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I have the best gig in the world. I get to help people move their dreams forward. I have the opportunity to help college kids who are just starting out. I can advise business owners who have hit a plateau, reach out and find the next big thing that will propel them to higher levels. It is all a big rush. I have talked previously about things that Young Entrepreneurs should know (some seasoned business owners could use these lessons as well). I have written about why someone would use a mentor and Real Social Networking.
But until now, I haven’t written much about what makes me want to get involved with a business. It just so happens that last week I interviewed a number of business owners who were looking for mentors. They each were smart, focused and clear about their mission. But I asked each what they hoped to get out of a mentoring relationship and I literally got blank stares.
For me, there are 8 things that I am looking for when looking to take on a new mentoring opportunity:
- Is the business owner able to clearly articulate his or her business? Does she understand her proposed business model? How does it make money? What does winning look like? Who is the competition? What makes you unique and thus memorable in the marketplace?
- How well does the entrepreneur take to proffered alternative ideas? In almost every first encounter (and many subsequent ones as well), I will offer up some differing opinions. I look for reaction and thought process when the entrepreneur replies. I am absolutely not looking for the entrepreneur to just accept my thesis. Rather, it is how they respond. Are they argumentative? Are they passive? Are they confident? Can they riff off of my idea to get to a better place? Some of my biggest failures as an advisor are when the entrepreneur has all of the answers and feels the need to continue to do what they want to do without seriously considering alternative opinions. Why invest time and effort in the mentoring relationship?
- Does the entrepreneur have a reasonable level of vision? By this I mean, is the entrepreneur focused only on global strategic issues with no real plan to get anything done? Conversely, it is almost as bad to have one who is buried in the minutiae of running the business with no thought beyond the next payroll cycle. While each entrepreneur has a preference for one or the other, it is critical that the entrepreneur develops to have both levels of vision in play at all times.
- Is the entrepreneur a professional? Even the youngest should have the basics down. Business cards, website, firm handshake, thank yous, elevator pitch of the business — all are critical. But most important, is your word your bond? If you promise something, can I count on it? This is where a lot of folks fall down. In most cases, I am volunteering to help you. The least you can do is to make promises you can keep and engage me wisely. Part of my value to you is access to my network. I cannot squander that resource on folks who cannot follow through.
- Is there a plan? Can you build a plan for what you want to do and then live to the plan? Can you stay away from the ADOS — Attention Deficit… Ooh Shiny — method of project planning? There are going to be lots of shiny objects out there. You need to stick to your plans and get stuff done.
- Have you got a reasonable financial plan? You need to keep your monetary requirements as low as possible. Looking for investment is the biggest shiny object project out there. I have seen more business falter through the fund raising period than at any other time. The entrepreneur is focused on making investor pitches and not running the business. Can you wait to get financing until you have a solid revenue stream? Your multiples and percentage of the company that you will retain will certainly be enhanced by waiting.
Yes, I know, some companies need a significant amount of financial assistance to get a prototype up and running. Do the best job that you can of bootstrapping the company and using Friends and Family to get you to the revenue stage if at all possible.
- Are you enthusiastic about your venture? You need to have energy to sell me on the concept and sell others as well. It will come through as you describe your company. You don’t have to be a marketing whiz to be enthusiastic. One of the company owners I met last week was a PhD candidate in materials science. She was as enthusiastic about the potential of her company and product as any of the other CEOs I have met recently.
- Lastly, do you understand my specific skills and capabilities? Is there a fit with the company’s business plan and the CEO’s capabilities? I am a mentor and not a miracle worker. There are areas in which I can help a business that come very easily to me, either because of specific experience or my particular aptitudes. If the business really needs something else, I would try to help them find the right type of mentor to solve that problem. In many cases, the company will require several mentors, who will each work on areas of specialization. It often helps if the mentors know each other and can collaborate, but it is not necessary.
It is a thrilling thing for me to be able to be a part of the growth of young companies. I take the charge of mentorship seriously and hope that the CEOs and founders find value in the journey.
Has anybody got any spare change? This economy has made it difficult for everyone, except possibly, the guys (and gals) at Goldman Sachs.
But that is not exactly the type of change that I was thinking about. The change that I want to talk about today is related to change in your business. As an advisor to small businesses, sometimes I work with folks who have run their companies for 4, 6 or even 8 years. Over that time they have developed a business concept that has built a client base and some revenue stream. But there they are. Their goal is to grow their business, but they are having a rough go of it. None of the concepts or ideas are working.
So, one way to get things moving, they think, is to bring in an advisor. Ah ha, someone who has been there and seen a lot of other companies. Somehow they find out about me (Thank you to all of you who refer business my way). So we talk. I ask questions and they are caught up in the moment of thinking about a big payday. “I know that my concept is worth 4 or 5 times what I am making now. Look at my customers. All I need is someone to show me the path. I’m willing to do anything.” And in a few cases, this is probably right. The company may only be a couple of small tweaks away from greatness.
But way more often, there is disappointment on both sides. Why is this? I believe that a big portion of this is resistance to change. The business owner cannot give up what got her to the current point. Sometimes it is that the owner is doing the work that his employee should be doing (what got him there). Other times, the entrepreneur is feeling that doing the hard work of selling, implementing new programs or developing relationships with partners is below her.
Change is the starting point for the next level of business. Most businesses run in a predictable pattern. Up to about $1 million in revenue, the owner (and entrepreneur) can manage the business by himself. He can figure out the right hires and engender enough loyalty to build a stable business. At about $1 million, in order to grow, the entrepreneur needs to change. Things need to get more formalized. You need sales forecasts, HR forms, partnership negotiations, perhaps even a new business model. The owner needs to get out from servicing the customer directly on a daily basis and start to lead the business in these new directions. In the cases where the owner is capable of growing and changing, this is the start of the entrepreneurial-managerial journey. You are not just running a business, but at this level you are also leading a team that will help to propel the business.
As hard as I try to help an entrepreneur evaluate their readiness for the types of changes that I have described, very few are ready for the reality. It reminds me of the saying “What got you here, won’t take you there.” You have to be willing and capable of change. You have to look at change as an opportunity to learn new things or to try out talents in different areas. Will you be successful? Maybe not, but by not trying you certainly will not be able to get to the next level. Perhaps you will find out that you are capable of performing some of the skills, but woefully inadequate to do others. Fine. Now would be the time to grow your strengths and find others to join your team that can do the painful stuff. Over time, if you look seriously at increasing your talent base, you will become a much stronger businessperson.
But at the heart of the matter, you have to be willing to change – go out on a limb and try something new.
Business is often compared to sports. You hear of someone hitting it out of the park or the slam-dunk opportunity. When you need to get back to the basics, it is often blocking and tackling. And who hasn’t had to develop a game plan for the upcoming budget year. But one thing that sports has that business doesn’t always is a clear opponent. Sports are all about the competition. Business, too, is about competition, but the opponents are often hidden.
Often, I have read business plans where the entrepreneur states that there is no competition for his particular venture’s product or service. If I am judging a business plan competition (there’s that word again), I automatically downgrade a couple of points. If, I am a mentor to said entrepreneur, that begins a longer conversation about the business.
My friend Jeff, the marketing strategist, likes companies to develop “Only” statements. As in, the widget is the only product that will wash your floors and leave your mouth minty fresh. I’m kidding, but Jeff is serious. In marketingland, it is critical to explain why your product is the only way to get things done. But from the other side of the fence, we understand that while we are the “only” X, our prospective customers also get to decide what is important to them and there are others out there who have something to say about their products.
Let’s face it, there is always competition. A few examples…
What about Microsoft, back when it was a tiny company? There is the oft told tale of how Gary Kildall, founder of Digital Research was a strong competitor to Bill Gates’ early efforts at Microsoft and lost out on the original IBM PC operating system contract because he wasn’t willing to sign the IBM non-disclosure documents. Had Gary Kildall signed the contracts, no one would have heard of Bill Gates or Microsoft. Instead of Windows, we might be using GEM.
But, really, when Henry Ford started making cars, he had no competition. Not so fast. Henry Ford had lots of competition. Besides the other automakers who were building cars on a custom basis, there was always the horse and buggy. People did not really need the automobile. Remember that “do nothing” is always a competitor in the minds of your potential customers. What Henry Ford did was change a manufacturing process for a product that had already been in the market.
OK, then, how about Segway. Dean Kaman built a product that no one had ever thought of. It was an entirely new product and how could there be any competition? Ah, but the competition was there, it was just disguised. Let’s see, people could walk (buy nothing), purchase a bike, hybrid car, roller blades, scooters. It depends on how they were looking at the problem. In actuality, the competition was what led to a less than successful introduction for the Segway and why they are still looked upon as curiosities, rather than a mainstream transportation choice for consumers.
I believe that you have to be honest with yourself when you look at your business. There is always competition and you have to be ready to confront it. Don’t forget about “Do Nothing” as a competitor. Look at alternative uses of other products and how your product may be viewed in the marketplace. In fact, if you can honestly say that there is no competition for your product, I would question the value that the marketplace has for your product.
So, if we can agree that in order for you to be successful, there will be competition, then how can we develop strategies that will further your business idea?
First, we need to realize that competition is good. In a way, competition validates the marketplace. If others are selling into the consumer base, then we know that the consumers are able to purchase to solve their needs. This gives you an idea that people may also buy your products, if they are marketed, produced and delivered with care.
Second, competition will force you to raise the level of your game. You have to understand the marketplace and react to it on a regular basis. This will hone your product offerings to be as good as they can be.
The one thing that I would emphasize to companies facing direct competition is, don’t play the other guy’s game. Change the game and make him play by a new set of rules, if at all possible. Going back to the Henry Ford story, this is his true genius. He was able to change his manufacturing process to lower the cost of the first mass produced automobile. The consumer really didn’t much care that it was mass produced, but suddenly the price for an automobile was not a stumbling block and Ford was able to literally change the world.
For you, look for ways to change the game as well. Maybe there is something that you can bring to the table that doesn’t cost you much, but the other guy hasn’t cottoned on to. Put your emphasis here. Go to your customers and let them know about that extra special feature and try to get it written into specs. Understand what is important to your purchasers. Is it value, couture, large portions, safety from lawsuits? Whatever it is, if you can provide it and your competitor cannot, you have a better than even chance of (sports metaphor coming…) landing the big one.
But, if you are successful, be aware that the circle has a way of coming back. Look at Microsoft and Google today. It’s all part of the game of business. Real entrepreneurs don’t shy away from the competition, they look for ways to compete on the playing field.
In the world of entrepreneurship, one of the most interesting questions that is debated is what really defines an entrepreneur. Much of the research and efforts in academic circles and Entrepreneurial Service Organizations are focused on getting people to start businesses. The curriculum covers everything from teaching the fundamentals of market research to building a business plan. The rationale is derived from studies that show that small businesses create much, if not all, of the growth in employment in the US. I believe that this type of education is important, but I truly believe that there is a more critical area that needs to be emphasized.
The usual definition of entrepreneurship usually has some connection with risk. That is, an entrepreneur is someone who is willing to assume the responsibility, risk and rewards of starting and operating a business.
Getting an idea is not difficult. In fact, most of the skills necessary to start a business are relatively easy to obtain. The difficult task is to finish. Let me explain. Many of the entrepreneurs that I have met have a reasonable business idea. They can put together some sort of business plan; some go with the mini 10 page report, others produce a tome of over 100 pages. They can put together a demo or a prototype. Then they lose their nerve. They review their research, they add just another modification to the web demo, they send out another survey. This is the point when they need to drive forward. As Steve Jobs says, Real artists ship.
I believe that real entrepreneurs ship. By shipping (or opening the website or performing the sales calls or signing the partnership agreements), the entrepreneur will gain knowledge about what the market really wants. She can make the changes to the offering to appeal to the customer. She can invite customers to be part of an inner circle and tie them closer to her company. And, possibly, even record some early revenue.
Lose the fear. There are few downsides to shipping earlier. Make sure that what you ship, you can be proud of, but don’t obsess over every aspect. Remember that Windows was unusable (but a good demonstration of future technologies) for the first several releases. It wasn’t until Windows 3.1 that Microsoft had a solid winner.
Yes, it is good to start businesses. But the risk inherent in an entrepreneurial company is multiplied if you don’t ship your product. You risk increased competition. You risk wasting critical capital by waiting. You risk your potential customers finding alternatives. You risk losing employees to other more exciting projects. The way to reduce the risk is to deliver a product to the marketplace and continue to respond to the market by reacting quickly to new information.
Shipping product is a virtue. Get it out there and find out whether you actually have something that the market demands.
I have been doing some thinking about mentoring. As I get more experience in providing business guidance to others I have found that there needs to be some more structure put around these relationships. Perhaps it is that old thing that it seems like you find articles in the news when you were thinking about them, but I found this article today about mentoring turning into a multi-player sport.
It makes a lot of sense. Clearly, mentors have a lot to give to their charges. Last week at the Launch Depaul new venture competition, all three of the for-profit teams have dedicated mentors through the Coleman Entrepreneurship Center Blueprint program. But not as clearly, mentors are usually really good at a couple of business topics and relatively weaker on others. As an entrepreneur who is looking to recruit a mentor, it is a good idea to perform a serious self evaluation to understand what your true needs are and what you hope to have the mentor accomplish. In many cases, it makes sense to work with several mentors to cover the spectrum of issues that the business owner has uncovered through the analysis. A good mentor will know his or her strengths and where they can provide the most support, but they will also know of other potential mentors who can cover other areas and be a good fit for the corporate culture.
Currently I am working on a project with another mentor, where a portion of the need is in my wheelhouse, finance and operations. But the other mentor that I am working with is a whiz with technology, planning, HR and legal. The entrepreneur understands sales and marketing, so we are fairly close to covering the ongoing needs of the company to enable serious growth.
As a business owner engaging a mentor or mentorship team, it is critical that you all agree on the structure for the support. In the cases where I was just a mentor on call when someone had an issue, the result was less satisfying for both parties than when the mentoring was clearly defined. That is not to say that you cannot deviate from the plan, however it is incumbent on all partners to understand what needs to be done and to adhere to a process to manage plan changes.
Both parties get so much out of a mentoring relationship, when it is managed as a true business relationship.
Entrepreneurship Blogger: I just found a new entrepreneurship resource that I need to share. Mark Suster writes Both Sides of The Table as an entrepreneur turned VC. His writing is clear and he writes about things that all entrepreneurs need to read. I think I have “starred” his posts 4 or 5 times in the last several weeks as clear thinking about topics I care about.
Reminders: Do you sometimes send an email request out to someone and then forget about the fact that you are expecting something in return? Then a deadline passes and you say, “Where in the heck is that response from so and so?”. There is a simple new tool out there for free that will help you. It is called FollowUpThen. To use it is simple. Just add an email address in the form email@example.com to your cc: or bcc: list and the site will send a nicely formatted email after that time period has passed. If you add it to the cc: list, then if the recipient doesn’t reply all with the answer to your request, FollowUpThen will send both you and the recipient the reminder email. If you add it to the bcc: list, the reminder will be sent only to the originator of the email. The xdays can be any number of days, weeks, months, years or hours. The tool seems to me to be an elegant solution to a common problem.
Legal Aid: If there is one thing in this world that I love is a business success story. There are a lot of things that make me crazy, but one of them is lawyers who go the extra mile to make tons of money at someone else’s expense, damn the particular merits of a case. The latest Chicago entrepreneurial success story is Groupon. If you have never heard about them, they create a deal a day for each city that they are in (now up to well over 50 cities). If a minimum number of people sign up for the deal, it is a go. The deals are usually pretty great — normally 50% or more off of some service. Each day you get this little present in your email box describing the deal — a manicure, massage, dinner, auto show tickets or Cubs rooftop box are just some examples. I have used their service and absolutely love it. Its free to sign up and just choose each day whether a specific deal will work for you. Their customer service policies are unbelievable. If you have a problem, normally they will just refund your purchase price, but they have been known to work with their vendors to make alternative dates available or accept expired certificates. Nothing but good things.
So, what’s the problem? Well, a local law firm just filed a class action lawsuit claiming that Groupon systematically deceives their customers. Best retort I have seen in a while — Groupon is declaring a class action lawsuit against itself. Let them know if and how you were deceived and they will make it right. If only there were some procedural way to have a law firm punished, if found to be bringing frivolous lawsuits. This one certainly sounds frivolous to me.
As some of you know, I am not the biggest fan of Social Networks. To me, it seems like a lot of the social networking that goes on is like New Year’s Eve, a time of forced frivolity. Now, I love New Year’s Eve, but only because it is my daughter’s birthday.
Yes, I know that social networking is a lot of things. Facebook and Twitter are certainly the types of things that I just don’t get. Why would I be posting all of my personal thoughts and what I am doing for the world to see and comment on? Perhaps it is just my age. With all of the social networks out there, how does one really benefit? I think I have been invited to 4 different Ning groups. Realistically how does one find the time to actively participate and get value from each? I have a profile on LinkedIn and have seen limited benefit from it. Lots of people have profiles (like me), but not a whole lot really gets accomplished using the tool.
Blogging seems to work for me. It gives me a chance to more fully flesh out the ideas that I have and put them down in writing. The very task of writing makes me provide a (sometimes :)) coherent narrative that I hope is helpful to my loyal readers. But I understand that blogging is mostly a one way communication unless my readers choose to comment directly in the blog.
The most fun that I have is Real Social Networking, as compared with the garden variety social networking talked about above. Please note that I am not talking about the business networking events that in Chicago tends to be passing business cards around, lying about the success of your business, trolling for customers (or a new job) and drinking adult beverages. Real Social Networking involves the introducing of people in my network to each other to help solve a business (or personal) problem. In order to do this to the best effect, you must really understand what each person in your network is about. Where they went to school, what their politics are, what do they do better than anyone you know, what are their blind spots – you get the picture. You can’t do that when you are amassing “friends” in order to beat Ashton Kutcher’s record on Facebook. It is hard to do that when you converse with people 140 characters at a time.
My social network is not that large compared to a lot of folks on Facebook. No matter. I know that if I call on my friends in the network to help another, they will. If they ask me to help one of their friends because I have certain skills that are needed, I will do so in a heartbeat.
In the past several weeks, I have been involved with 5 or 6 projects that have involved my network. In some cases, friends have asked that I provide counsel on a project. In other cases, I have introduced friends to other friends who can help solve an issue. In another case, I convened a group of friends to brainstorm potential business models for a friend’s fledgling venture. I have introduced angel investors to companies. I have provided referrals to other friends. This is the value of real social networking.
If you haven’t tried it, I recommend that you start. Start small. Invite someone that you have been introduced to, but don’t know well to coffee. Ask them what they are most proud of. Ask them what they do better than most people. Ask them what they are scared of. Share your stories. And then ask them, How can I help? You may be able to help right away either directly or through your network. But even if you can’t, you will have started to build the network. That is a key asset that is much more than having 5000 friends on Facebook.
New Product: I am very excited by the Square credit card processor for the iPhone (and maybe other devices with an audio plug). This product will revolutionize the way that people can conduct commerce. Not just businesses, but even person to person. The device is a small square credit card reader that plugs into the audio jack on the iPhone. There is software for the iPhone that will process the credit card and transfer money directly to the recipient’s bank account. Now the founders of Square have done some things right. They priced the software at $1 and the device is free. This makes it almost irresistible for anyone who wants to accept credit cards. Think of craft fairs, your lawn mowing teen or a Craigslist seller. The cost per transaction is reasonable (2.9%) and Square will even donate a penny per transaction to a charity of your choice. More details and a video here.
Knowledge: Steve Schwartz wrote a post on the 3 types of knowledge. While the language is not always appropriate for elementary school, he does explain clearly how these 3 types contribute to our general sense of ourselves.
Advice: Micah writes about giving advice. This one is going to be hard for me to do (given the name of this blog) as I love to give advice almost as much as Micah does, but if he can find a better way, I can try.
I just finished reading Atul Gawande’s newest book, The Checklist Manifesto: How to Get Things Right. Dr. Gawande is a great thinker and I had enjoyed reading his prior two books about the medical community: Better: A Surgeon’s Notes on Performance
and Complications: A Surgeon’s Notes on an Imperfect Science. In this book, he talks about a simple way to reduce errors in the operating room, a checklist. He talks about how checklists can be developed and how they are used in aviation to reduce errors in the cockpit.
There were a couple of key takeaways for me from this book. Gawande reports on the research of the science of complexity. Professors Brenda Zimmerman of York University and Sholom Glouberman of the University of Toronto have developed a distinction between three types of problems in the world. The first type is simple – like following a recipe to bake a cake. You may have to learn some parts of it, but it should be repeatable if you follow the instructions. The second type is complicated – think of sending a rocket to the moon. In a complicated problem, you can usually break it down into many simple problems, but you will have multiple people or teams, multiple specialties and timing and communication become serious obstacles to be overcome. The third type is complex – the example given here is raising a child. Unlike sending a rocket to the moon, if you successfully raise a child, there is no guarantee that your second child will turn out the same. Experience is helpful, but by no means sufficient. It is possible to successfully raise a child (no matter how you define that), you just can’t predict how it will happen.
In each of these types of problems, a checklist can be helpful. In the simple case, a recipe is a simple checklist that ensures that all of the steps are completed in the correct order. In the complex case, a checklist can be used to schedule the work that needs to get done, coordinate the interactions between the different teams and even regulate the communication between teams that is required to iron out issues that arise during the project. Gawande spends some time in the book detailing a large building project and their use of checklists to ensure that all of the myriad details that must be accounted for during a skyscraper construction project are managed.
It is in the complicated cases that the uses of the checklist have really not been utilized. For many years, the complicated cases have seemed to be too random to be managed through checklists. In the surgery, complications are all too often a regular part of the job. This antibiotic doesn’t work for this patient. The patient suddenly develops an infection. The laboratory does not deliver the right type of sample collection device. But Gawande and a team at the World Health Organization worked on a trial project with 8 hospitals around the world to try checklists in the operating room. Their goal was not to address all of the potential complications. They created a list of 19 specific things to check before, during and after a surgery. Things like, did you check the patient’s name bracelet, did you give pre-surgery antibiotics, if there is a chance for blood loss, did you request blood supplies be available. In addition, the checklist required that the team all introduce themselves before surgery. This bit was introduced to help the surgical team function like a team, when the complications arose.
The results from the trial were unbelievable. Hospitals from the US, Canada, UK, Australia, India, the Phillipines, Jordan and Tanzania participated. Overall, the rate of major complications for surgical patients in all eight hospitals fell by 36% after the introduction of the checklist, while deaths fell 47%. Such a simple concept. But it forced everyone to concentrate on the issues that they had control over, while preparing them to work as a team on the unforeseen complications that inevitably arise.
Now, usually I write about entrepreneurship, so why is this so important?
Well, Dr. Gawande took his message of the value of checklists to experts in other industries to see if there was a correlation. One of the folks he talked to was Geoff Smart, who wrote a top selling book on hiring called Who: The A Method for Hiring. Smart did a project with Venture Capitalists where he evaluated the style that the VC used to make investment decisions. The VC’s that used a checklist approach had a 10% likelihood of replacing the senior management versus 50% for VC’s that didn’t use the checklist. They were also more financially successful. The checklist users had an 80% ROI versus 35% or less for the rest.
As you look to develop your businesses, it seems like a good idea to implement checklists throughout your businesses. Even though your outcomes may not result in life and death, like Dr. Gawande, the benefits of using checklists to cull out the simple and mundane errors and focus on the complicating factors will strengthen your business.
Lately I have become fascinated with the sales process. Those of you who know me well, are not surprised, since sales has always been a Black Hole area for me. But my fascination is really directed at a certain type of sales process. Let me explain.
When you think of sales, you normally think of a company who has a product or service and has to find customers for that deliverable. There are a lot of folks writing articles about and perfecting their sales processes to get that prospect to sign on the dotted line. Everybody from Boeing to the local deli has their own process down and understands what they need to do to ensure that the income keeps rolling in.
In the past several weeks, I have had conversations with several businesses that have a dual sales process. That is, they have to sell someone on the idea to sell a product to the end user.
At DePaul University’s Coleman Entrepreneurship Center, I attended a Blueprint Connections networking event recently. These events give student entrepreneurs an opportunity to talk with and present their ideas to experienced business folks. I am always excited by the future of business after attending these sessions; there is just so much energy there.
At this event, I met a student named John. John had started a business of providing real estate services to college students. His goal was to match students to the perfect apartment. John had a good sense of his market, he understood the value of high quality service and he made a compelling case. His challenge, though, was that in order to make a sale, he actually had to make two sales. He had to develop relationships (and contracts) with landlords, so that he could show their properties and get paid for the successful lease process. Then he had to sell the students on the need for his services and the “inventory” of properties that he could show. It is a devilishly hard process to manage.
Another company that I have been working with sells a licensed commodity to a large retail chain. The owner needs to get legal authorization from each licensee (think over 15,000) to sell their licensed material. Then he has to work with the store manager (there are over 5,000 of those) at the retail chain to offer his products. Even though corporate has given the green light to selling the products, they want the store managers at the local level to make the final decision. It is a balancing problem. You want to go out to the licensee and get the authorization so that you have something to provide to the retail chain, but it certainly is helpful if you have the local retail store already on board to sell the products and can go to the licensee with a pre-order.
These opportunities are golden opportunities, because they have the benefit of a contractual relationship between the parties and that makes it more difficult for others to enter. When we talk about investors funding ventures, one area we normally talk about is barriers to entry. These dual-focused sales efforts do provide some level of barrier. The challenge is how to balance the sales efforts in a knowledgeable and responsible way to grow your business.