StartUp Secret Sauce Series: Are You Ready for Your First StartUp docx

StartUp Secret Sauce Series: Are You Ready for Your First StartUp?
Grace Lanni & Jessica Hendrick Scanlon
Copyright © 2012 by Grace Lanni & Jessica Hendrick Scanlon
Published by RSE Press at Smashwords
www.startupsecretsauce.com
All rights reserved. This book may not be reproduced in whole or in part without written permission
from this publisher, except by a reviewer who may quote brief passages in a review: nor may any part of
this book be reproduced, stored in a retrieval system or transmitted in any form or by any means,
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Library of Congress Cataloging-in-Publication Data
Lanni, Grace and Scanlon, Jessica, 2012
Secret Sauce Series; Book 1: Are You Ready for Your First StartUp? / Grace Lanni and Jessica Scanlon
Summary: Book 1 of the Secret Sauce Series is for people who want to start their first business venture
on their own or within a company. Are You Ready for Your First StartUp? gives people a real look at
what it takes to form a company idea, breathe life into the idea, and validate the idea for success.
ISBN -10: 0988440903 ISBN -13: 978-0-9884409-0-6
1.Start-Up 2. Entrepreneur 3. Business Advice 4. Intrapreneur 5. Small Business
The authors and RSE Press used their best efforts in preparing this program and the referenced
materials. The author and RSE Press make no representation or warranties with respect to the accuracy,
applicability, fitness, or completeness of the contents of this program. They disclaim any warranties
(expressed or implied), merchantability, or fitness for any particular purpose. The authors and publisher
shall in no event be held liable for any loss or other damages, including but not limited to special,
incidental, consequential, or other damages. As always, the advice of a competent physician,
psychologist, attorney, CPA, or other appropriate professional should be sought. This book contains
material protected under international and Federal Copyright Laws and Treaties. Any unauthorized
reprint or use of this material is prohibited.
Introduction
In writing our first in the StartUp Secret Sauce books, we realized the tremendous value of relevant
information and experienced support necessary for a first-time entrepreneur to turn a business idea into a

business reality. As consultants, we often work heads down, helping clients launch their first businesses
without detailing exactly how we helped. Writing this series of books gave us an opportunity to pull our
head above the canopy of daily consulting to see what recipe for success we bring to the table.
Clearly, we cannot give you everything you need to start your first business in a single short read. Our
hope is that we provide enough contexts so that you are not stopped by the inevitable challenges you
will face when launching a new business as an entrepreneur or a new idea within your current company
as an Intrapreneur.
This first book is also a tribute to you and your entrepreneurial spirit. We applaud you for taking the
risk. You’ll see that your first start-up will probably not be what you expected, and your next venture
will be as exciting and riddled with challenges as the first.
Thinking like an entrepreneur is a must if you wish to support innovation in your current company or
launch your own business. We believe it’s something ANY ONE can do, and we hope we provide the
Secret Sauce to get you there.
Table of Contents
• Chapter 1: What is Entrepreneurism Anyway?
• Chapter 2: Ready to Take the Plunge?
• Chapter 3: What’s the Best Business Structure for Your Venture?
• Chapter 4: Understand Your Work Style, Strengths & Weaknesses
• Chapter 5: Breathing Life Into Your Idea
• Chapter 6: Managing Barriers
• Chapter 7: Celebrating Your Wins
• Glossary
Chapter 1: What is Entrepreneurism Anyway?
A Harvard Professor’s Definition
Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.
Howard Stevenson, Professor of Business Administration, Harvard University
Dr. Stevenson was keen on observing the diverse backgrounds, business models and products generated
by entrepreneurs. In the 1980’s, Stevenson observed each entrepreneur had certain transformative plans:
the hi-tech idea, the new business model, or the next unique kitchen gadget. Each person had some of
the resources required and always, missing some key resources:

• • Money
• • Team Members
• • Business Contacts
• • Market Familiarity
• • Start-up Experience
• • Sales Skills
• • Marketing Skills
• • Operational Skills
• • Engineering Skills
• • Management Skills
• • Financial Skills
Let’s compare two entrepreneurs -
Mark Zuckerberg - Facebook
Resources he had: startup experience (high school software product to recommend music based on
tastes), software development experience, proximity to creative thinking at Harvard, proximity to users
(Harvard+Academia+Internet = Going Viral), willingness to change from his original idea of ‘which
face do like better’ to a social community site.
Resources he needed: mentorship, money, team
J.K. Rowling – Harry Potter
Resources she had: imagination, ability to write a great story and develop wonderful characters, prolific
writer, patience, tenacity (when turned down several times from Bloomsbury publishing, she self-
published after receiving rave reviews from the Chairman’s daughter.)
Resources she needed: funds, a publisher, business knowledge, marketing knowledge
Key Entrepreneurial Ingredients
Great Innovative Ideas
A great idea is the central backbone of a new business – without a great idea, it’s very difficult to inspire
others to join your team, to form great vendor partnerships, or most importantly, to secure customers.
The best way to come up with a great idea is to look at what frustrates you (or your customers) in
business or in daily life. For example, while selling Tablet PCs, one of our authors noticed nurses had to
put their Tablet PC pen down to scan patient wristbands in the hospital. This was inefficient and caused

a lot of negative feedback from the nurses in workflow studies. Lanni then drafted and secured a patent
on a ‘wireless pen scanner’ so that a nurse could simply turn the pen over to scan – not pick up another
device.
Arno Penzias also told Lanni one of the founding innovation stories at Ericsson. He described the first
two trumpet handsets tied to a stick in the Ericsson HQ museum. Dr. Penzias shared it was created by a
linesman trying to test the ‘tip’ and ‘ring’ signals on top of a telephone pole and that he didn’t have
enough hands to do all the functions required with separate speaking and listening devices. His
innovation sparked the standard phone handset design for decades.
One idea will launch a company. Continued innovation is necessary to keep a company growing and
expanding with its market.
Persistence & Patience
Once an idea is formulated, the entrepreneur must vet it from every angle – the current market, adjacent
markets, with potential clients, partners and when necessary potential investors. Through this process,
the device, ancillary support products and services and business models for selling will erupt. These are
tested repeatedly until confidence arises and prediction for the sales process occurs.
Purpose
Great companies are fueled by the entrepreneur’s purpose. Just think of the time and energy saved by
the nurse who no longer has to use two tools; or the hospital system that can reduce their spend
drastically, or the lives saved because the likelihood of using the scanner because it is present is very
high and medication verification is implemented properly. You can even approach your purpose from a
philanthropically - maybe the founder wants to support the future of the nursing profession by donating
a percentage of sales to a nursing scholarship fund. Whatever the purpose, it should strike a chord within
you and ignite your passion.
Passion
You’ll need lots of passion to drive your business towards success. An entrepreneur lives and breathes
his or her business twenty-four hours a day and seven days a week. Business owners lose sleep and often
make tough sacrifices to see their great idea through to fruition. If you are lacking passion, the early
days of your start-up will fill you with more frustration than excitement.
High IQ
IQ is short for intelligence quotient, a measurement of Intellectual Intelligence. You and your team have

to be sharp cookies to launch your company and maintain a competitive position in your target markets.
If you are good, others will be on your heels at all times, and your team must be able to innovate and
continue to do so. This is a game of book smarts and street smarts.
High EQ
EQ is short for emotional quotient which is a measurement of Emotional Intelligence. Great founders are
excellent communicators. Entrepreneurs with high EQs have teams that love working for them and often
work harder, smarter, innovate more making their companies able to produce more results faster and
more profitably. People with high EQs enjoy people and celebrate team members that are smarter,
faster, and more talented than they are. They tend to surround themselves with the best and brightest,
and their positivity shines through their products and services
Balance
Balance is a must in all areas of life: self, family, community, and business. Think of the flight
attendant speech – put your oxygen mask on before you assist your child. Frankly, if an entrepreneur
does not take time to rest and rejuvenate, they burn out, lose their innovative edge, and often make
unwise decisions because they are tired and are not thinking clearly. To manage the highest levels of
stress, a founder must rest and play hard. That’s why it’s common to see new start-up environments
cluttered with basketball hoops and Ping-Pong tables. The latest generation of entrepreneurs understands
the important of allowing the team brain rest and play.
Flexibility
There are times when a seven-day work week may be required to push a company through a launch. A
hardware manufacturer must adjust when a metal factory blows up in Asia and purchasing has to source
the product elsewhere or find a proper substitution. Or, after 15 consecutive music shows, your R&B
band has the opportunity to play at the House of Blues in LA to an audience including a key producer.
Remaining flexible allows space for you and your company to grow in ways you may not have expected.
Being able to determine when to say ‘no, thank-you’ is also a major skill. Prioritization, readiness, there
are many factors in making a solid leadership decision.
Mentorship
Every great entrepreneur has multiple mentors. Perhaps one is a financial guru, another is a whiz at
online marketing, and still a third fantastic at people dynamics. Seek a good balance of skills and
diversity in genders and generations as well. I know plenty of salty old dogs who have a young twenty-

something’s explaining technology and mobile solutions dynamics to them. To stay fresh, a founder
needs trusted and diverse perspectives.
Trusted Gut
Every founder can remember the time they went against everyone’s advice and trusted their gut to move
their company over a major hurdle. This is an entrepreneur’s own secret sauce – no one can give it you;
no one can take it away.
Chapter 2: Ready to Take the Plunge?
Entrepreneurial behavior is visible in many forms. From the kids on the corner with their lemonade
stand to the high school kid designing t-shirts and selling them at the football game, or the innovator in
your current company (intrapreneur) that always seems to be leading the coolest projects, the spirit of
entrepreneurialism is everywhere. Is it in you? The holistic approach to answer that question is to
examine the two sides to the recipe: You and The Business.
The “YOU” Factor: Health & Wellness.
You are priority number one, and you’ll need to stay in-shape to be successful. After all, this is a
marathon, not a sprint. Design a balanced health and workout schedule. You are about to put your
system on overload if you are launching a new company. To manage the physical and emotional stress,
good food, water, rest and exercise is essential. Get yourself a fitness mentor if necessary to support
your ability to manage your regime. Man cannot live on red bull and coffee alone for long.
Organization
Did you know there is actually a certification to become a professional organizer? If staying organized
is not one of your strong suits, consider hiring one of these professional organizers to help you. Clearing
out your office, home and even your car will save you and your team oceans of time and confusion.
Working with a professional will also give you the opportunity to absorb the tips and tricks to delegate,
manage gargantuan amounts of email, reduce incoming paper, and learn how to create a meeting culture
that doesn’t create useless paperwork.
Family & Friends
Though you will be putting in the hours with your new venture, your family and friends are still priority.
They are in the life experience partnership with you, and it’s your responsibility to keep communications
open and be compassionate to their concerns. Whether you have close friends, a partner or a spouse and
children, be aware of their need for your attention and participation in your new venture. The support of

your family and friends will be a necessary benefit to your success.
Ability to Execute
I’ve met plenty of people that have a lot of passion for something and never seem to be able to get
anything done. You must have passion AND the ability to get things done. Sometimes the timing for
your great business idea is off because of other obligations. You may have outside factors that prevent
you from devoting the time and energy it takes to launch a start-up. Understand that a successful
business takes full-time effort and sometimes trying multiple times before it really takes off. It is rare
that a business accelerates with only part-time focus.
Your ability to execute also includes your ability to delegate. Founders inevitably get to a point where
they can no longer do it all and must be able to let go of their ‘baby.’
The start-up stage of a company is unique and wanes over time with consistent revenue achievement.
Are you the best CEO for the 5-10 year run of your company? Are you the best CEO to FUND your
company? How humble can you be for the sake of your idea?
Wiki: The term “founderitis” or “founder’s syndrome” refers to the unhealthy condition
that afflicts many companies whose founders maintain a stranglehold on organizational
leadership. While many companies owe their success, and in fact their very existence, to
their founders, those same individuals can create chaos that ultimately leads to the
organization’s collapse. The challenge to founding CEOs and boards of directors is to
take steps to change conflict and chaos into opportunities for growth.
A founder must prepare themselves for the inventible – change. And there are times when you are the
best CEO to launch and grow your company.
The “Business” Factor: Business Idea
When we say business idea, we’re actually discussing two ingredients from the previous chapter: Your
Great Idea and Your Purpose. Your business idea needs to be rock solid. Meaning, you have an idea
that you like, you’ve done your research, and have a path to differentiation and revenue. If your idea is
interesting, your trusted advisors will be intrigued and will offer connections, their own ideas or event
funds to support your new venture.
Finances and Investment
If you are not a financial whiz who can digest a P&L and calculate EBITA with ease, find someone who
is. Your ability to create revenue models and overall financial models are critical to your success. Once

you and your team have determined your burn rate (how much money you need each month until the
company has enough monthly revenue to exceed your monthly expenses), and you have the ability to
defend your model, it’s time to determine how you are going to source the funds to launch the business.
Some sources include: self; family & friends; small business loans; grants; angel investors; institutional
investments and venture investments. Today, it’s even possible to crowd-source your funding by
launching a website that tells your story. Each lender has different needs and different “rules” by which
they play. Learn about them and make the best decision for your business.
Confidence is measured in the investor’s lounge. The first time you pitch your idea, whether to your
parents, your school, your boss, or your bank, you will get bombarded with hard-hitting questions. This
is a good test of your business idea and personal confidence. Plenty of investors will challenge you to
test your mental agility, your presence and confidence with questions like:
• Who are you and why are you in my office?
• How exactly do you expect to deliver a 100x return on my $2M?
• You have a few interesting people lined up for your founder’s team, but how do expect to
assemble enough people to support your revenue projections?
• Why is your idea better than your competitors?
• What’s stopping others from taking this idea and doing it?
• Do you have intellectual property?
• Why are you, your product, and your service special?
You may be able to design a business model to secure initial revenue through your services. The speed
of growth may suit your taste, however, to properly compete with the market, you’ll need to take in
monies to support accelerated expansion. Whether to take monies or not is always a consideration. Even
if your plan is to fund your own business at first, I wouldn’t rule out the consideration for investments in
your business in the future.
Types of Funding
Deciding how to fund your start-up is one of the most important challenges you’ll face during this
period. Take the following types of funding into consideration:
Self-Funded or Boot-Strapping: Regardless of the business, you will always need funds, and if you’re in
a position to provide your own resources, this often referred to as boot-strapping. Under this type of
funding, you’re completely independent from external financial obligations. Business growth can be

slow for boot-strappers who must save up revenue before investing in projects.
• Angel Funding: Angel funds come in a couple of different forms, but normally it’s
money received from an affluent person in exchange for partial ownership of your company.
Amounts typically range from $100k - $1M.
• Venture Capitalist Investments: This investment money from a Venture Capital Fund that
purchases equity in the company in order to sell that equity later for a larger return. Venture
Capitalist investments are normally associated with higher-risk business models or very
innovative companies. Amounts are usually $1M and up.
• Bank Loans: Bank loans are a very traditional route for securing start-up monies. A bank
will loan the individual a determined amount of money with an interest rate attached. The
business owner is then required to make monthly payments back to the bank with that
interest included. Banks often require collateral and historical success.
• It’s an entrepreneur’s mission to find the resources necessary to move a company into a
revenue generating state producing more income than the expenses required to operate.
Internal Investments in Team.
Start-Ups are usually focused on one thing initially – making the company produce revenue. This
process can be weeks, months or even years (think USDA trials). Throughout the life of the company,
investing in the organizational development of your team from all aspects (eg. Career skills, functional
knowledge, wellness) will serve to support long term health of the company, reduce turnover, and
increase innovative edge. How will your business support its employees?
Community and Service.
A company launching in 2012 and beyond is expected to consider their company’s place in the
community. Even if your primary purpose is to create wealth, sharing that wealth of money, time, and
energy with the community elicits great benefit for the founder, team, and the community. On a scale of
1-10, here are some ideas for the level of community service your organization might provide:
• The execs choose a non-profit to participate in.
• The company acknowledges publically community participation of their employees.
• The company commits to 1% of the profit of the company going to charity (i.e.
www.austingives.com)
• The company runs a holiday promo and gives a portion of profits to a cause.

• The employees form a team to participate regularly in a non-profit.
• The company commits to giving 25% profit to a client’s charity of choice. Termed a ‘B-
Corporation’ or For-Benefit Corporation, signified the business model is designed around a
key giving component. www.startsomethingthatmatters.com, www.changemytown.org
Chapter 3: What’s the Best Business Structure for Your Venture?
Early stage entrepreneurs are often starry-eyed to become the next $1B IPO. Public companies start in
many different ways. When we work with clients, they articulate a future vision of the way they would
like their company to be. When they look at the finances, partnerships, and number of employees
required to make this vision materialize, it can be daunting.
Start with the slice of the idea that is most compelling and that people will pay for. From there –
expand.
For instance, you may want to launch a wellness center. The building alone would produce $1000s of
dollars in monthly utility and liability bills, not to mention the necessity to pull in practitioners, clients,
marketing dollars, etc, etc, etc.
Define your purpose and a road map to your vision. Could you purchase a massage franchise to start?
(~$100,000) Or become a distributor for a wellness product line? (~$500) Or maybe a reseller of an
existing corporate wellness plan (~$1000). This would allow you to generate revenue, clients, test
marketing ideas, and ask what your clients what they would want in a wellness center so that by the time
you are ready to launch, you have a strong community surrounding you supporting your success.
Here’s a list of business structures. Get with an attorney and a CPA to sort out the best solution for you.
• Sole Proprietorship ; (SP)
• General Partnership ; (GP)
• Limited Partnership ; (LP)
• Subchapter C-Corporation (C-Corp)
• Subchapter S-Corporation (S-Corp)
• Limited Liability Company (LLC)
• Non-Profit Organization (NPO)
Chapter 4: Understand Your Work Style, Strengths & Weaknesses
There are many roles within an organization, and it is unlikely that a single founder can be a master at
all of them, much less execute all functions at once. How do you measure your abilities?

One way to measure your abilities is to look at a copy of your recent resume. Would you hire yourself to
do your accounting? Would you hire yourself to do your marketing? If you were applying for a job
within your company, what tasks could you perform successfully?
To get an objective perspective, ask your mentors. Are you a great front man for the business? Are you
able to tell a great story to investors and potential customers, but maybe lacking in the ability to
communicate details of the technology? Maybe you are the subject matter expert in the healthcare
market as an R.N. and understand the workflow that your company’s new product is producing;
however, you are not the person who can manage the operations.
I would suggest that you strive to have solid competencies in all areas of your business, and clarity on
direction for each department. However, surrounding yourself with others who can lead in
complimentary areas will allow you to move faster and smarter toward your goals.
There are 4 key functional areas useful to assess:
• Your values
• You work environment preferences
• Your executive communication skills
• Your cognitive abilities
A certified Executive Coach can administer and translate assessments in these areas for you and your
team. Understanding how each of your key team members works best and how best to communicate
with your team will great enhance your success.
What are the key roles to fill in any organization?
• CEO: The public face of the company, the leader of the company’s values, the person
who holds the vision, purpose and mission for the company’s success. Responsible for
inspiring all those connected with the company to support your success.
• Operations: Understands how all interactions happen within and without the company.
The keeper of the process documents and always looking for ways to improve process for the
benefit of the company.
• Finance: Develops revenue models, budgets, and spend parameters for the company. A
key player in conversations with investors, vendors, and customer purchasing large deals
managing risk. Manages the relationships with the banks, and often the legal support for the
business.

• Human Resources: Responsible for defining individual employee roles throughout the
company, as well as career growth and evaluations. Manages benefit programs, hiring, and
dismissals.
• Marketing: The organization that understands your company market, customers,
competitors, and your unique value propositions. Continually monitors the feedback from
sales, customers and vendors to evaluate opportunities to add new features, products, or
services. Also responsible for creating the communications and events within and without
the company whether online or in hard copy.
• Sales: Customer facing organization responsible for securing revenue from customers.
Uniquely positioned to discover key ancillary solutions which can elevate the company in the
sales process.
• Technology: Creates the means for managing and storing all the electronic data in the
company. If the company sells technology solutions, also responsible for development and
delivery of products and solutions.
• Customer Care / Support: Companies who take care of their clients when things go wrong
are poised for success. Having someone on your team who is specifically responsible for the
care of clients when they need help will serve you well.
Chapter 5: Breathing Life into Your Idea
There’s nothing more wonderful for us than sitting with a founder who spills out their idea for a new
venture and expresses need for help. There’s a 3-step process we embark on: 1) defining the purpose,
mission and vision for the company 2) researching the market and other solutions in the space and
identifying the key differentiation your company brings to bear 3) validating with potential clients and
partners.
An entrepreneur’s purpose is the light that fuels the adventure. Understanding this is a bit like a
founder’s own secret sauce. From the purpose, it is a natural extension to express the company’s
mission and vision. These are the guiding lights of the company. Those that measure new product ideas
and new company ideas against the company purpose, vision and mission will maintain their focus.
• Purpose: The definitive statement about the difference you are trying to make in the
world. WalMart’s Purpose is to save people money so they can live better.
• Mission: The mission (core strategy) that must be undertaken to fulfill the purpose.

WalMart is on a mission to drive down the cost of products and services, making them more
accessible and affordable for everyone’s benefit.
• Vision: A vivid, imaginative conception of view of the world once your purpose has been
fulfilled. WalMart’s vision is of a world where all people can afford to live better.
Ok, so you’ve defined your company’s purpose – what does this matter? It is the sounding board
against which all ideas, process, actions, and next steps at the firm can be measured against. It is the
defining outline on which all of your future sales efforts and marketing efforts should adhere to. If
something does not support your company’s purpose – just don’t do it.
Understanding your market from your company’s purpose perspective highlights your differentiation
and allows you to pass over features and product ideas which don’t support it. When you properly
evaluate an idea, you are critically thinking about the plusses and minuses and measuring the idea
against the purpose DNA. This third vector will provide clarity and the ability to better prioritize next
steps.
As an example consider you are launching a new personal computer.
• Company 1’s purpose – is to sell the most PCs
• Company 2’s purpose – is to keep making the coolest most innovative PCs
• Company 3’s purpose – is to make PCs which make people’s lives easier.
This is not an exercise in judging which purpose is better – just think about the decisions that are made
with the tip of the spear being their purpose.
Company 1’s purpose – is to sell the most PCs. If each meeting is framed with selling the most PCs –
here are some decisions that might be made within each department:
• Product Marketing – they make choices in the design and components which support a
competitive price to drive volume
• Development - they make sure the design is focused on the grand majority – not driving
toward innovation, but focusing on selling the most units.
• Operations – the purchasing agents are fierce – and set up systems to drive the vendors /
sourcing to the lowest price. They are playing the volume game and ordering large quantities
to drive availability.
• Sales – are going for the volume deals at large companies and perhaps compromising
revenue or complete solutions for the ability to move boxes.

• Support – has to be very organized with their systems in order to handle the inevitable PC
failure rates.
Company 2’s purpose – is to keep making the coolest most innovative PCs . Again, decisions that might
be made within each department:
• Product Marketing – they make choices in the design and components which support the
best, coolest solutions. They expect to be one of the highest priced solutions for the early
adopters who appreciate innovation.
• Development - they make sure the design is focused elegance. The viewability of the
screen, battery life, best camera, sound, etc.
• Operations – the purchasing agents are creative – and possible sourcing extra product
where only one source might be available.
• Sales – focus on the technology leaders. They expect to sell small pilot deals with rich
additional services.
• Support – has regular calls with the pilot installs to mitigate risks.
Company 3’s purpose – is to make PCs which make people’s lives easier. Departmental decisions:
• Product Marketing – spend months doing workflow studies to understand how consumers
use their products. They develop stories within multiple vertical markets and create sales
materials that highlight the usage of the device.
• Development - they make sure the design is focused elegance. The viewability of the
screen, battery life, best camera, sound, etc.
• Operations – the purchasing agents are creative – and possible sourcing extra product
where only one source might be available.
• Sales – focus on the technology leaders. They expect to sell small pilot deals with rich
additional services.
• Support – has regular calls with the pilot installs to mitigate risks.
Now, imagine three different executive constituents within the same company are driving to the
different purpose objectives. Can you see how mixing these agendas can create a tremendous amount
of churn and a lot of strife within the executive staff and confusion amongst the employees? It is the
founder & CEO’s opportunity to define the purpose, vision and mission and make it part of the way all
decisions within the company are made. Without it, you run the risk of departments undermining each

other without intending to do so.
Chapter 6: Managing Barriers
One thing in business is certain – there will be challenges. It is the very nature of solving an existing
challenge that creates a catchy, entrepreneurial idea.
Failures & Negative Feedback:
Your final product or first attempt at providing service might be a failure despite all the confidence and
hard work you put in. That’s OK. We all love receiving positive feedback, but the opportunity to grow
and evolve only comes when we hear criticism. How you respond to your failures and set-backs will
define your work environment moving forward. Be prepared to receive these moments as educational, a-
ha moments.
Changing Timelines:
Even the best-mapped-out plans can hit road bumps along the way. These bumps can be anything from a
product launch takes months longer than expected pushing revenue goals way back, or it can mean the
customer demand for your services is much higher than you’ve prepared to handle. Either too fast or too
slow can cause major headaches along the way. Remember that ingredient of flexibility? These timeline
issues provide a template for future projects. Take notes because it won’t be the first time you have
timeline hiccups, but you can prevent the same hiccups from happening over and over again if you learn
from experience.
Tight Budgets
When planning your first fiscal year budget, seek help from a mentor. There are more costs to consider
than you can probably imagine when you’re drafting your first budget. And even with that beautifully
complete budget, unexpected costs arise out of nowhere. Maybe you under priced your products or
services. Tight budgets can prevent you from investing in that great marketing campaign, hiring more
help, or developing the next stage of your product. Money is the fuel for the engine of your business.
Prioritize and make adjustments as needed throughout your first year. If you hit a serious budget issue,
investigate alternative types of funding (See Chapter 2), and use the information to better plan your
budget moving forward.
Poor Initial Marketing Mix
If you’ve ever taken a basic marketing course, you know that the four P’s of the Marketing Mix are:
Products, Pricing, Promotion and Placement.

• Products: This is defined as the goods and/or services your business provides. When
considering “Products” as a part of the marketing mix, you need to look at your products and
services from a customer angle. Take time to consider packaging, names, descriptions along
with the features and benefits.
• Pricing: Hopefully you know what the product or service will cost you. Now you need to
figure out how to price it effectively based on marketing research.
• Promotion: How will you promote your business and your products and services?
• Placement (Distribution): Where will you promote your goods and services? This takes
into consideration, not only geographical locations, but also in-store placement and media
(advertising in newspapers for example).
If you make an early mistake during any phase of planning for your marketing mix, there’s still hope.
(See Case Study 6.1). In many cases, a failure in any part of this mix is a part of initial testing for your
business. Many tech companies purposely set aside time during their launch to test areas of the four P’s
until they hit the right balance. Model yourself after them – move in phases and make adjustments
between each phase. This help your early marketing barriers feel less like failures and more like
valuable lessons.
The key to managing any early barrier is to stay flexible and to evolve and learn. That sharpness of mind
that investors seek in business owners is because they know that there will always be barriers. It will be
your ability to overcome these barriers or move around them that makes you successful.
An entrepreneur is one who listens critically and is always trying to solve problems they observe in
concert with their team. A successful entrepreneur is the one who can build and sell the solution to a
problem. We call this proper execution.
Case Study 6.1 – The Post-It Note
Here’s Wiki’s version of the story:
In 1968, Dr. Spencer Silver, a chemist at 3M in the United States, was attempting to develop a super-
strong adhesive, but instead he accidentally created a "low-tack", reusable, pressure-sensitive adhesive
.[1]

[2]
For five years, Silver promoted his invention within 3M, both informally and through seminars, but

without much success. In 1974, a colleague of his, Art Fry, who had attended one of Silver's seminars,
came up with the idea of using the adhesive to anchor his bookmark in his hymnbook.
[3][4]
Fry then
developed the idea by taking advantage of 3M's officially sanctioned "permitted bootlegging" policy.
[4]
3M launched the product in stores in 1977 in four cities under the name "Press 'n Peel", but its results
were disappointing.
[5][6]
A year later, in 1978, 3M issued free samples to residents of Boise, Idaho, and
94 percent of the people who tried them said that they would buy the product.
[5]
On April 6, 1980, the
product debuted in US stores as "Post-It Notes".
[7]
In 1981, Post-its were launched in Canada and
Europe.
[8]
In 2003, the company came out with Post-it Brand Super Sticky notes, with a stronger glue that adheres
better to vertical and non-smooth surfaces.
[9]
Standard Post-it Brand notes have only partial adhesive coating on the back, along one edge. Similar
products are used for specialized purposes with full adhesive coating; the US Post Office uses such
yellow address labels to forward mail.
The yellow color was chosen by accident; a lab next-door to the Post-it team had scrap yellow paper,
which the team initially used.
Can you identify some of the challenges in the story?
• Failure at developing a ‘super strong adhesive’
• Failure at initial marketing – what problem were they solving?
• Second Failure at marketing ‘Press & Peel’ – the wrong name

• Surely there were more…
Twelve years after the initial ‘failure’ the product finally had the right packaging and story with which
to promote purchasing the product. Today, 3M is one of greatest consumers of recycled paper – giving
additional useful lives to our massive paper consumption. Other ancillary products support the ‘Post-It’
Brand – highlighters, software versions of the post-it, etc, etc. It is a multi-million dollar product line
that continues to grow.
What’s Thomas Edison’s famous quote? Paraphrased: I didn’t fail many times, I found lots of ways
NOT to make a light bulb and one way TO make the bulb work. Thinking this way leaves more room
for innovation, don’t you think?
Decision making around challenges and a company’s culture supporting this will also fuel ongoing
innovation. 3M encourages their technical staff to spend 15% of their time on the product of their
choosing. How did Silver’s peers treat him after he failed?? Did they abuse him daily for it – or
encourage him to find out what it might be useful for?
Chapter 7: Celebrate the Wins
Last and certainly not least, celebrate your wins . . . even your tiny wins. The task of launching a
company can be incredibly complex, time-robbing, and if your only measure of success is receiving the
first order, you may tire before you get there.
Every day, each of your team members has success. Starting the day with a team rally. Ask, what did
we do right yesterday? What are you going after today? Asking not only serves to motivate the team,
but you are also recognizing each step along the way is significant to the entire organization.
The first win you can celebrate is your decision to start your own business. You, the entrepreneur, are
taking a tremendous step towards a life you’ve probably been envisioning for a while. Not only are
fulfilling a dream of your own, but you’ll be supporting your local and national economy, providing new
jobs and innovations for the population, and hopefully making a significant difference in you
community.
Congratulations to your first win. We hope the Secret Sauce helps to bring you more wins to come.
Glossary
• Arno Allan Penzias (born 26 April 1933) is an American physicist and Nobel laureate in
physics.
• eBook – Loosely defined, an electronic book. Initially an MS Word document or .PDF

document, now specific formats (i.e. EPUB) are required for different publishing venues
(LuLu, CreateSpace, iBooks, etc)
• EBITA is an acronym that refers to a company's earnings before the deduction of interest,
tax and amortization expenses. It is a financial indicator used widely as a measure of
efficiency and profitability. EBITA margins in developing telecom markets can be as high as
60%, but margins vary greatly across industries and over time. EBITA margin can be
calculated by taking the Profit Before Taxation (PBT/EBT) figure as shown on the
Consolidated Income Statement, and adding back Net Interest and Amortization. Often,
Amortization charges are zero and therefore EBIT = EBITA. EBITA has more recently been
cited by buyside investors as a useful metric to be used as a replacement for, or in
conjunction with, EBITDA multiples, as corporations continue to present increasing levels of
intangible-based amortization.(Wiki)
• Emotional Intelligence - the ability to identify, assess, and control the emotions of
oneself, of others, and of groups.
• Entrepreneurship - the pursuit of opportunity without regard to resources currently
controlled.
• General Partnership - A partnership is formed when two or more persons agree to carry
on a business together. This agreement can be written or oral. No local or state filings (other
than appropriate tax returns) are required to create this type of partnership. This is different
than a corporation, which does not come into existence until Articles of Incorporation have
been filed with the Secretary of State. The distinguishing feature of a partnership is the
unlimited liability of the partners. Each partner is personally liable for all of the debts of the
partnership. That includes any debts incurred by any of the other partners on behalf of the
partnership. Any one partner is able to bind the partnership by entering into a contract on
behalf of the partnership.
• Intellectual Intelligence – the ability to demonstrate abstract thought, understanding, self-
awareness, communication, reasoning, learning, having emotional knowledge, retaining,
planning, and problem solving.
• Intrapreneur - A person within a large corporation who takes direct responsibility for
turning an idea into a profitable finished product through assertive risk-taking and

innovation.
• IPO – Initial Public Offering
• Limited Liability Company - LLCs were created to provide business owners with the
liability protection that corporations enjoy without the double taxation. Earnings and losses
pass through to the owners and are included on their personal tax returns
• Non-Profit Organization - does not distribute its surplus funds to owners or shareholders,
but instead uses them to help pursue its goals
• P&L (profit & loss financial statement) - financial statement that summarizes the
revenues, costs and expenses incurred during a specific period of time - usually a fiscal
quarter or year. These records provide information that shows the ability of a company to
generate profit by increasing revenue and reducing costs. The P&L statement is also known
as a "statement of profit and loss", an "income statement" or an "income and expense
statement".
• Sole Proprietorship - The simplest business structure is the sole proprietorship, which
usually involves just one individual who owns and operates the enterprise. If you intend to
work alone, this structure may be the way to go.
• Subchapter C-Corporation - The corporate structure is more complex and expensive than
most other business structures. A corporation is an independent legal entity, separate from its
owners, and as such, it requires complying with more regulations and tax requirements.
• Subchapter S-Corporation - more attractive to small-business owners than a regular (or
C) corporation. An S corporation has appealing tax benefits and still provides business
owners with the liability protection of a corporation. With an S corporation, income and
losses are passed through to shareholders and included on their individual tax returns. As a
result, there's just one level of federal tax to pay.
Grace Lanni, Biography
Grace Lanni is the Managing Director with RSE Consulting and a Certified Career Manager. RSE
focuses on supporting clients launching new businesses, expanding their current markets and developing
strategic partnerships. These efforts often include professional branding, executive development, and
complete career transitions. With 20+ years of experience in hi-tech, Internet and traditional business,
Grace successfully evaluates customer needs to employ innovative solutions to solve real business

problems.
Grace is recognized as a solutions innovator, and business leader, and often speaks about technology
innovation creating opportunities within vertical industries. Prior experience includes building
intellectual capital and raising equity funds for corporate growth. Grace’s executive skills are
immediately apparent as she is a dynamic leader, process-orientated, organized, disciplined, and a
teacher as well as a student among professionals.
The founder and CEO of an Austin Ventures-funded and KPMG STANDOUT STARTUP award
winner, patent holder, and author of entrepreneurial and parenting books and many articles on
entrepreneurism, Grace now leverages her skills to accelerate growth for her clients. Grace also serves
the community as an Entrepreneur in Residence for the TX State - RampCorp Entrepreneurial program
and sitting on committees for The Professional Entrepreneur Institute, and Change My Town. Lanni
earned Bachelor of Science degrees in Electrical and Biomedical Engineering from Syracuse University.
Jessica Hendrick Scanlon, Biography
Jessica Hendrick Scanlon is an award-winning marketing and communications expert residing in Austin,
TX. After working for large corporations, Jessica decided her talents were best suited for helping local
businesses flourish. She started the small business marketing and communications firm Hot Dog
Marketing, LLC in 2008. As an experienced corporate marketing director, she’s developed an arsenal of
marketing and communication skills that she now shares with her small business partners.
Jessica has always held community service as a priority. She currently serves on the Austin Humane
Society’s Marketing and Development Committee and serves on the Board of Directors for the
Pflugerville Education Foundation. In the past, she chaired the Marketing Committee for the American
Cancer Society’s Cattle Baron’s Ball and worked as VP of Marketing for the Austin chapter of Amigos
de las Americas.