Timing and Capital - Early Bird or Second Mouse

Timing and Capital

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

If you never leave home without a wrist watch and wallet, you already know the importance of timing and capital. In a competitive commercial context these two tools are of vital importance.

Service leavers can bring their skills to bear usefully at every stage in the life of a company and an industry, and this post aims to illustrate some of the timing and capital considerations that may help a service leaver to choose a market that best suits their skills and expectations.

Timing

As the market for any product or service develops, demand typically follows a predictable pattern. After development and launch, a small number of "early adopters" are gradually joined by a growing group of customers. The market grows to maturity and then eventually declines.

Understanding the importance of timing and capital is essential if you are to harvest the best results from the market you are in - or thinking of getting into.

Early stage - to the victor the spoils

If you join a market at a very early stage - or create it - timing is critical. Get it right and you can enjoy high profit margins and high growth as early adopters sing your praises and spread the word. Get it wrong and you may find that demand doesn't appear - or takes longer and costs more than you expected.

While many early stage markets don't require large quantities of capital to enter, unless you are sure of your timing it is essential to have sufficient resources to survive if demand takes longer to pick up than you expected - you may also need to refine what you are selling so that more people want to buy it.

Of course any given quantity of capital will last much longer if you have a tight grip of costs and keep the "burn rate" as low as you can.

Growth markets - more capital required and less timing risk

If you choose to join the market later in its development - perhaps as a "fast follower" improving the initial offerings of others (Apple and Virgin are great examples of companies that do this), you are less exposed to the timing risk - the danger that you will have launched something that is ahead of its time - but you will probably also need more capital in order to capture customers and gain attention.

Mature and declining markets - optimisation and big balance sheets

Once a market has matured, the profit margins typically reduce and competitive success turns on being able to run the leanest operations. The search for economies of scale lead to consolidation and the creation of larger and larger organisations - along with the need for larger and larger quantities of capital. Strategic timing becomes less of an issue - but tactical timing is essential working capital management in particular becomes a key determinant of success.

You choose - bird or mouse

Military experience can fit people for each of these stages. The early stage of the development of a market is typically characterised by uncertainty - one of the staples of a military career - while fast following involves learning quickly from the experiences of others and seeking to build on their insights.

"The early bird catches the worm, but it's the second mouse that gets the cheese"

Since the military in the UK could fairly be described as a mature and declining market, servicemen and women have plenty of practice in optimising systems and processes to try to find efficiencies - particularly in large supply chains and communications systems.

Capital - be sure of your budget and backup

Each of these options depends to some extent on the capital available. While (except in some industries like mining or pharmaceuticals) there is often little capital required in the early stages of a market, joining an established market can require massive scale and resources.

Beyond the resources and expectations that an entrepreneur can bring to bear personally, they may need to seek additional capital from other investors or lenders. Understanding the expectations and constraints of those investors - whether they be friends and family or formal investors like business angels and venture capitalists - is essential to ensuring that the entrepreneur has the resources to realise their vision.

So gaining a clear understanding of the investor perspective should be high up the list of tasks for any entrepreneurial service leaver.


This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

Financial Analysis and Marketing - Two Key Skills for Entrepreneurs

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.


When I left the Royal Marines in 2000 I knew I had a lot to learn about civilian life (and I still do!). Two of the subject that were particularly alien to me, coming from an armed forces background, where finance and marketing.

I was fortunate enough to have a great introduction to each of these in the 2 years after I left the Corps. First I joined JP Morgan and was sent to Wall Street for their analyst training programme, and then during my MBA at Warwick Business School, I studied marketing and strategy under the legendary Professor Peter Doyle.

Financial Analysis

Financial analysis, an understanding of the way financial information is recorded, presented and interpreted, is essential to anyone who wants to understand how an enterprise works. The single most important piece of financial analysis is probably "can I sell this product or service for more than it costs me to make or buy?" if the answer to this first question is no, then it's time to go back to the drawing board. But this is only the beginning, and I would encourage any would-be entrepreneur - especially with an Armed Forces background - to spend some time learning how bookkeeping, accounting and financial modeling work.

While I was at JP Morgan I was analysing the financial statements of a major international energy company, when I noticed a $47 million discrepancy between two sets of reports. At first I thought I had uncovered some criminal activity, so I spoke to my boss who meticulously checked though the details, and after several hours pointed out the problem - on a billion dollar balance sheet, the $47m had disappeared as a rounding error!

Marketing

While the Armed Forces are a monopoly provider of services to a single client - the British Government - most businesses are competing with a wide range of capable rivals, each vying to take away customers. In any market where supply exceeds demand, an entrepreneur has to find ways of ensuring that they can sell their products or services at a premium. This is the realm of marketing.

I recommend spending time on a sales and marketing course, or at the very least reading widely on the subject. Peter Doyle's Marketing Management and Strategy is a great top level introduction.

While Doyle puts marketing into a strategic context (he trained as an economist before becoming a marketing guru), there are also simple tactical questions that every entrepreneur should keep a close eye on, such as:

• do I know my customer as well as possible?

• does my product fit my market as closely as possible?

• what can I measure to improve the performance of my marketing activities?

For me marketing remains the most interesting of the disciplines involved in entrepreneurship - and also the most challenging!

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

The Royal Marines Toolkit - Determination and Adaptability

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

The Royal Marines often have to travel light and deal with a wide variety of challenges, so they have developed a toolkit which combines simplicity with effectiveness in almost any circumstance. The toolkit contains two items: a hammer and a roll of duct tape.

There aren't many problems that you cannot solve - or at least deal with for the time being - with a hammer and/or duct tape - which is known in the Royal Marines as "Maskers" or "Harry Black".

These tools have metaphorical importance too of course - the hammer is a symbol of determination, while the maskers stands for improvisation and adaptability. Time spent in the Armed Forces gives plenty of opportunity to develop these two characteristics, and my message to every serviceman and woman considering leaving the Forces is to remember that they have these tools in their pockets long after they take off their uniform.

One word of warning though - as Abraham Maslow, the father of modern management pointed out, "If the only tool you have is a hammer, every problem begins to resemble a nail." While determination and adaptability are the most important tools in the entrepreneurial toolkit, they should be the only ones...

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

Nine Tools for Entrepreneurs

On Tuesday I was asked to join speak on "Inspiring Entrepreneurs: From Battlefield to Business" at the British Library.

Following a keynote speech from Clare Perry, the MP for Devizes Matthew Rock from Real Business, who chaired the event, introduced me, Peter Fitchett of Absolute Rubbish, Sarah-Jane Hill of Bish Bosh Becca and Mark Palmer of Green & Black's.

You can see the full webcast of the event here. My presentation starts at 17:17.

I shared nine tools that I believe can help service leavers in their journey from the Forces to Entrepreneurship. The nine tools are:

1. Determination
2. Adaptability
3. Financial Analysis
4. Marketing
5. Timing
6. Capital
7. LinkedIn
8. Coffee
9. Crowds

I'll explore each of these tools in more detail in following posts.

After the presentation we faced questions from the audience and also via twitter from the online viewers. I asked what tools other people would recommend and "Mentor" was a frequent suggestion - what additional tools would you suggest?

The Scottish Highlands - the Perfect Cure for Ennui

If you're experiencing a sense of ennui - "listlessness and dissatisfaction resulting from lack of interest", you might be inspired by John Macnab , a little gem of a book by John Buchan.

Set in the 1920s, the book follows 3 Londoners - a barrister, a banker and a cabinet minister - as they devise an entertainment to relieve their ennui - their frustration with their successful but unexciting lives.

They issue challenges to 3 Scottish landowners from whose estates they intend to poach stags and salmon. What follows is a masterpiece of storytelling and an evocative journey through the beautiful Scottish Highlands.

For the first time since 2000 I've returned to Sutherland, the rugged north western tip of Scotland for a week long holiday. Tomorrow I'm visiting a retired ghillie who lives nearby. He's a former paratrooper, a poet and a countryman who would have fitted right into Buchan's adventure. As I write the rain is pouring down outside and the wind is howling around the very comfortable Gull Cottage, where I'm staying. Darkness has only just fallen at 11pm and there is no traffic noise at all. There's no O2 here, though there's plenty of fresh air. It's a far cry from London and not a trace of ennui.

How to Spend Fifty Weeks on Holiday Each Year

I'm on holiday in the North Western Highlands at the moment and as I jumped into the icy clear waters of the North Atlantic this morning I remembered some words of wisdom I heard 21 years ago from a Manchester paper magnate.

In 1991 I worked for John Ridgway. Each week or fortnight small groups of hardy individuals would arrive in Ardmore for sailing, kayaking, climbing and hill walking challenges. My role was to accompany the groups and keep them safe. Drying out after a particularly challenging 16 hours on a windy mountain, I asked one of the visitors why he returned to Ardmore every year to spend a fortnight being eaten by midges, soaked at sea and ashore and driven to physical exhaustion. His answer made a big impression on me:

"Everyone I know goes on holiday for 2 weeks each year and spends the other 50 wishing they were still on holiday. I spend a fortnight here each summer and 50 weeks thanking God I'm warm and dry somewhere else!"

This was from a man who had built a successful business empire from scratch. At 50 he was as fit as many people on the course who were half his age. Most of all I was struck by his enthusiasm for everything he did.

Not everyone will agree with his holiday prescription, but then if it's true that we assess our wellbeing by reference to relative rather than absolute comfort, health and wealth, perhaps it does make sense to take short sharp shocks from time to time.

Feedback and Adaptable Teaching Boost Commando Performance

This is one of a series of articles on lessons from Commando training. Here is the full list.


Feedback and adaptable teaching styles are valuable performance enhancing tools even in the toughest environments.

I recently joined a group of former Royal Marines at an update briefing from the Commandant of the Commando Training Centre, Brigadier Ged Salzano, at the Royal United Services Institute in Whitehall. He shared some impressive statistics with us but also gave some great insights into how Commando training is adapting to incorporate lessons learned from educational psychology - and gamification.

At a time when all the armed forces are facing cuts, the Royal Marines have been building the case for investing in Commando forces, focusing on the quality and value that the Corps offers. This effort is extensive and detailed, but among the many figures that have been drawn together, I was particularly struck by a trio that demonstrate the improving quality both of the Commando training process, and of the raw material that goes through that process and emerges as a trained Royal Marine:

1. 62% of all recruits entering training now pass out successfully, up from 53%.
2. 80% of all recruits have at least 5 GCSEs at grade C or above.
3. 40% of recruits are academically qualified to be commissioned officers.

Brigadier Salzano illustrated this last point by mentioning that his Marine driver had a degree in Economics and that they had spent the journey to London discussing economic policy.

The Nod Whisperer

One of the key contributions to the improving pass out rate comes from an educational psychologist on the staff at the Commando Training Centre. When individual recruits struggle with a stage of training the educational psychologist will take an interest and may suggest different ways of approaching the learning challenge that takes account of the particular disposition of the recruit.

Since Royal Marine recruits are known as "nods", the educational psychologist has become known as the Nod Whisperer.

Recently the Nod Whisperer suggested that 3 recruits who were struggling to master the 30 foot rope climb may have unacknowledged vertigo. The recruits denied fear of heights, but agreed to try climbing wearing blindfolds - and promptly completed the climb successfully. Having cracked it once blindfolded they were then able to complete it without their eyes being covered.

Britain's Got Talented Corporals

Another training innovation is a feedback system in which the recruits in each troop vote for the Corporal that they consider to be giving the best instruction. When the troop passes out and the Corporals are due for posting to different units, the most voted-for Corporals are given first choice and a letter is written to their new Commanding Officer commending them for their performance.

This simple piece of gamification both encourages and rewards ever-improving standards of instruction, and directly contributes to the improving pass out rate of the Commando Training Centre. I've written about how games and recognition can boost team performance - and the Commando Training Centre is providing more evidence.

While some believe that the armed forces are bound by rank, convention and deference, here is a demonstration that even in the toughest conditions the Royal Marines have realised that valuable lessons can come from teaching theorists and the pupils themselves, as well as the teachers. This insight is surely valuable far beyond the Commando Training Centre...

This is one of a series of articles on lessons from Commando training. Here is the full list.