What You Need to Know About the New SEC Crowdfunding Rules

“Bureaucracy defends the status quo long past the time when the quo has lost its status.”  — Dr. Laurence J. Peter

When Congress passed the JOBS Act it mandated that the Securities and Exchange Commission finalize new crowdfunding rules within nine months. Well, the SEC missed the deadline by nearly three years, but on October 30, 2015, it finally approved the new rules. They “go live” April 2016 and there are some details you really ought to know…

What You Need to Know about SEC Crowdfunding Rules

Verge regulars know that last year Indiana passed its own, intra-state crowdfunding law (see my prior Verge article). While the Indiana-specific rules are now likely to gather dust because they limit your pool of potential investors to only Hoosiers, the federal rules may prove to be a robust marketplace for small-scale capital raises. Here’s a quick snapshot of the SEC’s final rules.

But First, Why New Rules?

As most know, selling securities is a highly regulated activity. Securities must be sold on public exchanges, unless there’s an exception.

The exception most familiar to entrepreneurs is the 506(b) safe harbor, which allows companies to sell securities to accredited investors in a private placement. Accredited investors include, among others, banks, high net worth individuals and trusts, and the issuer’s officers and directors; that is, those with sufficient knowledge and resources to “know better” and to absorb any losses from risky investments. Sites like CircleUp and AngelList have used crowdfunding for a few years, but they limit access to accredited investors.

verge startup pitches at the hi-fiOf course, there’s potential upside to investing in startups, and the “99%” who lack the income to qualify as accredited investors are presently shut out from investing in early and mid-stage companies.

Crowdfunding solves that problem by creating a new safe harbor where start-ups can raise money off of the public exchanges.

5 New SEC Crowdfunding Rules for Companies

Here are a few key rules for companies crowdfunding under the new SEC guidelines:

  1. Max Raise. A company may raise up to $1 million in a 12-month period from the crowd. (Note: under Indiana’s law, a company that provides Hoosiers with audited financials may raise up to $2 million).
  2. Portal. The company must conduct the raise through a registered third party “funding portal.”
  3. Target/Deadline. Through the portal, the company must set a target offering amount and a deadline to reach that amount, and it must allow investors to back out of any commitment up to forty-eight hours before the deadline.
  4. Investor Disclosures. The company must disclose certain company information to investors. The amount of disclosure required is similar to what start-ups are accustomed to disclosing to accredited investors: risk factors, business plans, financial statements (balance sheets, income statements, and cash flows), governance, and the like. You’ll want an experienced lawyer’s assistance.
  5. Annual Reporting. The company must file annual reports with the SEC, but with nowhere near the depth required of publicly-traded companies. Failure to comply with this or other SEC rules could strip you of your exemption. Not good.

Ding Dong the Wicked Audit is Dead (Sort Of)

New SEC Crowdfunding Rules For financial disclosures, the SEC’s proposed rules had called for audited financial statements for all raises above $500,000. There was tremendous push-back due to costs; for instance, Slava Rubin, Indiegogo co- founder and CEO, called audits, “a massive deal breaker.” Fortunately, the SEC slackened the requirement for first-time crowdfunders. The new rules require:

  1. For offerings of $100,000 or less, financial statements must be certified by the company’s CEO.
  2. For offerings between $100,000 – $500,000, financial statements must be reviewed by an independent auditor.
  3. For offerings greater than $500,000, financial statements must be reviewed by an independent auditor for first time crowdfunders, but for any follow-on crowdfund campaign the financial statements must be audited.

4 Crowdfunding Rules for Investors

Individuals will be allowed to invest based on annual income or net worth. Under the new rules, an individual may:

  1. If annual income or net worth is less than $100,000, invest the greater of $2,000 or 5% of the lesser of annual income or net worth.
  2. If annual income or net worth is $100,000 or more, invest 10% of the lesser of annual income or net worth.
  3. Invest not more than $100,000 per annum aggregate in crowdfunding offerings.
  4. Sell the securities, but only after holding them for one year.

Importantly, funding portals may rely on the investor’s representations concerning annual income, net worth, and the amount of the investor’s other crowdfunding investments, unless the portal has reasonable basis to question the investor’s representations. That is, there’s no affirmative obligation on the company or the portals to prod into investor’s private financial affairs to verify the investor’s representations.

Outlook for Investors and Entrepreneurs with the New SEC Crowdfunding Rules

Crowdfunding Rules for InvestorsVenture capitalists aren’t sweating. At $1 million a crowdfunded project is small even for a seed round, where average deal size hovers around $4 million and which constituted a mere 1% of 2014 VC dollars ($719 million of $48.3 billion).

On the other hand, one commentator noted that if U.S. families invested 1% of their assets in start-ups via crowdfunding, it would unleash $300 billion annually. The success of state-specific crowdfunding rules and of non-equity platforms such as KickStarter, Go Fund Me, and Kiva indicate there’s a sizable market for small denomination equity investments. And there’s certainly no dearth of start-ups looking for capital.

Ongoing SEC rules and reporting requirements will always be a deterrent to start-ups and will hamper crowdfunding’s potential, but as quality funding portals develop and the public acclimates to the new investing landscape, crowdfunding may become a useful tool for small-scale capital raises.

How will these rules change how you grow your business? Will you invest using the new Crowdfunding rules? Let us know in the comments below.

© 2015 Faegre Baker Daniels. All rights reserved.

How to Create a Life of Greatness with Lewis Howes

I could barely contain my enthusiasm as I walked into the well-furnished penthouse overlooking the Hollywood hills. But my excitement was justifiable. I was about to have a one of the most real conversations of my life with an ex-pro athlete who turned his life around to become serial entrepreneur, speaker, and author.

Lewis Howes on GreatnessLewis Howes has the ability to connect with anybody. His hit podcast The School of Greatness gets a million downloads a month and is consistently ranked in the Top 100 on itunes overall, and even the Top 5 in the Health and Fitness category. As we took a seat in his home office, Lewis slid an advance copy of his new book across the table to me. I’ve since underlined his book, also named The School of Greatness, dozens of times over and dogeared it front to back —a sign of a book containing true greatness.

Maybe it’s because I’m a frequent listener to The School of Greatness podcast, or maybe it’s Howes’s sheer charisma and ability to connect, but our conversation that afternoon went deeper than I had anticipated. I sat there for nearly an hour, entranced in conversation and surrounded by hundreds of his personal collection of books. I recognize most of the authors—former guests of of his show—including billionaire business leaders, best-selling authors, and professional athletes. With only the room of best-selling paperback as our audience, we dove in…

lewis-howes-greatness

In this interview, Lewis and I talk about some interesting topics like growing profitable businesses online, writing best-selling books, and performance psychology. But my favorite part of this interview is when we get personal and real about some of the challenge of building a life of greatness while building a business.

You’re going to love this…

Listen to Lewis Howes on Greatness:

Selected Links from the Interview:

Show Notes:

  • On starting his first company while living on his sister’s couch [3:40]
  • How to take action and stay motivated [5:15]
  • What to do when you don’t see eye-to-eye with your business partner (and insight into selling your company) [8:05]
  • How to use Periscope to make money and grow your audience [9:00]
  • Creating a unique and differentiated podcast [11:32]
  • How to prepare for any big event with Lewis’s “grounding” technique [13:05]
  • Why you should have a business coach [15:03]
  • What qualities to look for in a good business coach [16:15]
  • The important role of emotions in business [18:10]
  • Dealing with breakups and other emotional trauma while growing your business [21:35]
  • How to feel deeply and remain open to the world [23:00]
  • The journey to writing a best-selling book [26:00]
  • Why it’s important to write a book [31:20]
  • Lewis Howes’s new book The School of Greatness (plus how to get your free copy) [33:00]
  • What does the Greatness mean, and how can we achieve it? [34:15]

More About Lewis Howes:

People Mentioned:

You may also like these interviews:

Did you like this podcast?

What is your motivating force? What’s your purpose and inspiration? Drop a comment below and let us know what you learned from the interview with Lewis Howes.

The first 10 comments will get a free copy of Lewis Howes’s new book, The School of Greatness. PLUS we’ll include you on a private Verge-only call with Lewis, so you can learn from from Lewis live and ask him YOUR questions about greatness.

And hey, I’m feeling generous. Even if you’re not one of the first 10 people to comment, but you still comment within the first week of this post, I’ll hook you up with access to the call if you go out and buy your own copy of the The School of Greatness (just email your receipt to matt [at] VergeHQ [dot] com) Yes, that’s my direct line.

While you’re at it, I would LOVE to know what you thought about this podcast-eque format. It’s something we’re playing with here at Verge and we have some pretty killer interviews lined up. But maybe you prefer a different format. Maybe you prefer a different type of guest. Let me know!

 

Why Startups Should Celebrate Big Wins: The Psychology of Celebration in Entrepreneurship

Frank Gruber bootstrapped Tech.co (formerly Tech Cocktail) to grow organically and profitably. Since raising $2.5 million from Tony Hsieh and moving headquarters to downtown Las Vegas, Tech.co has reached millions of people.

Gruber has interviewed some of the world’s most exceptional entrepreneurs, including Jason Fried of Basecamp, Uber’s Travis Kalanick, and Matt Mullenweg of WordPress. He’s even written a book (Startup Mixology) to capture the most powerful lessons learned along the way. But I recently had a chance to talk with Gruber to dive deep into a couple of counter-intuitive concepts for high-impact entrepreneurship.

Watch (or listen) to the full conversation with Tech.co CEO Frank Gruber below:

Here’s the full audio with Frank Gruber for on-the-go and audiophile Verge friends:

Watch or listen to the full interview to learn:

  • Why entrepreneurs need to celebrate their wins with their team (and families!)
  • Strategies for bootstrapping to a scalable business
  • Stories from the tenches from Tech.co startups around the world

frank gruber tech cocktailFrank Gruber and I also talk about Tech.co’s annual startup conference—Celebrate. I’ll be joining them this year to moderate a powerhouse panel of investors.

Want to join me?

Drop a comment below for a chance to get a FREE pass to Celebrate 2015. Let me know one thing you’ve accomplished in your startup over the past month. We’ll pick our favorite 3, and give an all-access pass to Celebrate 2015.

So… what should you and your startup team celebrate?

How a Winning Psychology Fueled a $20-million Profitable Tech Company

John Qualls grew up on the West side of Indianapolis—on the wrong side of the tracks, so to speak.

“I felt like I was in this situation and I needed to find a way out,” John recalls. “I was a straight-F student in high school and around 15 or 16, I realized I was going absolutely nowhere.”

john-qualls-eleven-fiftyBut in the following years, John would prove to himself that he isn’t the kind of guy who sits around waiting for something to happen. He has a winning psychology. John’s quest has taken him literally around the world and led to him starting a technology company that would end up reaching profitability and $20 million in revenue within its first three years.

In this candid interview with John Qualls, you’ll learn:

  • how he made a million dollars in sales selling out of a bookstore,
  • how John started one of the first cloud hosting companies (BlueLock), and
  • why he’s now leading the charge in software development education at Eleven Fifty
  • …and more!

I was lucky enough to work closely with Qualls at his first startup and can tell you that there’s more substance and life experience in John’s pinky finger than there is in the average startup founder. I’m confident you’ll learn something by watching the full interview here:

On the go? Listen to the whole Winning Psychology Interview Here:

Why a Winning Psychology Drives Success in Startups

I rode shotgun with John Qualls in the early days of BlueLock as we scaled annual revenues north of the million-dollar mark. It was there, riding between sales calls, that I was able to witness first-hand John’s remarkable psychology.

I credit his consecutive successes to three core traits, which you can see from watching our conversation:

Winning Psychology Trait #1: Let Gratitude Give Life to Your Dreams

Winning Psychology

John’s childhood on the West side of Indianapolis didn’t give him a clear path for growth. But despite his limiting circumstances, something told him that there was something more out there, beyond his immediate reality.

This belief in abundance led Qualls to join the Marine Corps, which would establish a strong foundation of skills and habits while exposing him to other areas of the world.

“Living in Japan, I had this tremendous appreciation for what we had in the United States,” John says. As I’ve worked with John through the past five years, it’s become clear to me that his attitude of gratitude has fueled a powerful abundance mentality. These qualities have become John’s startup superpowers to weather the storm of entrepreneurship while allowing him to see opportunity where others do not.

Winning Psychology Trait #2: Let Go of Excuses

“I’ve seen it kill so many companies and so many people’s career,” says Qualls. The cancer that has killed so many ambitious dreams is something that John calls the “Can’t, sir.”

As in, “I’m sorry, I can’t, sir.

John Qualls - Winning PsychologyAnd John doesn’t let any such language infect his mind. That’s because this kind of self talk limits creativity, ambition and ultimately, potential.

“Why can’t you do that?” was John’s attitude while making moves in his first professional role after returning to the United States. And while John humbly credits his success to naivete, it’s clear that it’s the lack of perceived limits that allowed John to think big—and swing big.

By letting go of excuses, John found early success in sales, selling more than a million dollars in contracts out of a bookstore by simply approaching people who picked up books from the “computers and programming” section of the shelves. That same lack of limits gave John the ambition to pursue an RFP in the early days of BlueLock, which would turn out to be a pivotal multi-million-dollar contract with Lehman Brothers.

Winning Psychology Trait #3: Stop Playing to Not Lose. Play to Win!

“It literally about killed me. I was sleeping 8 hours total each week for about 8 months straight,” John recalls of the days following the signing of the Lehman Brothers contract at BlueLock.

And John credits his success to this focus on moving towards a goal, as opposed to focusing on avoiding negative results. He calls this paradigm shift playing not to lose vs. playing to win.

This relentless pursuit of positive goals has empowered Qualls to make difficult decisions, like replacing himself as CEO of his own company after three years of consistent growth. But it continues to drive his efforts today, as John continues to elevate the level of talent in his home state of Indiana.

“It’s about finding your passions and getting involved with people,” John says. As the President of Eleven Fifty Coding Academy, Qualls is working to help people learn to code. He’s attracting and training the best people and companies to grow their tech businesses in Indiana—something he refers to as “brain gain.”

(Tweet this story, or your own growth story with the hashtag #BrainGainIN)

How can you invest in these three psychological traits for yourself? We all have these qualities within ourselves. The question is…

Will you continue to invest in them? Will you continue to invest in you?

 

From Broke to Breakthrough: Peter Voogd and 6 Months to 6 Figures

I recently listened to the audiobook of 6 Months to 6 Figures by Peter Voogd, and his perspective really resonated with me. And not just because we have a shared past of door-to-door sales (I sold vacuum cleaners, he sold Cutco knives). Voogd went from broke to a game changer who practically defines the word “hustle.” In his book, and in this interview, he shares keys to success for fellow entrepreneurs.

“You only know how strong you really are until being strong is the only option you have. ”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figure

Watch the full interview with Peter Voogd:

On the go? Listen to the whole interview here:

Inspiration vs. Habits.

A lot of us entrepreneurs are inspired, which helps us drive action, but Voogd emphasized the importance of productive habits: “Inspiration is short-term and feels good in the moment, but it’s hard to sustain because you don’t have the habits.” One recipe for success he described was the habit of asking himself “What did I do well? What can I do better?” after every single meeting or presentation.

Circle of Influence.

Voogd further explained how taking it upon yourself to figure out these effective habits is unnecessary: “It takes people so much longer to get to an end result than they would’ve got if they actually reached out to people that are already playing the game at a higher level. They will tell you what the best habits are.” Identify the top five people in your industry and reach out to them. Stop making excuses and, as Nike advises, just do it. You’ll probably be surprised by how easy it is to get a hold of even famous people, who can then help you drastically shorten your learning curve. Watch Voogd explain his circle of influence epiphany →

“You have to realize that everyone who has a network now once didn’t. The first step is increasing your level of certainty that you can connect with people like that, whether you have anything to offer or not.”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figures

“The Unrequired Things.”

6monthsto6figuresAlong with establishing effective habits, Voogd spoke about how going above and beyond is the key. One way to go the extra mile is having utter confidence in selling yourself: “You have to believe wholeheartedly that the product is better for [your customer], and they are better off having it than if they don’t.”

The second unrequired thing is writing down the internal reasons that drive you to do what you do. You might come up with 20 to 30 reasons, then boil them down to four or five core ones. Voogd underscored that reasons come first, results come second: “Too many people just go after results, without having strong enough reasons, and if they go through challenges, they don’t have any reasons to pull them through the challenge.”

The Million Dollar Question.

A great story Voogd shared was from when he was a sales manager in his early 20s, striving to hit a $1 million sales goal that was thought to be unattainable. You can probably guess the outcome, but don’t miss how he did it →

“Anything is possible to those who value their goals, their dreams, and their visions over their current excuses or reality.”

-Peter Voogd, Author of the Best Seller 6 Months to 6 Figure

The One-Page Productivity Planner

Voogd shared the details of his one-page productivity planner. The exercise here is to simplify and focus on what really matters. Get the gist below, download his template here, or watch him explain it 

  1. Brief vision-statement. What’s your ideal outcome in six months?
  2. Your BIG 5 Goals for the next 12 months.
  3. Your Top Five Reasons, the most powerful ones that drive you the most.
  4. Your Key Values, to connect to what’s most important to you. For example, a few of Voogd’s are are flexibility, autonomy, and impact.

Download the 1-Page Productivity Sheet >>

Talk about impact! The Game Changers Academy Voogd founded has trained and inspired over 4,500 entrepreneurs, and his podcasts, videos, websites and social media reach over 200,000 people monthly.

Want to learn even more from outstanding young entrepreneurs?

On July 30th, I’ll take the stage with Santiago Jaramillo, one of Inc Magazine’s “30 Under 30″ for a special launch event in the brand new offices of his growing mobile tech company, Bluebridge. Get your tickets now!

Peter Voogd Interview Transcript show

Entrepreneurial Tips from a CPA CEO: Neil Berman on Founding, Leaving, Returning to and Growing Delivra

When the stereotypical entrepreneur is a 20-something with a sales or marketing background shooting for the moon, Neil Berman stands apart. He had a career in accounting before founding Delivra, an email marketing service provider that’s a “unicorn” in its own way.
The company itself is a rarity in the software world: it’s profitable. I spoke with the CEO about the advantages his accounting background gave him and what’s in store for Delivra.

Watch the full interview with Neil Berman here:

Dot-com Boom Beginnings

The year was 1999. Adoption of the Internet was rising rapidly, and Berman wanted in on “what I felt was a really big thing.” A former employer had once told him that if he could find a business that met three criteria – faster, better, and cheaper – he should go for it. Berman’s wife was working for the postal service at that time, and when he compared email communication to regular mail, Berman felt it met all three: “I stuck my stake in the ground and went from there.”

Entrepreneurship, CPA-Style.

Until then, Berman was an accountant: “I still belong to the Indiana CPA Society.” Working on the public side of accounting, he gained an inner look at many companies and what made them successful… or not. When starting his own company, Berman just didn’t buy into the classic entrepreneurial model of raising money, growing as fast as possible, and selling out. Between his conservative mindset and desire for independence, he opted to not seek investors and instead grew organically, initially starting Delivra out of his own home.

“I’ve seen entrepreneurs with great ideas, but the faster they grow, the more money they lose. Then their business collapses, and they don’t really understand why.”

-Neil Berman, Founder and CEO of Delivra

To this day, the company is opening a new regional office every three months without having to raise money or get a bank loan. When mentoring others about entrepreneurial finances, Berman said, “I find that either their eyes glaze over or they’re afraid to ask questions because they don’t want to appear stupid.” He emphasized that it’s vital to understand your business’s key performance indicators, especially what you have to do to break even. “If you’re in school today, take some of those accounting classes that you hate,” he advised wryly. “I didn’t like them either, but it’ll be useful information someday.”

On Walking Away…

NeilBermanLike fellow CEOs Steve Jobs and Howard Schultz, Berman left his own company and returned, but for a very different reason. Six years ago, Berman’s wife became ill and passed away very suddenly. Devastated, he hired a team of five to run the company’s functional departments in his stead and traveled the world: “I didn’t know if Delivra was going to be my future. I had to get grounded again.”

…And Coming Back.

Two years ago, Berman did return: “Coming back home to email software felt comfortable for me. I loved the software business and wanted to take it to the next level.” However, while the company was still profitable, competition had considerably heated up during his absence, and sales had flattened: “What we were doing previously had stopped working.” Berman jumped back into the saddle and set about determining Delivra’s future.

On Consultants and Dirty Laundry.

Since he knew the business, the market, and the competition, Berman had a vision for Delivra’s path forward but hired consultants to help him make a more informed decision. After “doing what consultants do” – surveying and interviewing customers, staff, and people both inside and outside of the industry – they presented a recommendation that aligned with Berman’s hunch but was better defined and more actionable. When working with consultants, Berman stressed transparency: “You need to be communicative about everything. Air the dirty laundry.”

“The Magic Differentiator.”

DelivraToday’s email marketing industry is competitive, but Delivra is investing a lot of money in product development to offer clients a robust marketing solution. But perhaps its biggest differentiator is its focus on building relationships with clients via its expanding network of regional offices and offering them product enablement help up front: “We find that to be a magic differentiator. Although it costs more, we’re going to close more sales, and that’s how we’re going to grow the business.”

A Crash Course on Email Deliverability.

Delivra takes pride in helping its customers’ emails reach inboxes the right way: “Today, delivering email with the blizzard of spam that’s out there is challenging. It’s part science and it’s part art.” Watch Berman’s crash course on email deliverability and list hygiene →

How do you try to apply a financial mindset to your entrepreneurial venture? Comment below!

See Delivra for Yourself on May 14th!

It’s pretty awesome to see what Delivra has built in Indianapolis, Indiana. We use Delivra at Verge and I’m blown away by the people at this company. Come meet them for yourself at Delivra’s open house on May 14th. Hope to see you there! Click here to RSVP →

Transcript: show

Entrepreneurs Answer: What’s the Best Startup Lesson You Learned?

What did I learn from that?

This question is a powerful follow-up to every major action you take building a new product or business. But it’s not often that we slow down enough to ask this of ourselves.

We recently asked a handful of entrepreneurs in the Verge community what was the most important lesson they learned in the last year. Luckily, they were able to slow their roll enough to share some thoughtful responses:

It’s a tough question to answer because it often requires humbling introspection. It means giving ourselves a good hard look in the mirror and taking ownership of where we are with our business. And we may not always like what we see.

The lessons are there, but they’re often shrouded by emotion and ego. So, here’s strategy for cutting through the head trash and getting to the good stuff:

1.) List your wins.

What did your business do that you are really proud of? It’s OK to brag here. This exercise is just for you. Make a list. (pro tip: caffeine, moderate alcohol, or even physical activity can be a productive catalyst here).

2.) List what’s wounded.

What did your business do that you are ashamed of or embarrassed by? Oh, c’mon… humble yourself here. You know your business screwed some things up this past year. Find your battle scars and business wounds, and make a nice long list. (pro tip: if you are prone to depression, maybe don’t drink alcohol while you do this). Get through it, and then move on to the next step . . .

Why Start a Business

3.) Ask yourself a simple question.

What was the main decision that led to this outcome? This question works for both wounds and wins. What you’re searching for here is the immediate action that led to the wound or win outcome.

Depending on how large your business is, this may not have been your direct action. Trace it back to the exact who and what of the action that produced your specific outcome.

4.) Keep asking that question.

Now that you’ve identified the direct action that produced your outcome, trace that momentum back a step further. What action or thought process was made by your business that produced your final outcome-producing action? When you find the answer, ask the question again:

What was the main decision that led to this outcome? Boil it down until you trace your steps back to your original entrepreneurial decision.

5.) Write down your answers.

You can map this thought process in a mind map. Or you can write it down as a short story, narrative, or whatever really brings this to life for you. But write the full sequence or strategy down for each big outcome. This ensures that you soak up and synthesize the knowledge that’s been lurking beneath the hustle and bustle of running your business.

When you get all of this out of your head and onto paper, it’s easier to remove the ego and emotion from your business wins and wounds. That’s an important step because emotion and ego have a tendency to distort your perception and prevent you from understanding the larger forces at play.

Once you have your winning strategies and wounding sequences identified, you can take action on your new insight. Develop new habits and business systems that based on these strategies and sequences. Like the entrepreneurs who shared their big wins and wounds from the past year, you can leverage your experiences to build a stronger business.

Make this next year the best one yet!

Entrepreneurs Answer: What’s the Best Startup Lesson You Learned?

What did I learn from that?

This question is a powerful follow-up to every major action you take building a new product or business. But it’s not often that we slow down enough to ask this of ourselves.

We recently asked a handful of entrepreneurs in the Verge community what was the most important lesson they learned in the last year. Luckily, they were able to slow their roll enough to share some thoughtful responses:

It’s a tough question to answer because it often requires humbling introspection. It means giving ourselves a good hard look in the mirror and taking ownership of where we are with our business. And we may not always like what we see.

The lessons are there, but they’re often shrouded by emotion and ego. So, here’s strategy for cutting through the head trash and getting to the good stuff:

1.) List your wins.

What did your business do that you are really proud of? It’s OK to brag here. This exercise is just for you. Make a list. (pro tip: caffeine, moderate alcohol, or even physical activity can be a productive catalyst here).

2.) List what’s wounded.

What did your business do that you are ashamed of or embarrassed by? Oh, c’mon… humble yourself here. You know your business screwed some things up this past year. Find your battle scars and business wounds, and make a nice long list. (pro tip: if you are prone to depression, maybe don’t drink alcohol while you do this). Get through it, and then move on to the next step . . .

Why Start a Business

3.) Ask yourself a simple question.

What was the main decision that led to this outcome? This question works for both wounds and wins. What you’re searching for here is the immediate action that led to the wound or win outcome.

Depending on how large your business is, this may not have been your direct action. Trace it back to the exact who and what of the action that produced your specific outcome.

4.) Keep asking that question.

Now that you’ve identified the direct action that produced your outcome, trace that momentum back a step further. What action or thought process was made by your business that produced your final outcome-producing action? When you find the answer, ask the question again:

What was the main decision that led to this outcome? Boil it down until you trace your steps back to your original entrepreneurial decision.

5.) Write down your answers.

You can map this thought process in a mind map. Or you can write it down as a short story, narrative, or whatever really brings this to life for you. But write the full sequence or strategy down for each big outcome. This ensures that you soak up and synthesize the knowledge that’s been lurking beneath the hustle and bustle of running your business.

When you get all of this out of your head and onto paper, it’s easier to remove the ego and emotion from your business wins and wounds. That’s an important step because emotion and ego have a tendency to distort your perception and prevent you from understanding the larger forces at play.

Once you have your winning strategies and wounding sequences identified, you can take action on your new insight. Develop new habits and business systems that based on these strategies and sequences. Like the entrepreneurs who shared their big wins and wounds from the past year, you can leverage your experiences to build a stronger business.

Make this next year the best one yet!

Before You Start, Ask Yourself….

work hardHow bad do you want it?

Whether you’re building a business, writing software, or writing a book—you have no idea what your limits are until you push them. You only know how badly you want it until you look back and see.

You’re consistent.

You keep building the thing that only you can see on the horizon. It’s that image on the back of the napkin that keeps you going. It’s the release of a deep breath you’ll feel when you finally solve the problem, create the value, build the thing.

You know you can see the future, so you keep chipping away at it.

But inevitably, things don’t take shape in the way you anticipate. There’s an obstacle that jolts you as it hits your body, interrupts your groove, and challenges your vision.

Doubt creeps in.

But you’re consistent.

doubt-creeps-in

You go back to what you know. You remember why you started. You find the energy to continue your groove or tweak your approach.

It feels right to have your tools in your hands. And so you keep chipping away at it. Every day. Building.

If you pick up your head and see how far you have to go, it can paralyze you. So instead, you look at how far you’ve come—today, this week, this year.

The fear is always there. So you starve it of oxygen.

With a vision as big as yours, there will be times when you feel like you’re going to crack. There are more splinters out there waiting to snag you.

So, how bad do you want it? Badly enough to be consistent?

Learn this Sales Secret from the Philippines to Earn More (and be happier!)

Philippines street vendor sales

Me haggling for my first taste of balut (don’t google that if you have a weak stomach)

“Salamat, po!”

That’s what the street vendors say here in the Philippines after they close a sale. I’m in heaven over here in Manila, where I get to practice my negotiating skills. Something fresh stimulates my brain each time I buy something in this haggling environment.

Whether you sell services, software or other products in your business, there’s in a hidden secret in Filipino culture.

You see, “Salamat” means “thank you.” But more importantly, “po” is a term of respect that does something interesting to the sales process.

It’s like saying “sir” or “ma’am” back in The States. Now, obviously that would feel kind of weird to go around to business meetings back home saying “Yes, sir” and “Hello, ma’am” (annoying and disingenuous). But, honestly…

There’s power in politeness.

Here in the Philippines, I’ve found myself smiling more. Sure, I’m flat-out happy to be here in the tropics. But, I’m confident that a lot of my smiles are reciprocating the happy Filipino faces who smile at me—in the market, on the street, in the elevator—everywhere.

What I was doing was involuntary.

It’s called mirroring and it’s works like magic (when used appropriately).

filipino smile

Smile first.

Mirroring isn’t just reflecting the physical mannerisms of the person with whom you’re communicating. It’s matching people’s phrases and inflections, their tempo, and tone.

Usually when entrepreneurs and sales leaders discuss the phenomena of mirroring, they focus on how to become the mirror. But, I’m telling you…

Sometimes it’s best to set the tone.

When people smile at you, what do you do?

Nine times out of ten you smile back, right? Well, it’s the same thing with your tone and respect. It can be the key to a new relationship or opportunity.

You can build mutual respect by being the first to show respect. You can build trust by showing you trust the other person. Be bold by bringing enthusiastic respect into your business.

But you won’t unlock any benefit if you don’t make it a priority.

So, see if you can try it out today.

Just try it with a close friend or colleague. Be the first to smile. Be extra respectful, energetic, or optimistic. It’s based on the same principles we discussed in “How to Get Seed Funding.”

If you get called out on it—good. Just tell the other person you’re trying something new that you hope will help you build deeper relationships (business and personal).

Register for Verge at DeveloperTown

Register now for Verge at DeveloperTown >>

Then, up the experience level and dive in. These tests will only do good things for you and your business.

More than 50 people registered yesterday for next Thursday’s Verge event. So, today there will still be space for you to RSVP and test your tone-setting and mirroring skills in the deep end.

Unfortunately, I won’t make it back for the festivities. But you’d better bet I’ll be watching the livestream of 2 excellent startup pitches and a fireside chat with Thaddeus Rex, who will show you another dimension of sales.

Register HERE if you can be in Indy next Thursday. Or stay tuned to the livestream and conversation at #VergeHQ on twitter.

So, where else could you try out setting the tone this week? Let me know what you’re thinking down in the comments…

Salamat, po!