“Credibility is the art of accepting responsibility.”
– Julian Hall
ACTUAL “CASE HISTORIES”: Almost more than anything else, Federico wanted to own his own business. Since childhood, he had wanted to start, build and grow “Federico, Inc.” When he was younger, he was always looking around at how other people began and ran their own businesses. Each time Federico passed an empty storefront he felt a little sad because it signified to him that someone’s dream of opening and thriving in his or her own business had not worked out. At 44 years old, he was beginning to wonder if his dream of being his own boss – and his own slave – would ever materialize.
Without warning, within two weeks’ time Federico received word that (i) an aunt he was close to had passed on and left him a sizable inheritance from her will, and also that (ii) he was being laid off from his job of 14 years, and was going to be provided six months of severance. Both were terrible news, but together they could just possibly represent a rare, once-in-a-lifetime chance to open his own business.
What Federico had been thinking about for a long time was something that he, his family and his friends always longed for: an internet service that locates historic sites of interest to those of Hispanic heritage, one that listed the sites, explained their significance to Hispanic history and culture, and suggested both restaurants and hotels in the vicinity. He knew how it would ideally look, how it would ideally work, and why it had such a great chance of success.
But Federico also knew he needed others to work with him: besides customers, he needed lenders, vendors, investors, partners, contractors and affiliated hotels, restaurants, and the like. The problem he faced was that no one seemed to take him, or his idea, seriously because Federico was not already operating a profitable business. He wondered how he might get other people to take him seriously, and consider sharing with him (a) their time, (b) their attention, (c) their money, and (d) even possibly their own business reputations: Frankly, no one seemed to want to take the time to talk to “this guy with an idea.” And, no one seemed to want to be part of an “experiment.”
What Federico learned was that the more you are making your idea “real,” the more it will be viewed to be “real” by others. Said differently, having your mind and your act together makes others want to get together with you. That simple line sums it up.
LESSON TO LEARN: It is a well known fact that many people would just love to leave their jobs, and start a business of their own. There must be 10 new television shows devoted to that very topic. The advantages are many, and it seems like a lot of fun. The problem is that there is no simple pathway to success and no “courses” out there to teach you how to do it.
One particularly vexing problem faced by potential entrepreneurs is the “new business credibility gap,” that is, until you are up and running, it is hard to get others to help you get there, to work with you, to give you a chance, to consider being a lender, a customer, a partner, an investor, or to otherwise become affiliated with you. After all, who wants to be a surgeon’s first patient, a barber’s first customer, or the one to try out the services of a parachute folder? The issue is “credibility,” which really just means “being trusted and believed in.” The problem is, “How do you get business credibility before you have a credible business, that is, before you are “up and running?”
There ten things are ones you would be wise to do, and that are available to you to do, in order to gain the new-business (or proposed-business) credibility you need to get your new business or business idea off the ground. They are the “making it real” that Federico learned makes others feel you are “for real” and that is the essence of new-business credibility.
Having helped many people transition from employer-employment to self-employment over the years has given rise to these 10 steps to gaining credibility for a new business or new business idea and you’ll see what I mean.
HERE ARE 10 STEPS TO CREDIBILITY FOR A NEW BUSINESS OR BUSINESS IDEA: Bear in mind that no single one of these ten steps is essential to establishing credibility for a new or proposed business, but the more you put into place the more credibility your new or proposed business will enjoy. “Make it real, and it will be real, to you and others.” And bear in mind, too, that these ten steps are not the only steps you can take to engender credibility to your new or proposed business:
1. Do Not B.S. – This is surely “Rule #1”. Credibility is a precious commodity, and once lost it is quite difficult to regain. Avoid any urge you may have to make things up that are not true, no matter how great the temptation may be. While there may be a gray area between “dishonesty” and “salesmanship,” you just can’t risk having other people come to the conclusion that you are not telling them the truth. Sure, you have hopes and dreams, and you are trying to make something happen from those hopes and dreams that does not yet exist, but beware of going over the line that separates “sharing dreams” from “shunned for dishonesty.” If you have ten customers, don’t claim you have 100. Instead, share that you have 10 and are shooting for 100.
2. Have an Understandable Business Model (as distinct from a Business Plan) – Many people will tell budding entrepreneurs that they must first create a “Business Plan.“ I would respectfully disagree, at least initially. A Business Plan describes in detail how a business is (hopefully) going to achieve its stated objectives and goals, from marketing, financial and operational perspectives. It is a step-by-step “plan” for what is hoped and expected to happen. In its essence, it is “How this is going to work.”
On the other hand, a “Business Model” is a design of (a) what the business offers, (b) why the customers will want what it is offering, and (c) how the business and its customers will positively interact. It is a model of who is motivated to engage in commerce from the viewpoint of both seller and buyer. In its essence, “Why this is going to work.” Notice the difference between “How” and “Why.”
Who is your intended audience or clientele? Is there a need, desire or shortage of what you will provide? Is the new way you propose doing business better than what is available at present?
At least initially, I view a simple and understandable Business Model to be the very essential element to creating Business Credibility. It is what gets people excited to join you. It should make common sense, appeal to many people, and be readily understandable, too. Avoid the industry jargon, eliminate the big words, and cut out unnecessary verbiage. Make it shoot through the air like an arrow.
3. Locate an “Angel Investor” or Two, If You Can – As the song goes from the musical Cabaret, “Money makes the world go round.” It is essential to have some money available to you to make a business idea into a business reality. Having someone be confident enough in you and your business model to provide initial “seed” or “angel” capital you need, or a part of it, is a direct path to business credibility. It is quite convincing as to your business proposition being quite “real.”
It does not matter how much seed capital you might have, although the more capital and the more investors or lenders, the more credibility you will have to others. And it does not matter if your Angel Investor is your Aunt Sadie. If others hear you have been that convincing to others, and so convincing that they have committed capital, they will say to themselves, “Hey, someone really believes in this guy or gal and this idea.” As the Dean Martin song went, “You’re nobody ‘til somebody loves you.”
Don’t have a wealthy Uncle Charlie? Bill Gates not your first cousin? Consider the many new “crowd funding” websites that help people just like you appeal to friends, family, acquaintances and even strangers. Many people in your situation have found “angel” or “seed” capital in this way.
By the way, if you have taken some of these very steps to engender credibility for your new or proposed business, the more you will have credibility to angel investors and thus the easier it will be to acquire start-up capital.
4. Locate and Meet with a Lawyer with Experience in Your Area of Endeavor – If there are two words that instantly lend credence to any budding business person – no matter what industry or business you are bound for – it is the phrase “my lawyer.” Some business models do require significant legal expertise, while others do not. Copyrights, leases, contracts and agreements regarding your new or proposed business are just some of the things you might need legal help with. Even being aware of the essential legal issues you may face, and regarding others you may not be aware of, being able to say “I will discuss that with our lawyer,” is a surefire way to establish “This person is real.” And having an attorney available to you just in case a legal issue arises will boost your own self-confidence.
It gives you great credibility with others if, when you approach them, (a) your company (proprietorship, corporation, LLC, etc.) has been legally established, and (b) you have simple agreements all ready for review and signature, both of which may benefit from legal assistance.
If your business idea and business model are new, unique or unusual, you might consider using a “Non-Disclosure Agreement,” often called an “NDA,” to present to others so that you can present your ideas to them without fearing that they might consider stealing it from you. That is what Mark Zuckerberg was alleged to have done – steal the idea for FaceBook – when he was hired by two would-be entrepreneurs to do software coding on an early version of FaceBook. If only he had been required to sign an NDA agreement . . .
You might consider using our Model Informal Non-Disclosure Agreement “NDA,” a simple memo that says, in effect, “You promise not to steal this idea.” To obtain a copy you can adapt for your own use, just [click here.] Delivered by Email – Instantly!
5. Seek Out Other Advisors and Mentors, as well – In addition to a legal advisor, it is helpful for your efforts, and super for your credibility, if you also have other business advisors “at the ready,” and potentially available to assist you, even if it is to bounce an idea off. These people would include an accountant, a person who is or used to be in your industry, and even a business person with considerable business experience.
It gives great credibility that you are willing to ask others for their perspective, and that you have wisely sought out such people. Even if you are a novice who has not before sailed his or her own ship, having “steady hands” available in case an unexpected “storm” takes place creates in the minds of others great confidence in your business’s chances of success. That is almost the definition of credibility.
Consider asking retired executives and professionals for their input, as many are quite willing to add such assistance.
6. Initiate Your Business’s “Nuts and Bolts” – Having simple business amenities in place is a surefire way to convey the sense that “you are for real.” By “business nuts and bolts, I mean (a) a telephone number, (b) an answering service, (c) business cards and business stationery, (d) a business bank account, and (e) a business website. Long before you are up and running, you can begin to develop and establish such “nuts and bolts,” and they can and will lend valuable credibility to your nascent enterprise.
7. Establish a Timeline to “Going Live” – Above, I raised the notion of a “Business Plan,” which is a outline of “how this business is going to work,” from marketing, financial and operational perspectives. Many people will ask if you have a business plan developed yet. A timetable for each step in developing the new business is an integral part of a Business Plan.
While a well-thought-out business plan is required by some parties, initial credibility does not flow from a piece of paper so much as it flows from passion, urgency and a readiness to set a deadline for “going live,” “opening the doors,” and “diving into the cold water.” People are always more impressed with, and willing to believe, “actual action” than “mere words.”
8. Create the Sense of “Rare and Fleeting Opportunity” – “No one has done this before. I am seeking four touring bands for this new and different music label. I have spoken with six band managers who are interested. Are you prepared to sign on?” Or “For the new-model law firm we need a partner in litigation. George and Molly are both interested, but frankly, I would rather give you the opportunity. Might you be willing to make a commitment this week?” Don’t underestimate the magic in the message “This boat is a rare opportunity, and just may have to leave port without you.”
9. Get Agreements, Forms and Procedures All Ready – Just in case potential customers, vendors, lenders, investors, partners and contractors line up at your door, and “knock to come in,” be prepared to have each of them “sign on the dotted line.” To do that, you need to have “the dotted line” ready for them to sign. Consider each relation you may need to establish for your new or prospective business – be it customer, contractor, partner, investor or otherwise – and put together, perhaps with help from your lawyer, the agreements, forms and procedures your new or prospective business might need. Just one more of those “steps to credibility.”
10. “Rev Up Your Engines” – Ready, set, go. If you have one investor, other potential investors will be more interested in putting up needed capital. If you have one partner, other potential partners will consider being your partner, as well. The same goes for lenders, vendors, clients, and customers. Two have the power of four, three have the power of nine, and so on.
These 10 Steps to New-Business or Proposed-Business Credibility are presented in something of a suggested chronological order. That being said, life rarely happens in an orderly fashion. Waiting for your hoped-for lawyer to get back to you? Then have your business cards printed. Waiting for final word on one “angel investor?” Then start preparing forms and agreements you may need for customers and clients. Whatever you do, just keeping doing things, establish momentum, and get that your rocket ship ready to take off. As you do, your confidence in your hoped-for venture will materialize, and there is nothing like confidence to create credibility in the minds of others.
P.S.: Al Sklover enjoys counseling people who are considering going into business on their own, as he did many years ago, and as he has helped others do so many times since. Consider the value of investing in 60-minute a telephone Consultation with Al Sklover about Going Into Your Own Business. He did it successfully, and so can you. [click here.]
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*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.
Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.
Sklover Working Wisdom™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains permission of local Courts to appear. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Company, LLC, 45 Rockefeller Plaza, Suite 2000, New York, New York 10111 (212) 757-5000.
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