These days, many people want to be their own boss and become an entrepreneur, run their own business and be millionaires. An achievement not many succeed at. So, let’s get some advice from someone who has been around the block and can tell it straight forward.
With so much sugar coating nowadays, it is refreshing to talk to someone who can shed some light into the world of Entrepreneurship who will give us some of the keys of starting a successful business. For those who don’t know who Jeff Stoller is, he is a highly-educated individual with a lot of attention for detail and has worked with some of the best known brands in the world including The Rolling Stones, Playboy, Warner Bros. and Penthouse.
Jeff, before we delve into the world of Entrepreneurship and talk about your book, why don’t you tell us a little bit about your professional background as you have an interesting story about your degrees, don’t you?
Professionally, I’m an attorney and accountant. I went to the University of Southern California and a fun fact of that is that when the university was celebrating its 100th birthday, a major photo exhibition was assembled to reflect that history. My photo was one of the pix because I was the first and only person to get 3 graduate degrees simultaneously. They actually changed the rules so others couldn’t do that… so I’m in a club of one. After receiving my law, master of business and master of taxation degrees, I went into the tax department at KPMG. I was recruited back to USC as a professor of finance, where I taught for 3 years before diving into the film finance business. Isn’t everyone in Los Angles in “show biz”?
Through a good friend, I was around the music industry and got involved with product merchandising. That led to an invitation for me to work with the Rolling Stones (which I accepted) and that, in turn, led to my working with Warner Bros. and Playboy. So, my legal and accounting background had morphed into the use of intellectual property to expand and build a brand. Separately, a client of mine was in the nightclub business, which took me into that world where I became - so I’m told - an expert in the hospitality/entertainment field. In fact, between 2004 and 2016, I created the largest international chain of nightclubs in the world. I left that world to pursue my own passion that caters to more of a family-friendly, totally mainstream audience, which is what my focus is now, along with some consulting on the side in hospitality, entertainment and entrepreneurship.
I met you when you were working for the Penthouse brand where you were the international licensing director in charge of opening clubs worldwide. Can you tell us what that entailed and what did you look for when people wanted to open more clubs?
I joined Penthouse right after it had been taken over by an investment group. My role was to create a program to license the world-famous Penthouse name to nightclubs around the world. I was given almost complete autonomy and the company was doing well enough that making money was my second priority. My first priority was protecting the integrity of the brand, which meant I said “no” to a lot of people who either wanted to convert an existing club or get in the business for the first time. With the brand being the top priority, I could focus on how a particular club and the owners would impact the brand and what we wanted the brand to be and to mean, because the owners’ goals and styles have an enormous impact on how the club turns out. In cases where someone wanted to get in the business and had the money, if it was a location that I thought was appropriate and the attitude of the investors was in the right place – in other words, wanting to own a club to party every night with the girls was an automatic “no” -- I would say, “We can do this depending on who you have for management.”
At that point, they’d either find someone and submit to me for approval or I would recommend someone … or I would never hear from them again because they knew I wouldn’t allow them to pimp out the brand for their own personal entertainment. But building a licensing program for an iconic name is more than just letting people use the name. I wanted to provide as much added-value as possible, so licensees would be happy with their experience and would stay with the program … and keep paying. After all, while making money may not have been my first priority, it was a very close second … and for some businesses, licensing can be the most profitable part of their business, as it was for Penthouse. Often, when I was asked by a prospective owner/investor what the sales of a converted club were before and after the re-branding so they could assess whether the brand was worth paying for, I would reply that while I couldn’t disclose specific numbers because of confidentiality, I could tell them that in every single license that came up for renewal, the licensee wanted to renew. To me, the best testimonial is when people keep coming back for more. In fact, over the 12 years from 2004-2016, we created the largest international chain of nightclubs in the world. Since I left, it’s trimmed back a bit, but the new people who are doing it have their own strengths and goals.
Talking about powerful global brands, what would you say are the requirements to have a long lasting successful brand?
Most people do not understand the real power of a brand. That sounds like a line from “Star Wars,” doesn’t it? OR how to use it. Putting it into words is fairly simple… executing it is not. So, here are my 3 points to having a successful brand:
#1. A “brand” is not just the name or logo, it is much more. The object of the brand or, more specifically, brand management is to get someone to do something or respond in a desired manner specifically because of the brand. Usually, that means buying something; but it could mean, for example, voting for someone when the brand is, instead, a person.
#2. People - businesses or consumers - buy a branded product or service for one or more of only 3 reasons. If a brand doesn’t satisfy at least one of these 3 reasons, the brand has little value other than as a name tag (or maybe some emotional value to the owner, such as the owner’s child’s name):
Be realistic about your own abilities. This opens the door to letting others help you where you need the help.
Run your idea and plan by people who are not friends or family, and who couldn’t care less about you. Friends and family want to be supportive and don’t want to hurt your feelings. Think of all the people who go on the talent shows on TV who are terrible, and they argue with the judges saying things like, “I’m a great singer. My family tells me that all the time.” Same thing. This takes the emotion out of it so you can be more logical about your decisions.
Get help doing your projections and cash flows from someone who’s done this before. This can save you a lot of time, effort and embarrassment because few people who haven’t done this before really understand, for example, the critical importance of cash flow timing differences. One of the biggest mistakes entrepreneurs and managers both make is thinking that businesses run on profits. Not true – they run on cash. That difference can make or break a new business. So, be realistic about the amount of money you need to launch your business.
Do not start underfunded. There is an enormous temptation when you know you need $1,000,000 and someone offers you $500,000 to take it and see what happens; but that has two downsides: (a) It puts the entrepreneur under enormous pressure to keep looking for money while trying to start the business. (b) It gives a prospective new investor enormous leverage because the investor knows the entrepreneur is at risk of losing everything. And if the entrepreneur is unable to get the rest of the money, the feeling of failure is amplified greatly.
Understand that a business is a thing, not you. Being optimistic and confident is essential; but the reality is that a lot of new businesses don’t succeed. If the business doesn’t succeed, that does not mean the entrepreneur is a failure. It means something done was not successful, but the entrepreneur – as a person – is still valuable, and should not feel embarrassed to re-engage with friends, family and colleagues. Similarly, this point is for people close to the entrepreneur: As important as it is for friends and family to be supportive of an entrepreneur, it is equally if not more important to be just as supportive if the venture doesn’t succeed, because that’s when the entrepreneur will need the re-affirmation of people close that he or she is still the same person as before.
Based on that last answer, what are the biggest initial hurdles to building a business and how can people overcome them?
Based on the last answer, “being realistic” about those elements can be very difficult and one has to step back and be able to evaluate as if it’s someone else and someone else’s ideas. A good way to address that is to have someone very knowledgeable, who you respect and who will always tell you the truth, to ask questions and bounce ideas off of … but you have to listen, as well. The ground rules of such a relationship must be laid out at the beginning to include the following: “No matter how much the friend/advisor wants to be supportive and not discourage or hurt the entrepreneur’s feelings, the friend/advisor must speak his or her mind, regardless of the consequences.” If not, and the friend/advisor is more concerned about not hurting the entrepreneur’s feelings, the truth could be covered up or ignored. Of course, raising capital is difficult. How to overcome that? Get a thick skin, don’t take rejection personally and keep at it.
For any Entrepreneur, Venture Capital is important, do you prefer to pursue funding or build organically and why?
If at all possible, build organically until you have a great story and investors come to you. That’s when you’re in command. At the beginning, outside funding sources are in command; but if you need outside funding, do what you have to do.
There are always competitors on the market, what is the best plan to compete against them?
The best plan to deal with competition is to determine
(a) who your target audience is and
(b) what your points of differentiation are that are important to your target audience.
It could be price, quality, service, location, ambiance, convenience, warranty, whatever. The difference may even include simply “doing it better” than the competition; though the difficulty with that is effectively communicating that subjective quality to your audience because it’s easy for anyone to say.
For those who partner up with someone in business, what should they be looking for?
There are operating partners, there are managing partners and there are investors. Most important is the ability to trust the people with whom you are in business. Without trust, you will have many sleepless nights. I learned this lesson the hard way when, in one business that was open late at night and I was the morning person, every few mornings the bookkeeper would say, “Jeff, $X is missing” and my answer was always “It’s not missing if you know where it is.” In that case, it was in my partner’s pocket. That relationship didn’t last long. Two more obvious elements to look for are expertise and passion – together. So often, when watching “Shark Tank,” I’ve seen the entrepreneurs plead their passion to the Sharks as if that’s all that matters; and I cringe when I see that because passion, without the ability to execute or a realistic assessment of the business is useless.
What is the single most influential factor in a business’ success?
There are so many different elements that it’s hard to point to one, but if you look at many successful businesses and the factors that contributed to their respective successes, I think the element that you will find in almost all is “being in the right place at the right time.” Some would call that “good analysis and planning” while others would call that “luck.” You call it what you will.
We talk success, but what about mistakes? Can you share with us one of your business mistakes in the past and what you learnt from it?
Actually, I referred to one of my mistakes when answering the question about “must-do’s” for an entrepreneur before starting a business: resisting the temptation to start underfunded. Here’s what happened: I was starting a new company and had budgeted the amount of money needed. The investors said “Ok, but we’ll give it to you in stages.” Keep in mind I said that businesses run on cash, not profits. The problem is that when you do a cash plan, if you don’t specifically plan for delayed investments, you will run short. My mistake was that I trusted that my investors would provide the cash on the schedule agreed; but when they didn’t, everything was screwed up and I didn’t have a back-up plan.
How important is it for an Entrepreneur to recharge when feeling drained or taking time off to rethink what the next steps are? I think the idea of working working working, then taking a 2 week vacation, then working working working is not the best idea. The reason is that when you return from vacation you may be recharged and ready to go, but the longer you keep working without a break, your stress level goes up and performance often goes down… maybe in ways you can’t tell, but it does. That’s natural. It creates a cycle with high peaks and low valleys. For me, a healthier way is to build time into your day or week to recharge, to allow yourself and your staff time each day to think and dream and imagine. Now, that may not happen every day, but plan it and include that time in your regular schedule and you won’t get so burnt out.
How do you think technology is impacting the way we do business now and in the future?
Technology does two major things: It gives us more and better information and it enables us to communicate with more people quickly. Having more information sounds great, but we have to process more information in order to be able to prioritize it and use it efficiently. Being able to communicate with millions of people quickly is also great, but it means that our target audience is being inundated with information that THEY now have to prioritize and process. The challenge, today, is how to use technology in a way that WE (whoever “we” is) stands out among that barrage of information.
What productivity tips can you give us for those new to Entrepreneurship?
This is a suggestion lots of people make, and I’m one of them: There is always a LOT to do. Make lists, prioritize and do as many things as you feel comfortable doing. Don’t look at the whole list and freeze from being overwhelmed or feel you must do them all at the same time. Also, learn how to delegate the tasks other people can handle.
What do you know today that you wish you would have known when you first got started as an entrepreneur?
When I started my first experience as an entrepreneur, I believed that hard work and talent were the only important things. I wish I would have known the importance of networking before I started a business.
Jeff, you have also spoken about Entrepreneurship at a few events, what do you enjoy the most about inspiring new audiences?
While many people have an idea, most don’t know how to get from Point A to Point B. The process is scary and overwhelming. I think what my speaking engagements do for people is make them realize that, yes, there is a lot to do but it CAN be done and that there is a path from Point A to Point B. What would you like to see in the Entrepreneurial world over the next few decades?
I’d love to see more entrepreneurial investment funds and incubators to help develop new ideas. Today, private investors and funds stay away from new ideas and start-ups, unless you’re in tech. There are a lot of great ideas and entrepreneurs doing things besides tech.
Now let’s talk about your book ‘You Want To Be an Entrepreneur’. What was the inspiration behind writing the book?
The inspiration came from my own experience consulting with others, seeing what issues they were dealing with and the guidance I was providing. As the subtitle, “Success requires more than just a great idea,” suggests, a great idea is a good start, but you have to be able to execute it. So, my book addresses the real world practical aspects of starting a business. I had seen so many speakers and books and websites telling people “You can do it” when, in reality, many couldn’t – at least, not yet. And that false sense of confidence can lead to a failure that, in some cases, could have been avoided. This goes back to my point about being realistic about one’s own abilities. I wrote the book to give entrepreneurs a realistic perspective of the kinds of things they ought to know or be aware of because so many people, after starting, say “I wish I’d known more about that before I started.” I can’t provide all the answers, but I can alert readers to a lot of the questions.
What are the top lessons people will learn from reading your book?
Hopefully, people will realize that the subtitle of my book is true – that there really is a lot more needed than just a great idea. But I don’t want people to feel they have to memorize the book. Just remember the big things and the questions so if something comes up – and it will – you’ll remember “there was something in that book about this.” And you will be able to re-read it and either address the issue yourself or consult someone who can help.
Who is the book's target audience?
The book’s target audience includes people who are new to business or starting their own business, as well as people who have started a business and seem to be missing something.
Any last words for our entrepreneur readers? Both to the start up and the more experienced ones?
Remember that Bill Gates, Steve Jobs and Henry Ford were all entrepreneurs. Sometimes, when we see today’s business giants, we forget that someone started it. There will always be new ideas and new entrepreneurs. So, don’t be scared off thinking only big companies can have a good idea. If that were true, MySpace would still be big and no one would have heard of Facebook.
Thank you very much Jeff, it was very inspiring talking with you and I know many people will enjoy reading your advice. So there you have it folks, who is ready to delve into the Entrepreneurial world?
If you want to buy Jeff’s book or connect with him here are some useful links
Book Link http://youwanttobeanentrepreneur.com/