Top 6 Red Flags of a Toxic Work Environment

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Jennifer R. Scott │ July 20, 2020

Are you satisfied with your current job situation? Does your employer provide you with opportunities for growth? Does your employer advocate for strong working relationships? Do you feel a sense of accomplishment in your current role? Do you feel safe at work? Do you receive adequate support when problems arise? If you answered no to any of these questions, there is a strong possibly you are currently in a toxic work environment.

High Employee Turn Over

There are may reasons for a high employee turnover rate, from lack of recognition and being overworked to low pay and being subjected to a toxic work environment. It is best to look for this red flag during the job search process. If you find a company that you are interested in has a high turn over rate, it is best to avoid that company all together. There is a good reason that no one stays for the long haul.

No Training Programs for Management

Managers need proper training to become effective leaders. Lack of training for managers often results in low employee morale, more workplace accidents and poor overall performance. Proper training is conducive to a more productive work environment.  When an employer does not take the time to invest time into professionally training their leaders, serious issues are sure to follow.

Hostile Work Environment

No one should ever feel intimidated, discriminated against or fearful at work. When an employee reports an act of sexual harassment, physical or psychological intimidation or racial, ethnic, religious or gender discrimination, such problems should be taken seriously by an employer and be resolved quickly. When such acts can go on, this is a clear indication an employer does not participate in fair organizational practices.

Money is Most Important

Without a doubt, generating cash flow is a top priority in any business venture. However, making sure the people who help generate the profits should be held equally as important. When employee morale and job satisfaction take a backseat to the bottom line, it becomes abundantly clear an employer does not value the worth of their employees. When the leaders of a company only care about dollar figures, they lose sight of their most valuable assets—the employees—the people who keep the doors open.

No Work/Life Balance

In recent years, more companies have adopted “lean” corporate practices to save time, money and increase revenue. The problem with this is many employees are left feeling overwhelmed, overworked and that their personal time boundaries are not being respected. When an employer does not show reverence for the personal life of an employee, that is a clear indication that employer has no sense of compassion or humanity.

Your gut is telling you to leave.

You are unhappy. You feel a sense of dread when the alarm goes off every morning. You debate calling in sick. You feel like nothing you accomplish will ever meet expectations, no matter how hard you work. You hate your job. This may be the biggest red flag of them all.

Classic Interview: Who is “Krazy Dave?”

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On December 1, 2015, I had the pleasure of interviewing David Eckler aka “Krazy Dave,” formally of Tru Television’s Lizard Lick Towing and Recovery, on his experiences serving in the United States Marine Corps, starring on the show, and his other projects.

 

 

 

Tell me where you got the name Krazy Dave.

Ah, that started off at a very young age. I was in private school in Australia, and spent years over there. When I came back to America I was 14 years old. I would talk about didgeridoos, and wolmaroos, and duck-billed platypuses. I would call peanut butter peanut paste. I would call the hood of a car the bonnet and the trunk of a car a boot, and they all just said I was crazy. And basically, it started right there. And, of course, at graduation my senior year, I volunteered to go into the Marine Corps and the Vietnam War. So, once again, that just solidified the fact that I was crazy.

 

So, you were in Vietnam?

 
No. I volunteered to go to Vietnam, but I didn’t have to do that. We were pulling out in ’74, when I went in, and I actually ended up with my helicopter squad over in Lebanon. We rescued the Americans when the PLO threatened to take over the Embassy. My helicopter squad went in, and we got all the Americans out. We told them they could have the building; it’s just a building. They could practice car bombing or whatever they were doing over there.

 
I know that when a lot of soldiers came back from Vietnam they did not receive a warm reception here at home. Was that your experience?

 
No, not at all. People had warmed up a lot. I think folks have an even better understanding of what our troops do for us now. You know, it’s all come full circle. A lot of the guys coming back from Vietnam didn’t get a fair shake, but now, it seems like our soldiers are being more appreciated. We’re understanding a little better now. I mean, this is the 2010s. In the 70’s and 80’s, we didn’t quite get it as a whole.

 
Tell me how your life has changed since you joined the Lizard Lick Towing show.

 
Actually, my life has slowed down a little bit because of doing that show. I was honored. The TV crew came and asked me if I would do that. I asked them what all was involved and they said, “Just be yourself, and we’re going to pay you a lot of money.” I had to do that. I mean, you know.

 
I can understand that.

 
But I never did quit my day job.

 
What has been your favorite part of the experience?

 
Actually, working with a girl named Jennifer Ducker who is the producer of the show. She’s from England, and she is just so fun to be around. She makes it so easy to work for her. She made it the incredible experience that it turned out to be.

 
What has been the most challenging part of being involved with the show?

 
Oh, having to deal with the owner of the company. He’s somebody who’s not a real people person, and sometimes very challenging to get along with. That was the biggest challenge.

 
There’s been a lot of controversy surrounding the cast of the show. How do you deal with those so-called haters and remain grounded in the midst of all that drama?

 
I kind of shut my ears and eyeballs to all of the drama, because a lot of people really don’t understand what goes on behind the scenes. I mean, haters, they’re everywhere. You just have to learn how to deal with them. There’s a lot more likers and lovers out there than there are haters, in my book.

 
I’ve noticed that you have a lot of young fans. Do you feel it’s your responsibility to always be a positive role model for them?

 
Oh, most definitely, yes. My fan bases is like 8-14, and the kids are what it’s all about. When you see their faces and what it means to them to actually meet you… They make me feel special. It’s actually them that are special.

 
What advice would you give to a young fan whose dream is to make it in the television industry?

 
Pick up a guitar and start practicing and go for the music industry.
West: Speaking of music, I understand that you have been playing and making music for quite some time.

 

 

What has that experience been like?

 
Oh, it’s phenomenal. It’s a release. Anytime you have a bad day, or you see something on the news that just really turns your stomach, if you can sit down and write about it, and put some heartfelt words and music to it, and turn it into a song, maybe you can help everybody be aware of what needs to be done.

 
Who were your major musical influences early in life, and how did they shape your musical tastes?

 
My early days started with Deep Purple. Black Sabbath. I like The Guess Who. Uh, the Grass Roots, back in the day. I’ve stuck with Ozzy all these years. I’ve always been a hard rocker.

 
Do you have any new projects going on?

 
Yeah, actually, we have a few things going on. Bobby (Brantley) and I are doing the Bad Dog Nation thing on Monday nights. We do live video chats. I’m still writing music. I was just working on some pieces. I’ve got my Rocky Cross Project, which is the name of my music project. Rocky Cross is where I live. I’ve got enough songs for another record album, and I’m pondering the thought of going into the studio again. So, that’s something to look forward to.

 
I have one last question for you. When you leave this Earth, what do you want people to remember most about you?

 
That I was honest. That I set them straight. I mean, I didn’t pull any punches, and I told them the truth whether they wanted to hear it or not. Basically, that I was an honest guy and I treated everybody the same, the way that I like to be treated. I mean, we’re all in St. Peter’s line, and I believe in treating the first person in line as good as the last person. If everybody would live by that motto, this would be a fine world.

11 Questions with Dr. Jacqueline Darna, Creator of the NoMo Nausea Phenomenon

Jennifer West February 17, 2019

Jackie Darna Photo
Dr. Jacqueline (Jackie) Darna never imagined that experiencing a severe bout of nausea after the birth of her daughter would lead to the discovery of a line of natural products which would take the homeopathic medical community by storm. Recently, I caught up with Jackie to get the scoop on how she founded her company, what drives her to keep reaching for success, what her plans are for the future, and more!

 

How did you come up with the idea or the concept for NoMo Nausea?

NoMo Nausea actually happened because I became a patient. When my beautiful daughter , who is asleep in the backseat right now, was born, I had to have an emergency C-section. I actually got sick after giving birth for her. I was throwing up for like three days straight. Nothing the physician or the people I worked with did was working. We were trying everything— every type of drug you can imagine. It was not working. Then he [the physician] came in as was like, “Hey, we’ll try a medically induced coma. We don’t really know what else to do for you because you just won’t stop.” Then, I remembered about acupressure— holding pressure on the P6 point of the wrist. About that time, my step-mom walked in with a peppermint plant. After smelling the leaves, it actually stopped me from vomiting. I was like, “Wow, this actually works.” Well the problem is I was breastfeeding and I had a lot going on and I like felt like I was getting sick. I needed something immediately, but I never had the leaves when I needed them. I needed something immediately but I never had the least when I needed them. So I taped the leaves to the acupressure point and I thought this would be a really good idea for a wristband. No one had ever combined essential oils and acupressure before. Then I went home and try to look for it. I looked all over— even for patenting the idea. Once I found out that nobody had ever done it, I patented the idea and basically came out with the concept of combining peppermint essential oil and acupressure. And that’s what you see on the shelf— Nomo Nausea.

Wow, that’s very, very amazing and inspiring.

Thank you. There’s more now, that’s for sure. There’s NoMo Migraine and different brands that have come out of it. It all started with my beautiful daughter.

What are your responsibilities as the CEO of a company?

As a CEO, I always joke it means Chief Everything Officer. By that, I mean starting as the inventor— the creator— moving into the business realm— anything from checking in with my vice president and my chief operations officer— making sure my shipments are going to come in accordingly— to talking to my sales representatives— making sure everybody is on top of things. I still go and bid whenever we have big contracts. I might go and fly up to the CVS headquarters or Target headquarters and I’ll go and sell the ideas or products and then follow up with everything else that has to come in and out of it. So it’s a lot of moving parts. That’s the back end of the business where marketing is the front end and the face of the company. It’s really about having the vision to be able to help others build a better quality of life, naturally, while using my products.

What was your mission at the outset?

To help others, to give them a better quality of life, naturally. A large portion of the world’s population suffers from nausea, vomiting, or headaches every day. So, I actually invented products that can help 50 percent feel better, not get sick. People should be able to enjoy life without all of the scary side effects of drugs and of all the other things that we are so accustomed to here. Kind of like the Western world got a little taste of the Eastern world. It’s nice to see that there are things that are very medically relevant [from the Eastern world] that have been used for thousands of years. I just made it more accessible— attractive— you know, a wrist band— something that everybody can put on their wrist and it becomes mainstream.

What do you view as your greatest setback and what did you learn from that experience?

The first one— there have been quite a few— was not ever taking a business or marketing class before, and getting the “in the trenches” MBA. I give this example every time I speak. My biggest failure was, I think we spent around $15,000, maybe a little less, in order to do a show called 97X Next Big Thing. It was a big concert. There were like thousands of people there. We had a booth there. It was myself, Taco Bus, and Budweiser all cosponsoring the event. It was on the radio— huge marketing publicity. Guess how many bands we sold. There were probably 5000 people there.

Maybe a hundred?

We sold seven. At a $10 price point, we’re looking at $70. We lost so much money. We’re talking that you have to know your primary market. Our number one target market is pregnant women. College kids are not thinking about not wanting to have a hangover the next day. Instead, they’d rather use ten extra dollars to drink another beer. So it was a big wakeup call. Regardless of how much publicity, it’s not targeting your main objective. You’re just not doing anyone justice or a favor. That was my biggest setback.

What has been the most important part of your journey?

The most important part has honestly been connection, learning that business is the business of people, not products or services. I have learned that regardless of what the business is, whether you have something to sell, or you are offering a service, it’s incredible how people want to do business with other people that they like and they trust. So having the combination of both, I really learned that you can do just about anything, in any different type of market share, when you form a unit, people are more than willing to help out.

What drives you to keep going when things get really tough?

My family— to be able to show the kids that they can do anything in the world. I went to school for twelve years of my life— having a doctorate, and I make wrist bands for a living. You may think you have a path, but I could only help patients on a ono-on-one basis. With my products, I can help millions of people. So, it’s a understanding that you’re doing something for the greater good. And when times get tough with them [family], I want to show them, one hundred percent, that I can be there for them. I can be a CEO. I can be a business woman. I can be a good sales person. I can be a mom, most importantly. I work and strive really hard to be able to create a legacy for them, so that they can not only be proud, they can want to be a part of something. My son actually invented NoMo Nausea Dog, our pet product. I’m just showing him how to turn ideas into something real and then the real work starts. Right? It’s just showing them that they can do it.

During my initial contact with you, you told me you have a very hectic schedule. How do you achieve a work life balance?

I love that question, because I have no idea. There is no such thing as work/life balance. Ok? (Laughs) If someone says they have an answer for that, please give them my number. Honestly, I feel like it is a pendulum. It’s a continuous motion. You just have to be able to figure out what’s the most important thing at that point in time. Sometimes, my kids know that when mommy comes home, I still have other stuff I have to do. I also know they are only awake for a certain number of hours, so I want to make sure I get to enjoy them. Once they go to sleep, then I can start working again. I have been caught many times, waking up at 2 or 3 o’clock in the morning, before everyone gets up, so I can get my stuff settled, before I have to start worrying about feeding the kids and the dog and everything else. Again, there is no such thing as work/life balance. You just have to be able to manage chaos. That’s probably the most important concept for any entrepreneur to see that is a true gift.

What has been your biggest aha moment?

Besides the actual product… It actually was when I was sitting and talking to CVS. Everyone told me that it is almost impossible, like winning the lottery, to get a product on the shelf of a major retailer. And they said it’s impossible without a broker, without having knowledge and skill in the area. I mean, looking back, I’m sure I filled out the form completely wrong, but I feel like it had to do with determination. It was the fact I had, against all odds, used every connection possible, had literally walked into a conference when I was not even supposed to be there and just took a risk to meet the people and get them to listen to me for 5 minutes. And when I was sitting in there, at CVS, forget thinking, “I’m just so proud of myself.” I was actually able to do all of it after they told me I was not going to be able to do it.

What is non-negotiable for you?

What’s non-negotiable would be my integrity. I would never sell my soul. By that, I mean I believe people are inherently good, and regardless of things in business that sometimes give you a bad taste, I will never practice things in a way that they should not be done. People get into really sketchy situations, stuff like that, and I don’t believe we should. I believe we are all good people, and as long as you are a good display of it, others will see that, too.

What is your personal vision for the future? no mo nausea pic

I want to create a NoMo for everything. I have all of these ideas. It started with NoMo Nausea, then, NoMo Migraine, now NoMo Sleepless Nights. I want NoMo Cough and Cold, NoMo Pain, just have a whole brand to help people with all different types of natural remedies, a first line of defense, a better form a wellness. I would love to be a household name. It would be the coolest thing ever for someone to say, “Man, I’m sick,” and for someone else to say, “Hey, go grab some NoMo Nausea.” Just like Zip Lock. Everybody knows what a Zip Lock bag is. Band Aid is a name brand. Everybody knows Band Aid. I want to be like a Band Aid for the world.

What is the most important piece of advice you have to offer to up and coming entrepreneurs?

Never give up. Do, then, say. By that, I mean, get it done now, then, talk about it. There are a lot of times that entrepreneurs get so distracted by everything that is going on. Make that first official go of it. I mentor, not just my interns, I also mentor other entrepreneurs, other business owners, and I see it all of the time. I offer this knowledge and there is no follow through. When I ask, “Why didn’t you take it,” they will be like, “Well, I wasn’t ready.” The thing is, you’re never going to be ready. There’s never going to be a perfect time. Entrepreneurs sell themselves short. “I don’t have a prototype. I need something that is physical.” No, you don’t. Sell it based off of the idea. Get a full understanding. Be determined, above all. Kick the door down to make sure that you get there. Then, sometimes, you don’t get a door. Sometimes, I have to fly through a window, or I sneak in the back door. You just have to have the determination, to want to do it. What’s the worst thing people can say? No. And, if that’s the case, you end up right back where you started, but at least you tried. But, sometimes, a no turns into a yes, or a maybe. By the way, a maybe can actually be a yes. What people don’t understand is you have to keep persisting.

Angel Investors: The Harvesting Strategy

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To wrap up this series on angel investors, I am going to discuss harvesting strategy. Some would say this is the most important step in the process. Knowing how, if and when you will see a return on your investment is crucial. There are seven harvesting methods, five positive and two negative. The positive harvesting methods include:

  • “Walking harvest (This method is unlikely to fail, but there is no potential to get valuation based on someone else’s perceived value of the business… The returns are essentially a cash flow stream…)
  • Partial sale (This method allows the investor to exit an other wise non-liquid investment, but the investor is unlikely to get an outstanding valuation. The return price is based on fairness and other factors.)
  • Initial public offering (The benefit of this method are liquidity for investors and the potential to capture outstanding multiples, but the drawback is that investors will have restricted stock that cannot be sold for six months… There is a high variability on returns, which means there is a risk of selling too soon or too late.)
  • Financial sale (The major benefit of this method is that, if there is cash flow, the likelihood of selling the company is very favorable. The major drawback here is that management cannot count on continued employment. The return on this investment consists of whatever the buyer thinks they can get from the sale.)
  • Strategic sale (Seen as the best harvest strategy, a strategic sale will produce a faster negotiating time and will most likely allow management to keep their positions, but, in doing so, the company may find themselves in a position where they must disclose important details about the company with the public. The return profits range from 10x to 40x.)” (Amis & Stevenson, 2001)

The negative harvesting methods include:

  • Chapter 11 (Filing Chapter 11 bankruptcy is less likely to cause a company to go under than filing Chapter 7 bankruptcy; however, this significantly decreases the chances of seeing a return.)
  • Chapter 7 (Filing Chapter 7 bankruptcy is pretty much the end of the road for a company. Most, if not all, of the initial investment is lost and there is no return, figuratively and literally speaking.)

As you can probably tell, it is very important to have a solid exit strategy determined during the planning stages. Doing so will at least soften the blow if things go south. It also helps an angel investor determine whether or not the deal is for them in the first place.

Resources

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

Angel Investors: Participating Roles

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According to the book, “Winning Angels,” by David Amis and Howard Stevens, angel investors “follow participation roles that are a combination of the needs and wants of the entrepreneur, the company, and themselves.” (Amis & Stevenson, 2001) Basically, this means that, sometimes, the role of an angel investor is nothing more than being an investor and, other times, it means an angel will take on more hands on responsibilities.

The five participation roles of an angel investor are: silent investor, reserve force, team member, coach, and controlling investor. Here is a breakdown:

  • The silent investor’s role is to fund the project. Nothing more. Nothing less.
  • The reserve force investor will not only provide funding, this angle will also provide help to the entrepreneur, depending on skill set, as needed.
  • The team member investor will become a member of the team, just as it sounds, helping out with various projects if the need should arise.
  • The coach investor does not have a controlling interest in the company; however, this angel will guide the entrepreneur and team by giving constructive feedback throughout the process.
  • The role of the controlling investor is just as it sounds. This angle takes over and controls the company.

The needs of the entrepreneur and the needs of the investor will determine which role, or roles, the investor will play in the company. Personally, I feel like the coach investor role benefits the entrepreneur the most, because it allows them to maintain control of this, while getting valuable input from the angel investor. In the flip side of that, it seem the angel who takes on the controlling role would have the final say of what goes on in a company, whether or not it turns out to be in the best interest of the entrepreneur. Just a side note, the type of business (product business, service business, retail business, or e-business) also plays a role in this dynamic. It all depends on the strengths and weakness of both parties involved.

Resources

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

11 Questions with Joan Sue West

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Traditionally, I work with entrepreneurs who are well-known subject matter experts (SMEs) in their respective fields. However, not all SMEs are famous. As a matter of fact, my favorite SME, my mentor, is not famous at all, but she has prevailed in her field, nonetheless. Joan Sue West has been a “Jane of all trades” throughout her career. At 70+, she is still going strong as the Account Manager for Mutual Builders, Inc. and continues to hold her own in today’s business market.

 

 

 

You are the account manager for Mutual Builders, Inc. What are your responsibilities in that position?

My beginning responsibilities in 2003 were to set up the general ledger, payroll, plus assist in the setup of the computer system (server/client) and run and maintain the computer system. My ongoing responsibilities consist of maintaining the general ledger (the complete accounting system using The Construction Manager (TCM)), which includes preparing all necessary year-end reports, excel spreadsheets, and any other documentation necessary to be given to the CPA for the yearly tax return. I do and maintain payroll for a 10 to 12 person company using QuickBooks and Excel spreadsheets, including all quarterly and year-end government reporting. As my responsibilities have grown and expanded over time, I now just oversee the computer system with the aid of an outside computer service company.

What did you do prior to working for Mutual Builders, Inc, and how did that prepare you to take on the job of account manager?

I have had many different positions in my career. Data processing:  clerical, key punch operator; finish cloth inspector in manufacturing; worked with my appraiser husband (clerical, key reports, payroll, various general office work), who did ad valorem tax counseling. We would gather a random sample from the register of deeds, collect the corresponding tax data from the tax assessor office, and have the level of assessment statistically proven for that particular county, so our system client(s) (who were assessed at 100% every year) would have recourse to have their level of assessment lowered accordingly. Administrative assistant to the Director of Internal Audit for Golden Corral (home office), learned so much regarding auditing, how systems work and fit together and much, much more. Executive Secretary to the President of Regency Development, learned a lot about people and being in the right place, at the right time!

Mutual Builders, Inc. is a privately owned construction company. Many people would be surprised to know that the company recently owned a restaurant—Bistro on 3rd. How did crunching the numbers for the restaurant differ from crunching the numbers for the parent company?

Crunching the numbers were far easier for our construction company than for the restaurant. The restaurant, because of the type of business, had many more hands “in the till” than the construction business. Which made it more prone to error, harder to control/run and impossible to be profitable. And I am not addressing any thievery; that was not in the picture. It is a much harder business to run that needs daily on-hands expertise. First, the restaurant was bought on a whim! It was bought by owners that being restaurateurs was not their main focus. They just hoped to break even. But the owners were out a certain amount of monies on the personal taxes anyway. They were either going to give the monies to the taxing entities or they could spend the corresponding monies in a restaurant that would never be profitable but would be a really nice place to eat, do all nature of community-oriented activities and community good-will. Which would be good for them and good for their community. So, we had the restaurant business for 6 years. And, just like it was bought, it was sold on a whim, too! Someone approached the owners, and so it was sold. In shutting the restaurant, I called the NC Employment Security to close our unemployment account. The person asked long we had been in business. I said 6 years. She said wonderful. The average restaurant is only 2 years. Interesting tidbit!

Let’s talk spreadsheets. Some would say you are a wiz at creating them. How does using spreadsheets benefit the business?

Spreadsheets help to display the data in a different manner, parse the data so a new perspective can be shown, and a large amount of data can be viewed in a concise usable format. It can also be used as a control measure to make sure that the numbers being used are accurate.

In the current course I am enrolled in, Entrepreneurial Feasibility Analysis, we are learning about income statements, charts of accounts, balance sheets, etc. Do you use these in your current position, and, if so, how do you use them?

Charts of accounts form the backbone of our account system. Each account captures the necessary data that is needed to supply the various individual reports, these accounts roll up to the balance sheet and income statement. The balance sheet and income statement, along with other needed documentation, are used to send to our bonding company, other entities that need to know our financial strengths and the CPA for the year-end tax returns, year-end insurance audit that I do and our mid-term audit that our CPA does for our bonding company. When it is time for the appropriate reporting, I make sure that all the necessary, corresponding documents are sent to the CPA for his review and reporting. As the owners do not believe in borrowing and are extremely savvy in how their business model is run financially, I do not have to do certain in-depth accounting that is necessary in other businesses. I am blessed!

Let’s switch gears a bit and talk about mentors. You have been my go-to person for business advice for many years now. You have a very broad knowledge base about how a business should and should not be run. Can you tell me about your mentor(s) and how working with others helped shape you into the business savvy woman you are today?

I have had many people, both male and female, that have crossed my path and enriched my life and business knowledge base. I have listened to my mentors and taken their pearls of wisdom to heart and applied their knowledge to mine. From this process, you will collect a portfolio of experiences, knowledge and stories that you, in turn, will be able to pass onto others.

What do you view as your greatest setback and what did you learn from that experience?

I view my greatest setbacks were my own ignorance and inexperience. I set about learning and growing from each experience. From each experience, I developed a better, happier more complete life.

What motivates you to keep going when things get tough?

God and those I love! I try to lead by example!

What is non-negotiable for you?

Giving up! Letting go is different from giving up!

If you could go back in time, what would you have done differently as far as your career is concerned?

Nothing! Not everyone can say that they have keyed on a Remington Rand with stops and latches, punch card machine. Hint: It was before IBM key punch machines.

What is the best piece of advice to you have to offer the entrepreneurs of the future?

If you want to be successful, be able to manage your time, self and employees wisely! It is a learned skill. Know, use and apply business accounting practices correctly. When you are developing your skill/specialty, learn and apply standard business practices and rules and accounting.

Angel Investors: To Negotiate or Not to Negotiate

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According to “Winning Angels,” there are “four elements” up for consideration when negotiating a deal—structure, price, the amount of capital that will be invested, and what role, if any, you will play in the development of the company. (Amis & Stevenson, 2001) These angels are also aware that not every deal presents a chance to negotiate and they may choose to walk away if that is the case. Angels who do not negotiate may choose not to negotiate for “three fundamental reasons:

  1. They don’t want to invest the time.
  2. They are concerned about the efficacy of a relationship based on trust that starts with a fight for money and/or control.
  3. Within certain limits, they don’t think the terms or price are that significant.” (Amis & Stevenson, 2001)

Not every entrepreneur is a gem to work with and not every deal is worth negotiating. Essentially, there is a learning curve for angel investors, and knowing when to invest in or pass on an idea  becomes easier with time and experience.

Resources

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

Angel Investors: The Structuring Argument

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Like most arguments, there are also two sides for the structuring dynamic. There are those who advocate for structure and there are those who say it does not matter. Angels who subscribe to the structure logic agree that they investors should pay “close attention” to how the deal is structures, while those who do not put faith in that approach believe that “the deal will be wildly successful or it will fail,” no matter how it is structured. (Amis & Stevenson, 2001) Essentially, the first group needs to see how it looks on paper and the second group does not. Personally, I tend to lean more toward the thought process of the camp that says structure is irrelevant. We all know that just because something looks good on paper does not mean it is going to pan out. Sometimes, you just have to dive in head first and be confident in your decision. That is the true entrepreneurial spirit.

Resources:

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

Angel Investors: The Art of Valuing

silver and gold coins
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“Valuation is what you are willing to exchange for something else you want.”

This section touches on the value of an investment. While dollar figures are important in determining value, there is another factor that comes into play. According to “Winning Angels,” the “return” on an investment can also include other perks, besides money; for instance, investing in a movie production could allow the investor to “meet movie stars and attend cocktail parties.” (Amis & Stevenson, 2001) Another way to win at investing is knowing exactly how the winners make it happen. On page 173, the authors have provided examples of some historic winning deals. It is not shocking that Apple Computer’s angel investor is at the top of the list. Richard Kramlich was able to turn $22,500 into over $5 million, which was “222 times his investment.” (Amis & Stevenson, 2001) This is not by any means the return on the average investment, however, it does just go to show what can be accomplished with the right deal.

Resources:

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

Angel Investors: The Art of Evaluating

A chalkboard that says 'Where to Invest?'

In the section on Evaluating, in the book “Winning Angels,” authors David Amis and Howard Stevenson tell us there are things to look out for when weeding out the not-so-good investment opportunities. Angel investors have to stay ahead of the game when it comes to choosing the right idea to invest in. Notably, the single most important piece of advice here is knowing what type of entrepreneur you are dealing with. There is the “serial entrepreneur,” the “empire builder,” the “lifestyle builder,” the “high-potential entrepreneur,” the “almost there entrepreneur,” and the “wanna-be entrepreneur.” (Amis & Stevenson, 2001) I feel that one of these stands out as the least risky entrepreneur and one stands out as the most risky. In my opinion, investing in the serial entrepreneur’s idea makes the most sense, because this person has been there and done that and knows what does and does not work. The wanna-be entrepreneur seems like the biggest liability, because their ideas can lack “so many of the fundamentals needed for early-stage success.” (Amis & Stevenson, 2001) What it comes down to is that angels have to be able to distinguish between good and bad ideas and good and bad entrepreneurs.

 

Resources:

 

Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.