set prices. Fees based on hourly rates — which are open-ended — as compared to flat rates often discourage purchases. All types of upfront fees, with no guarantee of results, similarly discourage firms from trying new services. Companies that have figured out how to eliminate the risks for the customer in their pricing systems, while still earning a profit, have proven to be solid innovators. (Location 1284)
  • The goal is to create a pricing system that makes sense to the customer and permits a far easier yes than what already exists. (Location 1299)
  • Look for Opportunities Deemed Too Small by Large Companies (Location 1302)
  • Consider Turning a Product into a Service (Location 1308)
  • Look for Opportunities to Provide Outsourcing (Location 1312)
  • the idea of core competence is in part meant to encourage focus. They note that “there must be some sense of what activities really contribute to long-term corporate prosperity.” They also suggested that “to be considered a core competence a skill must meet three tests”: (Location 1336)
  • Customer value: “A core competence must make a disproportionate contribution to customer-perceived value.” In essence, a core competence must be a central reason a customer chooses the products or services of a specific company. (Location 1338)
  • Competitor differentiation: A core competence “must also be competitively unique.” (Location 1340)
  • Extendability: From the perspective of “tomorrow’s markets,” a core competence should lead a company to imagine “an array of new products or services issuing from the competence.” (Location 1342)
  • Methodology 1: Find Your Greatest Strength (Location 1366)
  • “the real tragedy in life is not that each of us doesn’t have enough strengths, it’s that we fail to use the ones we have.” (Location 1371)
  • “Monitor your spontaneous, top-of-mind reactions to the situations you encounter. These top-of-mind reactions provide the best trace of your talents. They reveal the location of strong mental connections.” (Location 1386)
  • Methodology 2: Find Your Source of Personal Energy (Location 1395)
  • The evidence suggests that expertise in an area that matches your unique skills can be learned and should not be an intimidating barrier to moving forward. When an area fits with your core competence, it releases tremendous energy and learning tends to come swiftly and sometimes effortlessly. Your natural talents make you an intuitive learner in this area. (Location 1433)
  • importance of metrics and what he calls the “denominator” question. Collins found that “every good-to-great company attained the notion of a single ‘economic denominator’ ”: (Location 1513)
  • Think about it in terms of the following question: If you could pick one and only one ratio — profit per x (or, in the social sector, cash flow perx ) — to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine? We learned this single question leads to profound insight into the inner workings of an organization’s economics… Do you need to have a single denominator? No, but pushing for a single denominator tends to produce a better insight than letting yourself off the hook with three or four denominators. The denominator question serves as a mechanism to force deeper understanding of the key drivers in your economic engine… (Location 1514)
  • If you can’t yet identify these points, you’re not ready to start the business in earnest. Prioritizing your time and energy is of major importance. (Location 1522)
  • If you don’t get the metrics right, there’s a good chance you’ll lead your start-up to ruin. (Location 1526)
  • Scale means better access to anyone who matters to your business. (Location 1591)
  • As you grow larger, your per unit costs decrease. (Location 1605)
  • An important value of scale also occurs in marketing. (Location 1608)
  • As you grow, new and often unexpected revenue opportunities start to appear. (Location 1612)
  • With growth, other businesses care about your success. (Location 1616)
  • 60% Rule holds that the best solution is to automate everything except the core focus of your business, using inexpensive plug-and-play services, even when these services only provide 60% of the functionality you want. (Location 1625)
  • The value of just getting your business going is enormously high, (Location 1666)
  • Speed to market is in itself a virtue. (Location 1669)
  • Build for Flexibility (Location 1677)
  • One way of determining how to decide what activities to outsource involves making a map of the entire process of your business. Begin the map with a list of everything that must happen in your business, from beginning to end. Next, ask yourself, “What are the unique functions that allow this business to create value for the customers and compete in the marketplace? What are the brains of the business that determine whether the revenues and profits of the operation grow?” The activities that do not fit within these criteria should be outsourced. (Location 2004)
  • After you’ve finished your map and lined up services to handle your outsourcing, you should periodically analyze whether you are on target. While recognizing that everything takes longer than expected, ask yourself how you will be allocating your time for the next 3 months. Do you have contracts to negotiate or specific creative activities to perform? All of these are extremely time consuming. It does not help to be overly optimistic with regard to your efficiency: Try to put together a realistic schedule of how you will be spending your time. If it looks overwhelming, then either you have not outsourced enough functions or you must think harder about how to focus the business to simplify your activities. (Location 2008)
  • Remember, Simplicity Always Wins (Location 2047)
  • The go-it-alone businesses typically succeed because of a laserlike focus on solving a specific problem. The founder develops a better way to address the problem, figures out how to create a manageable infrastructure that supports this effort, and remains highly flexible over time. In many cases, this flexibility allows the business to react to market shifts far faster than larger competitors. All of these benefits are heightened when the business is straightforward — and diminish as it becomes more complex. (Location 2048)
  • The best test of simplicity versus complexity is probably your intuition. As you go forward, ask yourself how you would instinctively describe your business to someone. If you would say, “It’s really very simple. What I do is…,” then you’re most likely on the right track. Conversely, if your immediate thought is There are too many moving parts here, it’s critical to stop and reassess your infrastructure. (Location 2073)
  • There are multiple lessons in Loeb’s experience for go-it-alone entrepreneurs: Get moving. “Get it off the ground as quickly as possible. If you are first and speedy, you will find ways to ensure you maintain your success,” Loeb says. In his view, people spend far too much time putting the cart before the horse. They start negotiating for all kinds of protections and rights before they have proven they can do anything, So, he says, “they never get off the ground.” Minimize risk. Loeb says that “risk is an inherent part of the process, but you work to minimize it as much as possible.” For him, this involves “testing absolutely everything you can with real customers so you can understand what works and what doesn’t.” Don’t be afraid of failure. “Failure is an integral part of the process,” Loeb says. “You want to act in areas where’s there’s lots of margin for error, but you will inevitably see failures…. We work hard to encourage action. Errors of commission are inevitable. It’s errors of omission that block success.” Using extreme outsourcing to get the business off the ground without large investments. Synapse is still a believer in extreme outsourcing. (Location 2170)
  • The “Three Rules Maximum” Test (Location 2240)
  • What are the one to three things that are going to determine whether I succeed here? The obvious follow-up questions are Do I have the essential expertise to execute well within this focus? and If not, can I acquire it? (Location 2242)
  • The “You are the Customer” Test (Location 2244)
  • Put yourself in the place of your prospective customer. Now, ask yourself a series of questions: With the range of choices already available to me, would I buy the new product or service this company is offering? If so, why? As a prospective buyer, am I unique, or are there many people like me? Would I buy the product or service at the full price that is presently planned? How quickly and easily would I buy the service? Would I buy it immediately, or would I require a fair amount of education about this new offering? Then, stepping back into the entrepreneurial role, ask: Do the current plans for the business allow for the appropriate amount of time and effort? (Location 2245)
  • The “Differentiation and Market Hegemony” Test (Location 2251)
  • Whenever someone says, “This is a huge market and we need to capture only one percent of it to succeed,” it’s time to turn around and run for the hills. Avoid this trap at all costs! Success demands that your business be distinctive and dominate something. It’s far better to be the large fish in a smaller pond than one fish in a giant ocean. (Location 2252)
  • The “Can I Be Circumvented?” Test (Location 2271)
  • You may have a valuable insight that allows you to build a substantial business. Then, a supplier or partner will realize that they can replicate your business and eliminate the need for your service or product. Prior to starting the business, you want to assess the risk of this all too common phenomenon and its potential to prevent your long-term success. (Location 2272)
  • The “Double Your Costs” Test (Location 2278)
  • You can predict that things will go wrong, that everything is always more expensive than you anticipate, and that it always takes longer than you anticipate to build a revenue stream. This test looks at how much room you have for error — naturally the more room, the better. Look at your existing plan for profits (your anticipated expense, your anticipated revenues, and the timing of your revenues) and ask yourself the following questions: If I double my costs, is this still a good business proposition? If revenues are half of what I anticipate for the first year, combined with doubling my costs, is this business still a good idea? (Location 2280)
  • The best business ideas typically leave you a lot of room to make mistakes. And remember, what you end up making money from may not be what you set out to make money from, so leave lots of room for experimentation. This test is probably most valuable when conducted before you put time and energy into test-driving your business. Once you’ve already perfected your business model — while keeping your day job — you may not have to adopt such drastic assumptions, because you’ll have the advantage of real experience to tell you what works. (Location 2285)
  • The “Dependency” Test (Location 2289)
  • A central source of risk in any business can be too great a dependency on one supplier or customer. The rule of thumb is that no single customer should account for more than 35% of a firm’s sales. (Location 2289)
  • The “Can It Survive Without Me?” Test (Location 2303)
  • The “Can It Survive Without Me?” Test addresses an upside potential of the business you are considering: Are you building a terrific go-it-alone business that will have the potential to be sold? (Location 2304)
  • The “Multiple Streams of Income” Test (Location 2316)
  • A classic method of limiting risk is diversification. In the context of business income, this refers to the potential of the business to generate revenues from multiple sources. (Location 2317)
  • “Vulnerability” Test (Location 2324)
  • The vulnerability test, or “what is the worst-case approach” to analyzing a business opportunity, starts with a few appropriate questions: Once I am up and going, what could happen that could essentially kill the business instantly? How likely is this possibility? How do I anticipate that existing and potential competitors will react to my business? Do any competitors have the ability, by responding to my perceived threat, to deliver an immediate knockout blow to my business? Why won’t existing competitors respond to my market entry? (Location 2324)
  • The “More than a One-Trick Pony” Test (Location 2331)
  • You are far more likely to succeed if your business — or the core skills you will be exploiting — will have the flexibility to go in multiple directions. But if you know that you’re launching a one-trick pony, stop and think very hard. As a go-it-alone entrepreneur, you have far less room for error. (Location 2335)
  • Don’t Quit Your Day Job Until You Have No Time to Sleep (Location 2356)
  • Building a business today is a never-ending process of trying something, learning, and trying more — on the basis of what you have learned. (Location 2514)
  • The key to making “good” mistakes is to limit your downside risk. You want to experiment, and then experiment some more, so that your mistakes have consequences that are as limited as possible. (Location 2519)
  • These are the most relevant warning signs for solo entrepreneurs: (Location 2523)
  • Complexity (Location 2524)
  • Success Leading to Complacency (Location 2527)
  • what distinguishes companies that succeed from those that fail is their ultimate ability to recognize that a serious mistake is happening and to change direction before the ship goes down. (Location 2545)
  • culture of openness”; establishing “multiple avenues of debate, discussion, and data” so that people have a voice; and creating a learning organization that is open both to new information and to shifts in direction. (Location 2548)
  • Make a list of the things that could seriously undermine your business, from the possible collapse of a central client business, to the loss of an important marketing channel. Paste the list on the wall in your office. Look at it regularly and ask yourself, How do I know these things are not happening? What if this assumption or that assumption is wrong? Is there something else I could be doing to test this understanding? (Location 2557)
  • Frequent Mistake: Attempting to Expand from Focused to Comprehensive Services (Location 2562)
  • successful company usually starts out highly focused on an individual product, service or market…. But success creates something else: the opportunity to branch out in many directions,” he says. As a result, “over time, the company becomes unfocused. It offers too many products and services for too many markets at too many price levels. It loses its sense of direction.” (Location 2570)
  • Lou Gerstner calls the “grass is greener” mentality “the most pernicious” reason companies lose their focus and ultimately fail. It’s (Location 2575)
  • One simple test for distinguishing between valuable diversification and diversification that diminishes focus is the amount of new infrastructure required for a new offering. By and large, if no new infrastructure is required, then you are enhancing your business and maintaining your focus. If new infrastructure is required, you should think seriously about whether this new initiative will quickly lead to weaker business by increasing complexity. (Location 2584)
  • “The only way to exit the failure freeway and see the new territory of achievement is to take full responsibility for yourself and your mistakes…. Take a hard look at a very recent failure that you have considered not to be your fault. Look for anything negative in the failure that you should claim responsibility for. Then own it.” (Location 2610)
  • Be prepared to sell. As a go-it-alone entrepreneur, you must be ready to convince people that your initiative has merit. This may take the form of what is considered classic selling: convincing people to buy your product. Even if you do not see yourself involved in classic selling, you will still, in all likelihood, need to be a persuasive salesperson: You will most likely need to convince entities to do business with you — either as a provider or as a recipient of your work. (Location 2619)
  • Be prepared to demonstrate credibility. (Location 2631)
  • confident attitude will go a long way toward demonstrating credibility. It is absolutely essential that you project confidence in your ability to handle whatever task you are discussing with a potential customer, client, or supplier. (Location 2636)
  • How can people have confidence that you will deliver on your promises if you appear to doubt yourself? (Location 2638)
  • Be absolutely focused on getting paid. (Location 2639)
  • Think through your own support system and the extent of your need to stay connected to other people. (Location 2643)
  • Never be afraid to ask others for help. (Location 2647)
  • Instead of dwelling on your self-doubts, picturing the menace that waits, visualize your dream, focus on the specific image of the desire you seek. Passionately believe in the probability of succeeding in turning your dream into a reality. Passion empowers. The more passionate you are about living your dream, the more you will begin to assert control over your fear. And while you may never rid yourself of having fear as a constant companion, you can learn to take charge…. (Location 2678)