Most people think innovation is all about ideas, when in fact it is more about delivery, people, and process. Entrepreneurs looking to innovate need to understand the execution challenge if they expect their startup to carve out a profitable niche in the marketplace, and keep innovating to build and maintain a sustainable competitive advantage.

Everyone thinks they know how to make innovation happen, but I can’t find much real research on the subject. At the same time, myths about innovation are commonplace in business. Vijay Govindarajan and Chris Trimble, in their book “The Other Side of Innovation: Solving the Execution Challenge” have done the best recent research I have seen on this subject.

They take you step-by-step through the innovation execution process, in the context the ten most common myths about innovation, which I think makes their approach particularly instructive:

1. Innovation is all about ideas. While it is true that you can’t get started without an idea, the importance of the Big Hunt is vastly overrated. Ideas are only beginnings. Without the necessary focus, discipline, and resources on execution, nothing happens.
2. A great leader never fails at innovation. When in comes to innovation, there is nothing simple about execution. The inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone.
3. Effective innovation leaders are subversives fighting the system. Effective innovation leaders are not necessarily the biggest risk takers, mavericks, and rebels. The primary virtue of an effective innovation leader is humility. What you want is integration with real world operations, not an undisciplined and chaotic mess.
4. Everyone can be an innovator. Ideation is everyone’s job, as are small improvements in each employee’s direct sphere of responsibility. Yet most team members don’t have the bandwidth or interest to do their existing job, and well as address major innovations.
5. Real innovation happens bottoms-up. Innovation initiatives of any appreciable scale require a formal, intentional resource commitment. That requires the focus and resources from top executives to sustain, even initiate, relevant efforts.
6. Innovation can be embedded inside an established organization. Some forms of innovation can be imbedded, like continuous product improvement, but discontinuous innovation is basically incompatible with ongoing operations.
7. Initiating innovation requires wholesale organizational change. Innovation requires only targeted change. The first principle is to do no harm to existing operations. A common approach that works is to use dedicated teams to structure innovative efforts.
8. Innovation can only happen in skunk works. Innovation should not be isolated from ongoing operations. There must be engagement between the two. Nearly every worthwhile innovation initiative needs to leverage existing assets and capabilities.
9. Innovation is unmanageable chaos. Unfortunately, best practices for generating ideas have almost nothing to do with best practices for moving them forward. Innovation must be closely and carefully managed, during the 99% of the journey that is execution.
10. Only startups can innovate. Luckily for entrepreneurs, many large companies are convinced that they must leave innovation to startups. Yet research suggests that many of the world’s biggest problems can only be solved by large, established corporations.

Everyone agrees that the goal of innovation is positive change, to make someone or something better. Entrepreneurs need it to start, and established companies need it to survive. The front end of innovation, or “ideating” is the energizing and glamorous part. Execution seems like behind-the-scenes dirty work. But without the reality of execution, big ideas go nowhere, even in startups.

When you have been on the startup firing line, you quickly learn that any insight from experts and entrepreneurs who have been there before you can make the difference between failure and success. Yet, many new entrepreneurs brazenly assume they are bulletproof, and march blindly into the fray. The result is that well over 50% of startups fail in the first two years.

I don’t think anyone proclaims to have any silver bullets, but there are common failure threads that appear all too often. There are many books written about failure in startups, and I don’t recommend any of them. I prefer the more positive approach of getting you better prepared up-front, like the new book “It’s Your Biz” by Susan Wilson Solovic.

Susan has years of experience in the small business trenches, and really focuses on what it takes to succeed, with realistic caveats, including an excellent summary of words of wisdom categories that every entrepreneur should review:

1. Don’t chase your tail. As you are building your business, take introspective looks at yourself weekly. How many days have you had lots of activity going on, but at the end of the day, you’ve accomplished nothing to move your business forward? Measure results to make sure you are not chasing your tail, like your favorite puppy dog.
2. Keep moving forward. Never let a day go by in which you haven’t done at least one activity that directly relates to a key business goal. Establish deadlines and milestones for yourself and track your forward progress. Keep you eye on the ball, and don’t be distracted by seemingly attractive options that lead you away from your core business.
3. Listen to your instincts. It’s important to ask and listen to others for advice and guidance, but measure these inputs against your own instincts as well. Blindly following someone else’s strategy doesn’t help as an excuse for failure, and doesn’t help you learn along the way.
4. Manage growth wisely. Overextending yourself and your resources by taking on too much too fast can kill your business. Growing a business is like a marathon, you don’t want your company to be a flash in the pan. Remember, according to Seth Godin, the average overnight success takes six years.
5. Look for collaborative opportunities. In business, it’s tough to survive on an island. Strategic alliances allow you to take on bigger contracts, offer more services, and cover larger geographic territories. In addition, two heads are better than one, so collaborative brainpower is a significant asset.
6. Expect the unexpected. You can’t predict natural disasters, and economic fluctuations. Yet too few entrepreneurs have a current list of business essentials, emergency contacts, or documented backup procedures. Even better, you need a “Plan B” for survival when the unexpected arrives.
7. Learn to manage your stress. The stress of growing your business will take its toll, unless you take care of yourself. Be realistic about what you can expect of yourself and don’t over-commit. Learn to say “no” and really mean it. Schedule some time each week that is just for you, and for your family.

Overall, we all emphasize that you need to keep purpose, promise, and principles as the cornerstones of your business. It’s amazing how many business owners and their teams go through the motions of running their businesses on a day-to-day basis without ever understanding the purpose behind what they’re doing.

Businesses without a purpose don’t have a heart. Or if the principles and values aren’t yours, then it’s not your heart. If it’s not your heart, then you will be making promises to your customers with your fingers crossed. Remember that if you don’t deliver for your customers, they won’t deliver for you. That can make the normal business trenches a deep hole. Read and heed.

Every entrepreneur needs to be honest about their strengths and weaknesses, and realistic about their reasons for choosing the startup route. For any entrepreneur, even the best business opportunities, if entered for the wrong reasons, will likely fail. Some of these reasons seem obvious, so forgive me for restating, but I still hear them too often.

Statistics show that at least 50% of new startups fail within five years, and many of the survivors eventually fail. If you don’t want to be part of these statistics, consider all the alternatives to starting your own business, especially if you have one of the following perspectives:

1. “I’m tired of working hard and being so stressed all the time.” Starting and growing a business is more work and more stress than any employee role should be. Perhaps you need to look carefully at the reasons for your weariness and stress at work. Health and personal problems don’t go away when you start a business.
2. “It’s my hobby anyway, so why not make it my business?” The problem here is that most hobbies cost money rather than make money. Just because you love doing it doesn’t mean anyone will love paying for it.
3. “I’m desperate, since I can’t find a job that suits me.” With the current recession, jobs are indeed hard to find. But don’t forget that businesses are failing at a higher rate as well. Desperate people don’t make good entrepreneurs, and probably don’t have the resources or fortitude to start a business.
4. “My family has always been in business, so it’s in my genes.” Good entrepreneurs do seem to have certain innate qualities, but it’s not clear that these qualities are automatically passed to offspring. If your passions are elsewhere, don’t try running the family business.
5. “I’ve inherited some money and starting a business should be a good investment.” You can’t start a business without capital, but having capital doesn’t mean you can start one. Learning is expensive and risky. It’s less risky to invest your windfall in someone with a proven business record, or put the money in the bank.
6. “I have some extra time, and I need a second income.” Being an entrepreneur is not a part-time job. A business startup is actually a second expense more than a second income. For supplementary income, you would be better served to take a part-time job with an existing company.
7. “I hate having a boss, and just being an employee.” Don’t start a business for a power trip. When you become a business owner, your customers, suppliers, creditors, partners and a lot of other people will become your new “bosses”. These people may be harder to please than your boss at the office today.
8. “All my friends own hot businesses and seem to be doing well.” You shouldn’t believe all the hype, or all the things said in social circles. Definitely don’t jump into trendy businesses you don’t know just to be popular. Even good friends tend to forget talking about the years of hard work and sacrifice, in favor of recent success.
9. “I’d like to be rich, so I’ll start a business.” Starting a business with a dream of riches is certain disappointment. There is no evidence that entrepreneurs make more money, on the average, than other professionals. There is much evidence that the risks of failure are higher on the business owner side.
10. “My primary goal is to contribute something to society.” This is laudable, but more effectively addressed after you have built a successful company, not before. If changing the world is your main motivation and money is not a concern, then do it, without allowing the building of a company to slow you down.

For anyone with entrepreneurial aspirations, I recommend you start by networking with peer business people and organizations before you commit to a startup of your own. Ask questions and do everything you can to make sure you are tackling the right business for the right reasons. Your entrepreneurial life depends on it.

Startups are usually so focused on selling more of their branded product or service to their own customer base (organic growth) that they don’t consider the more indirect methods (non-organic growth) of increasing revenue and market share. Non-organic growth would include OEM relationships, finding strategic partners, “coopetition,” as well as acquisitions.

This initial focus is usually driven by limited financial and people resources, as well as the bandwidth of the executive team. Yet a creative and skilled team will often find that non-organic growth techniques can better leverage these limited resources.

An example of a startup which used non-organic growth early and effectively was Microsoft. Bill Gates started producing software solutions, like his Basic Interpreter and MS DOS, but quickly focused on adding thousands of small partners for applications, and major partners like IBM and other hardware manufacturers. Even mergers and acquisitions (M&A) came early.

Some people feel that organic growth is “better” because it requires real innovation and sustained effort to create long-term competitive advantage through differentiation and efficiency. They might agree that it cannot compensate for the speed and scale of growth of the non-organic approach, but has lower risks of failure.

Despite the risks, there are many advantages of non-organic growth, even in startup environments:

• New product or service lines. Organic growth assumes innovation in the product or service, but non-organic growth through white labeling and strategic partners may add totally new brands and services to your revenue stream.

• Fresh customer base. Teaming with another company, or buying another company, can add new geographical locations and new customer segments to the business. These relationships need not require cash investments; often they are done with exchanges of equity or assets.

• Economies of scale. In many cases business opportunities with competitors (coopetition) will open up a new marketing channel, and definitely give you the cost advantages of scale. Economies of scale also apply to marketing, distribution, and sales.

• New management skills. New business relationships mean new perspectives and new executives working on the opportunity. This can be a significant competitive advantage over major competitors, and overall reduces competition in the market place.

I’m certainly not proposing that one mode should be used to the exclusion of the other. Rather, I recommend that you pursue both concurrently, per the advantages of each. For example, if you are in an industry which is fragmented or has a slowing growth rate, with too many competitors, non-organic growth may be required for survival.

Use organic growth options for things which you do best, where there is plenty of room for growth by selling your products in new geographic areas, or using new sales channels, such as through a wholesaler or website. Organic growth is typically safer because you’re using a tried-and-tested business model, and you can reinvest profits back into the business.

Certainly non-organic growth has its pitfalls. Entrepreneurs, while partnering with or acquiring a new business, must check for compatibility and strategic fit. Yet startups looking for investors need to evaluate all the growth alternatives from the very beginning. “No growth” or even slow-growth companies waiting for an angel may have a long wait.

With the tenth anniversary of 9/11 behind us, and the ongoing financial woes, there seems to be a growing population out there worried about all the people and companies watching to hurt them. Why is everyone so paranoid these days? My plea to entrepreneurs is to recognize it as an opportunity, and go the extra mile to make people’s life better rather than stoke the fires.

I must be the only one who believes that most of the “watching” in the real world, and on the Internet, is done by businesses to help you find what you want, protect you, and improve your experience, rather than invade your privacy or scam you.

I certainly agree that just like in the real world, consumers have to assume that there are always bad groups on the Internet, as well as down the street, trying to rip you off, so stay out of bad neighborhoods, and keep your wits about you at all times. Internet users need to start watching out for themselves, like looking both ways before you cross the street.

In addition, there is a real business opportunity here for startups. I know companies who collect sensitive data from consumers all the time, and still seem to keep a squeaky clean image (Amazon.com, Ebay). There are others who are always a bit suspect, or have been hit hard by their mistakes.

The opportunity is to take advantage of the new power and tools on the Internet. Here are a few specifics on how to be part of the solution, rather than part of the problem:

• Put a personal face and address on your site; don’t hide behind an “info” email address.
• Make your company visible, reachable and responsive through social networks.
• Market your solution and user benefits, not the mysterious technology behind it.
• Use video and audio, rather than jargon, abbreviations, and computer lingo on your site.
• Make navigation simple and consistent, with abundant online help

The good news is that, if your company does it right, it might be another Amazon. There seems to be an insatiable demand from consumers for a better shopping experience, meaning they will pay a premium to a company that can present them a better match in products to their interests, without jeopardizing their good name.

In support of this, despite qualms, consumers seem very quick these days to provide more personal data to get something they want. Young people naively enter their pictures and personal data for fun on social networking sites, ignoring constant feedback from the media that these are bad practices.

The bad news for startups is that your company can lose big if it’s caught in the middle. A few months ago, the Sony PlayStation Network was hacked, with personal data of up to 70 million people stolen, and this black eye won’t soon go away. A few years earlier, PayPal was hit by a scam to get the personal information of its users, and some feel it hasn’t really recovered since.

Sometimes the problem cause is that startups forget the technical standards and quality processes that every Internet rollout must follow to reduce the risk. Don’t take shortcuts on these. I see lots of new software put together on a shoestring as a “proof of concept” – but then gets rolled out to customers “asis” due to lack of time or money to “harden” the product.

What I learned from a panel discussion a while back, sponsored by an association of lawyers, is that lawyers don’t have any answers, and are all too quick to fan the flames of fear and paranoia. They merely highlighted consumer privacy rights, with much hand-wringing about big bad companies that are capturing shopping habits without consumer knowledge on the Internet.

A better approach is to use your marketing power to tell people that you can now ring their cell phone in front of their favorite store for a special sale, and allow them to “opt in,” rather than surprising them with your new technology. Few people are paranoid about something they want and expect. That’s just good business.

Over the years, I’ve had the privilege of working with some of the best entrepreneurs in Silicon Valley and elsewhere. On the average, the entrepreneurs I know are struggling. But one thing they all seem to have in common is a love for learning and change. They rush in with a passion to better the world, and money is just an indication of their progress.

The successful ones then invest their time and money in furthering their knowledge base. I’m not talking about academic classes, because at best these only teach you how to learn. In these days of rapid change, most experts believe that the facts college students learn as a sophomore are obsolete before they exit their senior year.

Learning should be viewed as an ongoing part of everything you do, and one of the most important things. It’s an unfortunate artifact of our educational system that young people spend a dozen years focused more on memorizing facts than the learning process, and then thinking that they will have all they need to know for the rest of their lives by the time they graduate.

In business, as in most other disciplines, there are practical steps towards learning what you need for the next stage of your company and your life. These include the following:

• Networking with people who know. A question I sometimes get from startup founders is “What do I talk to these guys about?” I say you can’t learn much if you are doing all the talking. Just ask investors what they look for in successful companies. I’ve never known any successful entrepreneurs or investors who were not happy to share their secrets.

• Read entrepreneur stories. Most successful entrepreneurs have been written up on the Internet, or in magazines, or books. Spend some time with these biographies and soak up the insights and inspiration. Follow up online with social networking to make contact, dig deeper, and maybe even line up a mentor.

• Adopt a mentor. Boomers who have been there and done that make great mentors. They have the time and interest in “giving back” some of what they have learned to the next generation. Gen-X executives are too busy running their own companies to be mentors. A mentor is someone who doesn’t let ego or money get in the way of helping.

• Formal learning. Some formal learning is always advisable, but get beyond university MBA courses to professional seminars and case studies. Formal courses work best for basics, like a business start-up course or financial accounting. Go with topics you are interested in and need today.

• Volunteering with local organizations. Work is highly valuable in any environment of universities and professional organizations. The payback is that you can get experience for free, while working on real stuff. I’ve done business plan judging at local universities, and learned more than I contributed.

• Just start a business. There is no better way to learn about being entrepreneurial than starting a business. No matter how much advice and counsel you have been given, I guarantee that you will encounter new challenges daily, to enhance your learning opportunities.

If you are one of those people who likes structured classes for learning, and counts on spending at least two weeks per year in the classroom to “catch up,” that’s laudable, but don’t try to start a business at the same time. It won’t happen.

If you have decided to become an entrepreneur solely to make more money, you are also likely to be disappointed. It’s that double challenge of learning to overcome all obstacles, while still surviving on the financial front, that keeps a good entrepreneur motivated to face a new day. Join us if you dare.

Even when your startup is a one-man show, you will soon find that you are “out of control,” unless you start organizing and writing down how and when key things need to get done. Like it or not, you are now entering the dreaded realm of “formal business processes.” The right question is “What is the minimum that I need?”

The simple answer is that you need to implement one process at a time, starting with those things that are most critical to your business, until you feel a relief that things are starting to happen naturally and consistently, without the attendant stress and continual recovery mode. If you feel that the process itself is a burden, you have likely gone too far.

Here are eight key business tasks that relate to almost every startup, generally prioritized by criticality. Think about the implications of each to your own business, and the potential impact of getting them done incorrectly, or forgetting to do them entirely:

1. Manage your financials and physical assets. I’m continually amazed at the number of entrepreneurs who go for months into a new business without really keeping a formal record of money spent or assets acquired. Use a simple accounting tool like QuickBooks, get away from co-mingled funds, and you have the first business process you need.
2. Develop your business plan. Write down the key elements of your business plan very early, and keep it current as things evolve. This will include the first version of many critical processes that can be split out later, including market opportunity, requirements, product definition, business model, sales process, and organization.
3. Product development process. Even if you are doing the work yourself, you need to document requirements, features, metrics, and milestones. If you are contracting or outsourcing, this is even more important. Otherwise you will find yourself a year later being no closer to a product that you were yesterday, with no idea why.
4. Funding process. Unless you are bootstrapping everything, you need to have a clear plan on what networking and documents are required to get to friends and family, angel investors, and institutional investors. Measure yourself against a researched plan, or your “out of cash” brick wall will be looming before you know it.
5. Manage human resources. At this stage, you should start recruiting, hiring, paying, and training others to help you run your business. In addition to effectiveness and consistency, you now have a myriad of legal and tax considerations to get right. Don’t try this without a formal process.
6. Leverage information technology. Find an IT person you can trust, and plan how you will acquire, implement, and utilize computer technology to run your business. How do you access the Internet, what servers do you need, applications required, databases designed, and backups scheduled? It all has to be written down and maintained.
7. Billing and revenue collection. Whether you provide an online subscription service, or sell products in a store, you need to consistently and economically sell your product and collect revenue to survive. Here you will likely need to train others to help you, so more detail may be required in this process.
8. Customer service and support. Here is another often overlooked area of process that kills many startups, both in cost and time. Don’t assume that you can fix every problem yourself, or that there won’t be any problems to fix. Even if your business is online, people want a contact, real expertise, and quick response.

If you are a great startup, you won’t just copy the processes of your competitors, even in these basic elements. Innovation is the key, to keep each process small, but make it more effective than competitors and big-company processes.

But having no process does not make you more competitive. In my experience, no process sounds more like a hobby than a business. Hobbies can be a lot of fun, but they usually cost money rather than make money. What is your business objective?

If you are one of the many people who lost your job during the recent depression, you should be working on starting your own business, in parallel with looking for that ideal replacement job. Let me explain why this is a win-win deal, no matter what the outcome.

You have probably secretly always wanted to run your own show, but with a full-time job, never had the time to consider a startup. Then there was always the risk of failure, which of course doesn’t apply now since your real job is gone. Also, for most of us, not having done it before, we have no idea where or how to start.

Here are my recommendations on how and why initiating a startup while looking for a job is the right thing to do:

1. No gap in your resume. Instead of an embarrassing gap in your resume for your period out of work, you have an entry for your startup business, showing initiative, leadership, and breadth of experience.
2. Fun learning experience. It’s more fun tackling the challenges of a startup in between job search activities, than sitting around feeling sorry for yourself and waiting for status callbacks on interviews (which seem to have gone out of style).
3. Find a partner. Unless you are a true loner, you need someone like-minded but complementary in skills to help you with the startup plans. It’s always good to have someone to test your ideas, keep your spirits up, and hone your business skills. Now you have a reason for talking to people who may become lifelong friends.
4. Incorporate an LLC. First, pick a name for your company and do the paperwork on starting a Limited Liability Corporation (LLC). Almost anyone can handle this without professional help, and the cost is less than $100 in many states. It shows everyone you are serious, and limits your liability on any mistakes.
5. Develop low-cost plan. Pick a startup business that you can do for minimal cost, like a services business with the skills you have. With simple software available today, pick a domain name and implement your own website. Use social networking and blogging to get your message out. You don’t need an investor for this approach.
6. Get business cards made. Nothing says you are serious about a business like handing out professional business cards at local events and Chamber of Commerce meetings. Do them on your home computer for a few dollars. Offer to help a couple of customers free, just to get your act together and your presence known.
7. Highlight your startup efforts in job interviews. Work your startup efforts into every job interview and application. It will definitely show off your energy and vision, and will make you a more competitive candidate for any role.
8. Make the decision – job or business. Obviously, at some point you will need to decide whether your startup business is better than the job opportunities. That’s good because it’s always nice to have an alternative, rather than feeling that you just have to take the first dead-end job offered.

There are other startup related points I could make here, like joining an existing startup as a “volunteer” for a time, just to learn more about what is required. Also, in most geographies, there are organizations springing up, and university workshops, to mentor people out of work and contemplating a startup. Get some help from them if you need it.

Just remember that problems are really just opportunities in disguise. Don’t miss out on what may be the best opportunity you will have in your lifetime for a new career. Start up now.

Many people believe that good entrepreneurs are naturally born, rather than trained or experienced in the art of business. I believe there is a natural born component required, but often I tend to agree with Peter Drucker, who said “It’s not magic, it’s not mysterious, and it has nothing to do with genes. It’s a discipline, and like any discipline, it can be learned.”

On the natural born side, some entrepreneurs seem to have a strong vision and the ability to inspirationally lead others. It is this vision that is the beacon to drive the right people behavior, leading to the success of the business. If you don’t feel a vision in your heart, or if you don’t have the strength to inspire people, entrepreneurship is probably the wrong road for you.

If you feel you have the vision characteristics, you still could benefit from some of the key learnable skills that can improve the success and impact of every entrepreneur, assembled from an interview with Herb Kelleher of Southwest Airlines and other executives:

1. Ability to set priorities and focus on goals. Many people allow themselves to be driven by the crisis of the moment. Personal discipline is the key word here. Set yourself some priorities and goals, and live by them.
2. Able to identify important issues. Some people call this common sense; others call it “street smarts.” In the normal startup environment, there are multiple forces competing for your attention every day, and you need to learn to delegate or ignore many. It relates back to experience and knowledge, more than genes.
3. Conviction to be a passionate advocate. When you believe in something enough to turn your passion into action, you have become an advocate. That power and voice is then used to persuade others to make the correct decision. An effective advocate requires conviction, usually acquired during related first hand experience or training.
4. Broad knowledge and experience. Experience allows one to tackle challenges with confidence in a given area. Broad knowledge facilitates the same success in other business areas. Entrepreneurs need this, because their challenges are across the spectrum from technical to legal, operational, financial, and organizational.
5. Active listening skills. Above all, the ability to listen and understand the real meaning of what people are saying (and not saying) is paramount, because the most important information never arrives in reports or email. Some people pick this up from experience, and others find classroom courses most helpful in setting the focus.
6. Sound judgment. I don’t think anyone is born with sound judgment; it has to be learned, but can be started at a very early age. Every entrepreneur must have the capacity to assess situations or circumstances shrewdly and to draw proper conclusions.
7. Pleasant skepticism. Skepticism is not doubting, but applying reason and critical thinking to determine validity. It’s the process of searching for a supportable conclusion, as opposed to justifying a preconceived conclusion. It is a learned skill.

These all revolve around the larger theme of team building. In short, to succeed, the entrepreneur must see and articulate a vision in order to attract and motivate a team, then be able to identify the key issues, challenge the views held within the team, and make judgments from among the varying perspectives in the team.

Every entrepreneur enters the game with a unique combination of genes and skills. If the things mentioned here feel natural to you, and you are young at heart, have a healthy curiosity and zest for life, the entrepreneurial world may have a place for you, too. Give it a try. If you are having fun, you probably have what it takes.

Building a startup is hard work for low pay, it’s risky, and it requires total responsibility to make it work. Yet, many entrepreneurs are the happiest people I know. On the other hand, I know many unhappy individuals who are always partying, have minimal commitments, and little responsibility. I suspect the real parameters of happiness have eluded these people.

According to one of my favorite authors, Brian Tracy, in his book “The Power of Self-Discipline,” happiness is not even a goal that you can aim at and achieve in and of itself, but it is a by-product that comes to you when you are engaged in doing something you really enjoy while in the company of people you like and respect.

He defines the five key ingredients of happiness that every potential and existing entrepreneur (and every person) should evaluate relative to their own situation:

1. Happy relationships. Fully 85 percent of your happiness – or unhappiness – will come from your relationships with other people. For entrepreneurs, that includes business colleagues, but it also still includes spouse, children and friends.
2. Meaningful work. You must be doing things that you love and give you a sense of fulfillment, as well as making a contribution. Studies have shown that the three most motivating business factors include challenging work, opportunities for growth, and pleasant coworkers.
3. Financial independence. The happiest of all people are those who have reached the point at which they no longer worry about money. That doesn’t mean unlimited funds, but enough that they don’t fear being destitute, without funds, or dependent on others.
4. Health and energy. It is only when you enjoy high levels of pain-free health and a continuous flow of energy that you feel truly happy. For many, health is only a “deficiency need,” meaning you don’t think much about it until you are deprived of it.
5. Self-actualization.This is the big one, the feeling that you are becoming everything you are capable of becoming. Before this can happen, you must first feel that all deficiency needs are satisfied, and you have achieved self-esteem:
   • Survival. Basic survival is the top deficiency need, meaning sufficient food, water, clothing, and shelter to preserve your life and well-being. You cannot be happy, and you will experience tremendous stress, until survival requirements are met.
   • Security. The second deficiency need encompasses financial, emotional, and physical security. You have to have enough money, security in your relationships, and physical security to assure that you are not in imminent jeopardy of any kind.
   • Belongingness. The final deficiency need reminds us that we are social people, and we need social relationships with others, both at home and at work. You need to be recognized and accepted by other people who count in your world.
   • Self-esteem. Your self-esteem is the core of your personality and largely determines how you feel about everything that happens to you. Are you liked and appreciated by peers, doing a good job and being recognized for it, and achieving your ideals?

According to Abraham Maslow, a noted psychologist, less than two percent of the population ever reaches this height of self-actualization and personal fulfillment. But the wonderful thing about self-actualization needs is that they never need to be completely satisfied. As you stretch yourself in this direction, you experience a steady flow of happiness and contentment.

In all of these areas, you need to exert self-discipline and willpower to overcome the tendency to take shortcuts. When you keep going in spite of all obstacles and hardships, you feel powerful. Your self-esteem and self-confidence increase, and then as you move, step by step, toward your ideals, you feel genuinely happy. Are you a happy entrepreneur?

Most entrepreneurs think that risk is just an “occupational hazard” that can be minimized or eliminated by a smart businessman. That way of thinking is simplistic and wrong. In reality, some risks are good and should be embraced for growth and a competitive edge, while others are bad and should be avoided completely.

Traditional risk management focuses only on bad risks, and seeks to contain losses. But if you want growth and sustainability, you need to create good risks, which means intentionally taking a risk to grow your business or gain competitive advantage.

In fact, entrepreneurship is all about taking calculated risks, while minimizing non-calculated risks. Here are some simple examples of “good” calculated risks that you should be working on:

1. Deliver an innovative solution to a painful customer problem. This can be high risk if your solution doesn’t work, or your price is more painful than the problem. A bad risk is assuming that you because you like the solution, everyone will buy it, or that you can build an existing solution cheaper than anyone else.
2. Plan to replace your product with a better and cheaper one. Probably more companies fail by avoiding this strategic risk than any other. If the current product is making money, it seems like a bad risk to obsolete it. Yet, new technology can quickly blindside you, and market dynamics change, plus you need to broaden your opportunity.
3. Build a dynamic product line, rather than a single product. Every new product you add stretches your ability to deliver winning function and quality. Yet a great initial product, with no follow-on, will not keep you ahead of competitors. Take the strategic risk.
4. Implement a new business model. Software as a service (SaaS) has now pretty much replaced the old licensing model, but offering it was a strategic risk for SalesForce.com. Proactively implementing new business models, like subscriptions and “freemium” pricing, are good risks, while linearly lowering old product prices is a bad risk.
5. Partner with a competitor. Use “coopetition” for cost sharing, economies of scale, and open access to new markets. Once you have established your credibility and value, a strategic partnership may lead to other business relationships or a funding source.
6. Plan to spend money on marketing. It’s a bad risk to count only on word-of-mouth and viral social network buzz for marketing, as I see in many business plans today. These days, you have to spend money to make money. Of course there is work involved to find the right media, and balance the investment against the return.
7. Build your team from the best and brightest. Good people are expensive, and they are hard to find, which adds risk to your startup, but it’s a strategic risk. Lowering the risk by hiring the cheapest, or counting on family members, is a bad risk.
8. Count on less funding rather than more. It’s a well-known oxymoron that startups which are over-funded to reduce risk fail more often than under-funded ones. Strategically, the more you can do for less, the stronger you grow. It’s a bad risk to solve problems with money.
9. Be aggressive in your forecasts. Every investor has heard from the “conservative” founder who reduces his forecast to lower the risk. These don’t get funded, or they under-perform anyway. Forecasts should be strategic, based on the opportunity and pain level.
10. Lead rather than follow. In the old days, the leaders always caught the arrows, so following was less risky. Entrepreneurs who try to reduce risk by following winners, like building another Facebook or another Google, will find that they don’t catch arrows or customers.

The challenge with all risks is that they must be proactive, measured, and managed. If not, they automatically become bad risks. How much of your time is spent on containing the bad risks, versus initiating forward-thinking ones? If it’s over 50%, your whole startup is a bad risk.

Every startup founder I know talks about the chaos of their business, which they usually attribute to that burst of growth that is required to get to positive cash flow. They envision a stable environment after that point, and may have convinced themselves that they will be safer and happier with a livable income, maintaining a loyal but flat customer base.

Sadly, this false perception often leads to the death of their business, or at least the end of their tenure as CEO. I second the message that chaos never subsides, from a couple of successful entrepreneurs, Clate Mask and Scott Martineau, in their book “Conquer the Chaos.” Your only choice is to live with it, and find a way to conquer it.

Some small business owners hope to reduce stress by keeping their business static, and believe that they can rely on referrals and repeat business to keep a consistent customer set. Even with this, there are important reasons why not innovating, or going into maintenance mode, will lead to your demise:

• Competitors swoop in and take your space. There are always people around with deeper pockets that can find synergy between your space and theirs. Once they see you have developed credible traction, they can grab your space with less cost (meaning lower price) than you had to put into developing it. Don’t count on your IP to save you.

• Employees stop innovating. Employees are human, and a static known environment is more comfortable than a dynamic one. Innovation requires venturing into the unknown, causing more dreaded chaos. The easiest way to reduce chaos is to buffer all your activities (slow down), define safer generic processes, which spiral down productivity.

• Your products quickly become outdated. Change is the only constant in a successful business. Technology keeps improving at a rapid rate, so you fall behind in technology, driving costs up, and you become non-competitive.

• Your income drops. With decreased employee productivity and outdated technology, your costs go up, and income drops. Even great entrepreneurs are amazed at how fast this can lead to a non-recoverable situation.

The only real solution is to conquer the chaos, while continually expanding your reach into the available market, and into the improvements in technology. Conquering chaos requires two key strategies:

1. Mindset strategy. Your mindset is your emotional capital, bolstered by disciplined optimism and entrepreneurial independence. These give you the capacity to grow your business without getting consumed by it. You need to find ways to replenish these on a regular basis, and find your balance of pain versus rewards to keep your company vital.
2. System strategies. These are the processes and tools you implement to grow your business and keep it running smoothly and profitably. Key ones include centralization, automation, and follow-up. Again, balance is the key, with some measurements along the way to keep you on track.

Even after you bring chaos under control, you face an ongoing challenge to avoid back-sliding. Once your systems are in place, you have to give yourself the time you are saving. Make sure your own ambition doesn’t send you back into chaos. Don’t fall for the belief that your business will fail without you. Relax, let go, and enjoy the freedom you have earned.

Only now can you become the liberated entrepreneur that you set out to be in the first place. Your business will grow, you will make more money, have more time, more control, more purpose, and less chaos. Do you have what it takes to achieve the real entrepreneur lifestyle?

These days, your online Internet reputation is your reputation. Of course, having no reputation is usually better than a bad one, but don’t wait for someone else to establish a good one for you. It’s time for every business and business person to proactively create a positive presence, before someone else puts you in a defensive mode that is hard to win.

The first step in the process is to claim your online identity. This is simple in concept, but requires real effort and can be time consuming, and even expensive, if someone gets there before you and tries to sell you the rights to your preferred business or personal domain name. See my previous article on “When to Pay a Premium for Your Company Domain Name ”

Michael Fertik and David Thompson bring this issue and many others together in their book “Wild West 2.0.” After you claim your identity with placeholder domain names, accounts in social networks, and common blogging platforms, your next challenge is to create enough positive content as a “Google wall” to keep negative info out of the top Google search results.

Positive content, such as information and pictures on your accomplishments, achievements, and friends, paints you in a good light. Neutral content, including your membership in business associations, and company affiliations, can at best balance false negative information, or at least make the negatives harder to find.

Here are some of the easiest methods we both recommend for creating positive and neutral content:

• Blogging. There are several major free blogging platforms you can use to claim your identity, including WordPress, Blogger, and LiveJournal. If you add new content periodically, it is likely to become a secure and important part of your online resume, and it will come out at the top of any Google searches on your identity.

• Twittering. An even easier way of getting your positive messages to the top of Google rankings is “micro-blogging” through Twitter. This is especially useful in providing links to other positive and neutral content.

• Profile sites. There are several free and paid services, such as LinkedIn and Visible.me, that allow users to create a short personal profile and to link to other relevant sites. Simply engaging in forum discussions and exchanging comments establishes positive content.

• Other user-created content sites. Sites like Flickr, Webshots, and YouTube allow users to create and share photos and videos, and create short profiles. You can use these sites to your advantage by uploading relevant and positive content and prominently including your name in the subject or description.

• Professional directories. Many professions offer free online directories of members or similar sites for professional networking. These sites are often highly ranked in search engine results because they are heavily linked. If there is a directory relevant to your business or profession, use it.

If you have already been a victim of online reputation damage (accidentally or maliciously), proactively reach out to friends and co-workers to explain the problem. They can assist you by linking to positive and neutral content about you, thus displacing or minimizing the negative content.

For your startup, one study found that reputation damage is a bigger risk to most companies than natural disaster or even terrorism. Remember that during the startup phase where your company is not yet a brand, you are the company, so your reputation and that of your company are tightly linked.

The Internet has been a powerful and disruptive technology. The good news is that you can use it to advantage. But you can’t ignore it, and pretend there is no danger. Just like in prior generations with the Wild West, people who put up a good offense to protect themselves were the ones who survived and prospered. Take heed, and take action.

If you have had some success in a business, I’m sure you bristle just like I do when someone says “You were just lucky…” I’m a strong believer that we all make our own luck, which means that the harder we work, the luckier we get. In reality, “hard work” is just a catch-all term for a list of principles that good entrepreneurs follow, allowing them to work smarter and improve their odds of success.

A short list of these “hard work” principles, published recently by Anthony Tjan in the Harvard Business Review summarizes them as heart, smarts, and guts. I agree with these, and most people recognize them when they see them in others, but the terms are still a bit abstract for learning purposes.

Therefore, other experts, like professors Alex Rovira and Fernando Trias de Bes, authors of the book, “Good Luck: Create the Conditions for Success in Life & Business,” have identified five more definitive principles that seemingly lucky and successful entrepreneurs have in common:

1. Accept responsibility for your actions. Business owners who feel that they have had good luck also feel responsible for their own actions. When things go wrong or the outcome of any given situation is other than intended, they never point the finger of blame at external factors or other individuals. Instead, they look to themselves and ask, “What have I done for this to occur?” Then they act accordingly to solve the problem.
2. Learning from mistakes. Creators of good luck don’t see a mistake as a failure. Instead, a mistake is an opportunity for learning. Thomas Edison is the classic example. The very first light bulb was invented by Sir Joseph Wilson Swan, who demonstrated the theoretical concept but gave up trying to develop a practical application after only three attempts. By contrast, Edison made his own good luck and designed a working light bulb after over 1,000 failures.
3. Perseverance on all goals. Creators of good luck don’t give up or postpone. When a problem or situation arises, they act immediately to either solve it without delay, delegate, or forget about it. This enables their energy to be fully focused on their work and avoid conscious or unconscious distractions, which only generate inefficiency.
4. Confidence in yourself and others. The most powerful principle is often the most overlooked. Confidence in yourself is essential, and those who create their own good luck have high degrees of assertiveness and self-esteem. Closely linked to assertiveness and self-esteem is trust in others and respect for them, seeing other people as major sources of opportunity.
5. Cooperation with others in your network. Synergy is key. Trust in others leads to a solid network of work colleagues and friends, which, in turn, provides more resources to carry out projects than if they were managed alone. Think cooperation rather than competitiveness. At the most basic level, any project or undertaking takes place in the context of the broader group, and everyone should have the chance to emerge a winner.

With these attributes and the right attitude, I believe that most of “business luck” can be meaningfully influenced. That lucky attitude, according to Tjan, is a combination of three traits – humility, intellectual curiosity, and optimism.

Therefore, the basic equation of developing the right lucky attitude is quite simple. It starts with having the humility to be self-aware of your own limitations, followed by the intellectual curiosity to ask the right questions and actively listen to input, and concluding with the belief and optimism that something better is always possible.

Any entrepreneur can have this mindset if they just believe that luck is not random. They need to realize that they alone are the creators of the conditions that foster the achievement of specific, visualized goals. Then, having seen it work, they will know how to repeat the success. Overall, that really is “hard work.” Are you doing the right hard work to get lucky in your business?

I’m sure we have all seen entrepreneurs with high levels of passion and confidence touting an idea that seems to make very little sense to us. Of course, we never see ourselves in this mode, yet we need to recognize that all humans see reality differently through a built-in set of “cognitive biases,” based on their own unique background of experiences, training, and mental state.

These biases are good, in that they allow us to quickly filter and make decisions in the constant barrage of information we face each day, but bad because they often lead to errors in reasoning and emotional choices. The worst case is called the “passion trap,” where a pattern of beliefs, choices, and behaviors feel good and become self-reinforcing, but lead to disaster.

John Bradberry, in a recent book called “6 Secrets to Startup Success” identifies five key biases that sabotage many passionate entrepreneurs in their startup decision making. I challenge any entrepreneur to honestly tell me that they have never fallen victim to any of these while making startup decisions:

1. Confirmation bias. This refers to the human tendency to select and interpret available information in a way that confirms pre-existing hopes and beliefs. The antidote is to look for dissenting views that seem to form a pattern of concern. Then what you perceive as isolated exceptions, might indeed appear as a clear majority.
2. Representativeness (belief in the law of small numbers). Many entrepreneurs tend to settle on conclusions they like, based on only a small number of observations or a few pieces of data. The new founder who hears positive reviews from three out of four friends may assume that 75 percent of the general population will react similarly.
3. Overconfidence or illusion of control. Overconfidence leads founders to treat their assumptions as facts and see less uncertainty and risk than actually exists. The illusion of control causes startup founders to overrate their abilities and skills in controlling future events and outcomes. Both result is “rose-colored” plans, rather than realistic ones.
4. Anchoring. This refers to our mind’s tendency to give excessive weight to the first information we receive about a topic or the first idea we think of. It encourages founders to cling to an original idea or, if pressed, to consider only slight deviations from the idea instead of more radical alternatives. The ability to pivot sharply and timely is at risk here.
5. Escalation of commitment (“sunk cost” fallacy). Startup founders often refuse to abandon a losing strategy in an attempt to preserve whatever value has been created up to that point. They feel that they have put so much money, time, and energy into an idea or plan, that it must be the idea. Investing more into a bad idea doesn’t make it good.

Optimism, for example, is a typical entrepreneurial trait that improves performance, but only up to a point. In fact, moderately optimistic people have been shown to outperform extreme optimists on a wide range of task and assignments. There are a number of similar entrepreneurial characteristics that are recognized as good, but can be amplified to unhealthy levels, resulting in passion traps, or so-called “Icarus qualities.”

Every entrepreneur needs to be on the lookout for early warning signs of biases and passion traps that signal that you are in danger of undercutting your odds of startup success. Obvious ones are founders who are thinking or saying, “This is a sure thing,” or executives losing patience with advisors who point out risks or shortcomings in your plan.

In my experience, a great startup is more about great execution, rather than a great idea. It’s about converting your passion into economic value. To counter-balance the biases in your passion, the best approach is to look beyond your own mind and actively listen to your customers, your advisors and your team. When was the last time you really listened?

A couple of years ago, I saw first hand what can happen to a founder, and the business, when the founder practices unhealthy habits, such as working 20 hours a day. A typical “Type A” personality, with boundless energy and enthusiasm, she aggravated some previous health limitations until she was bedridden, and the business floundered.

Many entrepreneurs are too focused on their dream to take notice of health warning signs, which leads them to ignore business health signs as well. If you can’t remember the last time you had a relaxing evening with the spouse, or read a book, then your health may be in jeopardy. If your business won’t run for a day without you, then the business isn’t healthy either.

There is no single formula for how to stay healthy while starting and running an exciting but demanding new business, but here are a few suggestions, depending on your lifestyle:

• Stay fit and rested. You will have more energy and think more effectively if you are in shape and rested. In addition, you’re a role model for partners and employees. Real job performance is more a function of productivity than hours worked anyway.

• Find a stress reliever. For some people, it’s quiet meditation, and for others it’s a vigorous workout at the gym. Find something you really enjoy that doesn’t have anything to do with your business. These will help you unleash the creative side.

• Work and family balance. Family-work balance is an issue that involves financial values, gender roles, career paths, time management and many other factors. Entrepreneurs can be so focused that they ignore the family, resulting in an unhealthy situation for everyone.

• Regular medical checkups. No one is immune to the random attacks of a disease, and something recognized sooner rather than later can often be treated with minimal lasting effect. Undiagnosed and untreated problems, resulting from ignored or unknown symptoms, are a health disaster well worth avoiding.

At the same time, don’t forget that there are things you must do to maintain the health of your business, and send the right message to your employees on priorities:

• Reward employee health. Lead by example, of course, and encourage employees regularly to pursue a healthy lifestyle. You might even give special recognition for sticking to a wellness program, or sponsor a healthy team outing or other activities.

• Quarterly business reviews. On a regular basis, at least once a quarter, you need to take a hard look at all your key metrics. Maybe it’s time to tackle a new geography, or figure out how to exit some clients who are “high maintenance.”

• Quality improvements. Continuous improvement is the key to quality production. Make sure your processes are working. A constant increase in the quality of products and services, including more innovation and creativity, all lead to a healthier business.

• Improve customer service. Make sure all employees are empowered to provide the same customer service they would want for themselves and their own business. Measure how well you are doing with surveys and personal contacts.

Healthy companies need healthy employees and healthy processes. Workplace health promotion is not, as some might think, a charitable gesture towards employees but an investment in the company. It can be a life or death issue with you personally, as well as your company. Don’t wait, like my friend, until it’s too late.

One of the most common complaints I hear from entrepreneurs is that they are overwhelmed by the workload and stress of starting their company. Then there are the additional challenges of balancing the demands of family and friends. Having too much on your plate can turn your dream into a nightmare.

Some people will tell you to just get a bigger plate, meaning hire some help. But with the pressures of the economy, and limited access to outside funding, we all know this isn’t always possible or appropriate. I recommend the opposite, or getting things off your plate that shouldn’t be there in the first place.

In reality, many entrepreneurs are their own worst enemy, trying to do everything, working inefficiently, and imagining things that need doing which will never happen. Here are some tips on how to look at work, make some hard decisions, and keep your health and sanity:

1. Maintain a big picture perspective. It’s easy to be overwhelmed by day-to-day details, to the degree that they all seem like big items, driving up your imagined workload. Take a few minutes each day to reflect on your real goals, and eliminate items which don’t relate.
2. Set realistic deadlines. The more your workload grows, the greater is your temptation to set unrealistic deadlines for yourself. This results in poor quality work, which generates more work to fix previous efforts. Allow some buffer on every item.
3. Prioritize the work items. Relentlessly reprioritize your list and complete them in order, resisting the urge to skip over the tough ones. The longer that high-priority items stay on your list, the more stress you will feel, and consequences will add new items.
4. Keep a written to-do list. Most people can’t manage more than five items in their head, and when your list gets longer, it seems infinite. Write it down, but even then, keep it to the top ten priority items or less. Multiple pages of work items won’t get done anyway.
5. Block out time for priority work items. Don’t allow your day to be monopolized by distractions and the crisis of the moment. Close your door, or move to another location where you will not be interrupted so that you will complete the top item on your list today.
6. Count the completions. At the end of each day, check off, count, and celebrate your positives. A sense of progress is important here. Look positively at your progress as a glass half full, rather than half empty.
7. Take a break to recharge. Even a few minutes each hour to relax will re-energize you. Regular non-work breaks, like a trip to the gym, or time with family will be ultimately more productive than slugging it out all night on a given problem. Get a good night’s sleep.
8. Discuss the tough ones with a mentor. Don’t be afraid to discuss your challenges with a trusted friend, or business advisor. This will clarify the issue in your own mind, and let you see it from other angles. You need to stop and regroup when you hit a brick wall.
9. Stay in control of your emotions. Stress is a normal part of life. Don’t let it lead to anger and frustration, or loss of productivity. We can choose how we handle tough situations, and the best approach is always to stay calm and in control.
10. Eliminate phantom work items. These are items that you never intend to do, and probably don’t need, but you carry them on your list because of guilt or direction from someone else. You can’t complete an item that you don’t understand.

Wearing all the hats required to initiate a startup is tough in the best of situations. Then your business really starts to take off, and it gets even more challenging. As an entrepreneur, you need to seriously apply the discipline of these principles early and always to survive, and hopefully even enjoy the journey.

Entrepreneurs are usually highly creative and innovative, but many innovative people are not entrepreneurs. Since it takes a team of people to build a great company, the challenge is to find that small percentage of innovative people, and then nurture the tendency, rather than stifle it.

A while back I read a book titled “The Rudolph Factor,” by Cyndi Laurin and Craig Morningstar, which is all about finding the bright lights that can drive innovation in your business. The story most specifically targets big companies, like Boeing, but the concepts are just as applicable to a startup with one or more employees.

The core message is that real innovation and competitive advantage are more people-based than product or process-based. Every good entrepreneur needs a people-centric focus to ferret out creativity and innovation in his team, and to build a sustainable competitive advantage.

The authors observe that people who behave as mentors tend to have an uncanny ability to recognize and nurture people who have innate capabilities along these lines. Here is a summary of the characteristics they and you should look for:

• Thinkers and problem solvers. Innovators are naturally creative and love new challenges. Some may appear a bit eccentric to people around them. They generally promote unconventional ways to solve problems and have an easier time than most at identifying the root cause of a problem.

• Passionate and inquisitive. These team members are passionate about their work and light up when talking about their role or a particular project they are working on. They often ask “Why?” even when it is not the most popular question to be asked.

• Challenge the status quo. They believe that questioning is of value and benefit to the organization. This is also how they discover what they need in order to solve a problem, so they aren’t rocking the boat just for the sake of rocking the boat.

• Connect the dots. Innovators have the ability to quickly synthesize many variables to solve problems or make improvements. To others, it may appear as if their ideas come out of the blue or that there is no rhyme or reason behind their thinking.

• See the big picture. They tend to be natural systems thinkers and see the whole forest rather than a single tree … or just the bark on the tree. They may express frustration if people around them are having conversations about the bark, rather than the forest.

• Collaborative and action oriented. They are not loners, and have the ability and confidence to turn their ideas into action. They act on their ideas, sometimes without knowing how they will accomplish them. The “how” is always revealed in time.

Your challenge is to go forth with this new awareness and thinking, to find and mentor those bright lights that will drive innovation and competitive advantage. The next step after finding innovators is to integrate them into your team. A key aspect is establishing a team-based culture that is a safe environment to share and execute ideas.

In fact, this safe and nurturing environment has to extend beyond a single team to the highest levels of the organization. It should embody a style of leadership that is essentially a commitment to the success of the people around you. That opens the door for anyone in the organization to lead from where they are, rather than waiting for management to “do something.”

Innovation is at the very heart of every successful startup. Everyone wins when you look at things very differently and wonder “why”, not “why not.” What better way to extend this power than to surround yourself with more highly creative people? Then you can make the world a place of possibilities, as well as probabilities.

If I had a dollar for every time someone has said to me, “One of these days, I’m going to start my own company,” I’d be rich. If this day ever comes for all these people, we will be overrun by startups. Yet I don’t lose any sleep over either of these possibilities.

Most people procrastinate from time to time, but I suspect that the challenge here is somewhat deeper than that. So I did my own informal survey of business books, to gather the key reasons why most people never start the journey. If you recognize yourself in any of these categories, you may be more of a “wanna be” than a real entrepreneur:

1. You are a dreamer, not a do-er. Most people in this category actually prefer to think of themselves as “idea people,” rather than implementers. In reality, the dreaming part and the idea are the easy parts, and the hard part is building a workable plan and making it successful. A strong vision is required, but that’s different from the dream.
2. Unable to learn the new skills. This starts happening to people immediately after school, who think that academia is where skills are acquired. Actually, schools are only for learning how to learn. Specific expertise is self-learned from experience, not books. The ability to learn doesn’t decline with age, unless confidence and interest declines.
3. Unhealthy fear of failure. A wise man I once knew said “He who is never afraid, he’s a fool.” Successful people overcome their rational fears, and move on to get the job done. Others are debilitated by their fear, and never start. Expecting some failure, and learning to deal with it, is one of the most effective ways to learn. Investors know that all too well.
4. Hidden fear of success. Believe it or not, many people fear success, and stop short if they see it approaching. There is, in fact, plenty of evidence that it takes a strong person to manage their life after success – note the many failures after success in winning the lottery, or after topping the charts in their chosen profession.
5. You are a perfectionist, not a pragmatist. A new product or service will never be perfect in a rapidly changing world, so why start? At the other extreme, I know inventors that have been working on the same idea for thirty years, and have nothing to show for it. A proven path to success in business is to get something out, and iteratively improve it.
6. Not focused, or easily distracted. Successful entrepreneurs have a strong vision, and don’t let anyone or anything lead them astray. In business, this means you have to keep your priorities straight, and separate the important from the urgent. Learn to commit, focus, organize your work, and delegate when appropriate.
7. Always finding excuses. The first principle of entrepreneurship is that “the buck stops here” – you have to accept ultimate responsibility for whatever happens, good or bad, Excuses are artificial barriers for not starting something, or ways of convincing yourself that someone or something else is responsible for your failures. Neither is productive.
8. You are not a self-starter. If you need someone else to tell you when to develop your business plan and organize your time, then “one of these days” will probably never come for you. With the entrepreneurial lifestyle, it’s up to you to set the standards, be the model, and actively do the follow-through.

According to Psychology Today, some twenty percent of people identify themselves as chronic procrastinators. Among wishful entrepreneurs, I think the percentage is nearer to ninety. If that is your current state, it need not be a life sentence by default. Some of you will change your outlook and your behavior, one of these days. When will you get around to it?

Even though the world is getting smaller, due to easy global connectivity, people still feel alone if not well-connected locally. There is also more going on in every location, so this personal need and super sensitivity to the local community has spawned a new breed of Internet startups, called “hyperlocal.” The term first appeared five years ago, but the model is now very common.

At first this was limited to news sites that concentrated on a segment of a community, like West Seattle, but the concept is now being applied to advertising and promotion sites, blogging sites, and even legal services sites. These hyperlocal sites don’t have to compete with global sites, and always have unique content, community advertising, and local issues.

Foursquare is good example of a modern hyperlocal site, which describes itself as “50% friend-finder, 30% social city guide, 20% nightlife game.” It also shows how such a website can scale by adding new cities. When you enter one of these cities, you simply check-in to tell the service where you are, and you begin to earn points and unlock badges for discovering new things.

Much of this is still evolving, but I think it has great potential. Here are some of the dimensions of hyperlocal, summarized by Alex Gamela in an interview with Adrian Holovaty of EveryBlock:

• Geographic granularity. Give people a way to follow news around a particular block. This is the main focus of EveryBlock, where they give each city block its own Web page, its own RSS feed and its own e-mail alerts.

• Geographic customization. Give people a way to draw custom geographic boundaries to specify their area of interest. Their “custom locations” feature lets you draw an arbitrary area in your neighborhood that selects the streets you’re interested in following.

• Geographic messaging. Give people a way to post news to specific geographic areas. Their “Notify your neighbors” feature lets people post messages (news reports, classifieds, etc.) to their blocks, with a sophisticated level of targeting.

• Subject matter granularity. Give people information that’s “too small” or otherwise not important enough for mainstream news sites, such as restaurant inspections, building permits, and fire department dispatches.

• Topic customization. Give people ways to control which types of information they get and how often they get it. For example, EveryBlock lets you choose which types of information you want to get daily, weekly or “as it happens”.

When you extend this to include social media marketing, you can imagine that startups and small businesses are in fact at an advantage over their less flexible big brothers. They can offer real-time feedback and immediate rewards for hyperlocal activity, by members of that community, for members of the community.

Hyperlocal blogs like My Ballard can find unique content that doesn’t compete with major players and newspapers for attention. They are free to write about neighborhood events, charities, schools, and local causes. The big news outlets don’t have the staff or resources to chase these types of stories.

I predict that hyperlocal services sites will continue to emerge and flourish. Many years ago, a community law firm could have a rewarding law practice, financially and personally fulfilling, by becoming a part of the community. In the new digital age, it’s possible again, even easier and faster.

With the advent of the iPhone and Blackberry, location-based apps are becoming commonplace. Especially in local communities, people want to know where the sales are, and who is hanging out where. This is not just a fad.

Hyperlocal can be the “beginning” for your startup, allowing you to test your business model and your marketing plan before you scale. Or it can be the final destination, if you are looking for a fun family business in the new world. Just like Mister Rogers neighborhood, I recommend it as a familiar place for your startup to “learn the ropes” before you take on the whole world.