Episode 30: How to Start a Business: Expert Advice on Planning, Funding & Sales

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In this episode, Dr. Jeff Rickon sits down with Martin Estill — serial entrepreneur, former Chief Revenue Officer, and SCORE Houston volunteer mentor — for an in-depth conversation about how to start, grow, fund, and scale a small business.

With 30+ years of real-world experience across oil & gas, software, retail, and B2B marketing, Martin breaks down the exact mistakes most entrepreneurs make — and what to do instead.

In this episode you'll learn: ✅ How to write a business plan (and why most people skip it — and fail) ✅ Where to get funding for your startup — from your own pocket to angel investors & venture capital ✅ How to get your first customers using referential sales (without paying for ads) ✅ The #1 mistake new entrepreneurs make going from idea to execution ✅ How to build a sales & marketing strategy that actually works ✅ When and how to scale your business and delegate effectively ✅ How to find a business partner and structure equity deals ✅ How to sell or exit a business for maximum value ✅ Why SCORE mentoring is the best-kept secret for small business owners

🕐 Timestamps: 00:00 – Introduction 

03:00 – Martin's background in oil & gas entrepreneurship 

07:00 – The 3 biggest mistakes small business owners make 

12:00 – How to write a business plan 

18:00 – How to fund your business (funding hierarchy explained) 

25:00 – How to get your first customers (the bullseye model) 

32:00 – How to scale, delegate & sell your business 

38:00 – How SCORE mentoring works & how to get free help

Give your comments at https://scorehoustonpodcast.blogspot.com or write to pv.bala@scorevolunteer.org. Let us know what you like of this episode and suggest subjects on which you wish to know more. 

Transcript

0:02

Welcome to Mentor Conversations at Score Houston, where we bring you insights and stories from our mentors. You'll hear from senior executives, entrepreneurs, and professionals who volunteer their time to guide small businesses. SCORE is America's largest network of volunteer business mentors and is supported by the U.S. Small Business Administration. In Houston, we provide free, confidential mentoring and education to help entrepreneurs start, grow, and succeed. Now, let's dive into today's mentor conversation. Hi, this is Dr. Jeff Rickin with SCORE. Our guest today is a retired entrepreneur and business executive who spent more than 30 years in the trenches starting and building and funding and exiting companies across software, business, consulting, and retail service. His most recent executive role was as Chief Revenue Officer at Bayard Bradford, a Houston-based business-to-business marketing and sales strategy firm. Today he brings all of that real-world experience to Houston's entrepreneurial community as Score Houston volunteer mentor. Please welcome Martin Estill. Welcome, Martin. Thank you very much. I appreciate the introduction. Tell us something about your background. You have a very broad, diverse background. Tell us something about your history in business. I ended up being an independent oil and gas operator. And I think looking back at it, I did that primarily because my father was in that space and he was a bit of an entrepreneur. And you get exposed to things when you're growing up. You don't know what you're being exposed to. But for me, it seemed like a very logical course. And it was a fun and interesting exercise. And I discovered how little I knew about business. This was really a risky business. So you know about the risk of starting a business. It's a capital-intensive and a risk-based business. But for me, it was a it was what I knew. It was my entire knowledge base of business, any business with oil and gas. So from starting with what you knew, I discovered what I didn't understand, which was all the rules about how businesses work. And I gained all that knowledge on the job. And so that's where I went forward. That the first exercise was okay. It wasn't a big success, but it gave me a starting point. And I went back and expanded my knowledge base in business and continued doing it in other industries. What you have to do is mitigate that risk by gaining knowledge and insight, by gaining additional resources to help fill your voids and gaps. I think the fundamental piece that attracted me after that first experience was just the fundamental business principles necessary to succeed. And I spent a fair bit of time learning those while I was expanding other skills like sales and marketing and recruiting, hiring and firing. But there's just some basic fundamentals that any business has to have. I think a lot of people find there's basically three challenges to business. One, coming up with a unique idea, a concept, a dream. Two, I think funding. Everybody wants to know where do I get the money? How do I fund this? And three, how do I sell it? How do I make it successful? I think those are the things we teach at score. And I think you probably have some expertise in that area. It's funny you should mention that those basically are those the I'm gonna use slightly different words, but those are fundamentally the three mistakes that I see in almost every business client that I have at score. I um the words I would use are I have an idea. I get clients that have an idea, but they went from idea to execution. They skipped over all that critical part about planning, building a model that can work. It's just they because they have the idea, they go to execution and they their success rate drops precipitously if they don't know how to build the rest of the plan to make it work. What is a plan? Oh my goodness, how much time have you got, Jeff? Yeah. Is there a format to a roadmap to success? How do we write down a plan for our business? There is. There's a standard business form. Score has examples of templates of that on the website, is a great starting point. That the structure of the business plan, it almost doesn't matter what industry you're in, but the business plan, a financial forecast, profit loss forecast, and some sort of an action calendar are to me the fundamental three things that you have to have in order to go someplace. And then when I meet clients and they have an idea, nine times out of ten, they do not have a plan. So we work on getting their ideas out of their head and into a document. Your second topic that you mentioned, funds. A lot of people have the idea, they might even have a concept for the execution, how to make it work, but they do not have any funds. They assume the funds will appear, they assume that their idea will be so tremendous, people will throw money at them. It's not how it works. And there's a logical hierarchy that you'll find in almost every business. The first funds are yours. If it's your business, you have to reach into your pocket. The second are your friends and family. The third are now you're reaching up to a point if you've had success along the way, where you can talk to angel investors. After that, there's venture capital, there's private equity, there's public funds, there's a wide spectrum. But you must, as a business owner, understand that you have to take the first risk and you have to build to getting other people to join you in that risk. So there is some risk. Now, but the third item you mentioned was sales, sales and marketing. And this is my own philosophy that the the mistake people make is I build it and they will come. You know, that old movie that was out there, it doesn't happen. And you must understand sales and marketing because at the end of the day, that's the the only way you're getting money in is from raising capital from investors or from selling to somebody. And if you those are fundamental elements that you just must understand if you're going to run your own business. And for some odd reason, it seems every client I ever have ever had in score needs clients yesterday. They don't, they're not going to build a marketing program that's going to be weeks and months. They need something immediately that's usually only paid digital marketing that might bring you a candidate. And that's a very expensive candidate. There's a model I've been using, which it's a bullseye. So in the very center of the bullseye is referential sales. Those are the fastest dollars you'll ever find. Someone who knows you, who trusts you, who's worked with you, who wants you to supply them again. And then from there, you move out in a series of rings that are all referential sales. And then you run into the digital marketing, which kind of starts on the outside and works in. Aside from people that have worked with you, it's people that know people who are interested in you. And then it's people that know you from a non-work environment, some other community you're involved in, and they want to help you because you're a good person. And then people that they know. The next ring out are qualified sales opportunities that come from digital marketing. If you go all the way out, most digital marketing is getting people to be aware of you. They don't, you don't exist in people's minds. You don't have the client base. So digital marketing is making people aware that they need to look for something like that. There's a uh process called the buyer's journey. It's a well-established digital marketing methodology. I recommend it to anybody, and it's got very clear process steps that are used by digital marketers in every type of business that you can envision today. But those two come together. So when you launch a business, you better be able to go pull references in some fashion while you stand up your digital marketing. Paying for a lead off of Google is a very expensive, low profitability as far as opportunities. Yeah, that's what I've found with the people I work with and score. They don't have a clear idea of how to shake hands, give it a smile. Get to know people first. It's show up and listen. Listen to them. You're going to invest time or you're going to invest money to make contacts that lead to sales. It's up to you. But I highly recommend a blend of digital marketing and traditional relationship building. And most people already have a network. They just never thought about them in that fashion before. So it's there, but people do have to put on a new pair of glasses and look at their world slightly differently. Yeah, I like the way you put that. A new pair of glasses. You have to look at things differently. If I ask a new client at score, and I ask them to write down, you I tell them 50 people. Write them down. You already know 50 people. It's your dentist, it's your mailman, 50 people, not to mention your family. Just bundle them, get them to your website if they want to know what you do. I've been with score for a couple of years, and I've probably had somewhere between 80 and 110 customers. I lose track of them all. But they're all different, they're all unique, they're all their background. But the things that are similar for all of them is that they have some knowledge repository. They've got a knowledge of business that they want to turn into an income, a business of their own. With that as a starting point, I've had a couple of clients that have been highly successful. One of them was in the logistics space, shipping stuff by planes and trains and boats and whatever else. He had deep knowledge. I when I met him, he was working for a logistics company. He left them. And he and I started talking about what he knew and who he knew. And at the end of the day, he was able in about a year to go from nothing to over a million dollars a year of income because he started referencing everything that he knew in a different way. And this is what I did for him. This had I just listened to what he told me, and he was going out trying to sell his knowledge as a consultant. But I got him to do two or three things that fundamentally changed his entire approach to business. The first is I got him to recognize when he looked in the mirror, a knowledge worker was looking back at him. He was so knowledgeable on all these moving parts of logistics, his knowledge was not only deep, it was wide. And he had spent his career in this space. That changed his perspective. He was no longer a needy job seeker. He was a knowledge worker willing to help people with their problems. And if you think about that 180-degree switch, it's not about him, it's about who he's serving. And he shows up with the answers that they must have. The second thing I got him to recognize is because he's a knowledge worker, you don't work for free. Everyone wanted him to pay him a commission to bring business. I said, no, no, that's that doesn't work. You're already the knowledgeable worker. You'll show up, get a base pay, structure some sort of a bonus compensation. He went from a very low compensation structure to something that was reflective of the type of business he was bringing in for these clients. And it was an appropriate exchange of his knowledge and his relations for the business that the customers needed. And the last thing was the more he talked, I saw an opportunity for him to build a business that could scale significantly. So I got him to start thinking about the parts he could give to somebody that would report to him. Scale early, be prepared to scale, because most people, once they get to doing it, they think they have to do it all. And that's when you die. That's when you run into the brick wall and you run out of juice. But so he early on he started and found ways to offload work to other people that could be done. Well, he did the magic rain making, and he was the he was the expert on it all. How to delegate. You're using you're looking for the word delegate there. Thank you. Thank you. That was the word I was looking for, Jeff. You're exactly right. I think Ray Kroc found that with 19 Cent hamburgers. When Ray Kroc saw the McDonald's brothers and said, I can do this, reproduce this, but I can't do it all myself. He invented the franchise, basically. He did. And sold those hamburgers like crazy. Yep. Yep. Yeah. So you have to learn to delegate to others and trust others. Just make it duplicatable and tell them exactly what you want. Well, that's interesting. Now, as a score mentor, our services, of course, are we're a nonprofit. We offer our services at score.org. People can find us there and select people in their field and in their specialty. I attract a lot of people in healthcare, of course. And you would be in marketing and business. That's where your expertise is. What has been your experience as a score mentor, as a volunteer in your valuable time? What has been the reward for you as a mentor? Oh my goodness. I loved my career. And when I decided it was time to retire, my greatest concern was what am I going to do with all that energy? I love to learn. I love to be challenged. I love to give away the last five, 10 years of my career. I was giving away my knowledge to help the next generation. So a friend of mine who was a score client recommended iContact Score. And when I did, I got an opportunity to refresh myself. It's no longer me trying to figure out how to squeeze the two ends and make it a financial exercise, but it's me giving away the knowledge about how do you do that. So for me, it challenges me. It's greatly rewarding for me to give to the next generation. Those are two of the high water marks about being part of score. I think the third thing is I wish I discovered SCORE when I was early in my career. I this is the best kept secret in business. And I just knew about this. Yes, and the stuff I learned in the school of hard knocks, a lot of it's being given away for free by score. If somebody is working on a startup exercise, the advice I give to them is go find a mentor, go tell them your story. Because at the end of the day, wherever they are in their process, we can help them move them along more quickly and more successfully. They don't have to be at any ideal starting point. Wherever they are is fine. But the assignment may be go back and do this work. Go back and validate you've got a market before you spend your money to try to go grow a business. Or it may be make a business plan and let's start talking about who you're going to raise money from. Wherever they are is always different. That's what I find too. So, what are the advantages to having a score mentor as opposed to just skipping that and I can do it myself attitude for a first-time entrepreneur? That's a really interesting question because I did the second one. I did the I can figure it out all by myself. Sure you can. I would say if you don't, if you were looking for success quickly, my experience ultimately was go find someone smarter than me to help me learn what I what's right in front of me. The beauty of score is whatever is right in front of you is going to change. And we've got experts, we got such a depth and breadth of knowledge in the score mentors. Wherever you are, we can find somebody to help get you to the next point. And there's always another point after that you have to learn. But I, if I were to turn back the hands of time, I would not do it the way I did it. I would have found a score mentor early on and lived with them for 10 years while they helped me get through all the learning steps I had to get through. Yeah, I always find we've we can save them with our experience for decades, making all the same mistakes we're teaching them not to do. We can save them thousands of dollars and years of wasted time. Oh, yes. Going down the wrong path. And begins with a roadmap, but that's that business plan. We can help them get that business plan. If not for funding, certainly get their heads straight so they can see where the pathway is ahead to success and where the minds are in the minefield. That business plan is one of those fundamental critical pieces when you go from idea to execution without the plan. You're going to fail because you haven't thought through, you haven't taken the time to lay out all the things necessary for success. If you write a business plan, you get it out of your head. That's a huge start. Once it's out of your head, someone else can look at it. There's no way they can look at what's just between your ears and under your hair. When it's in the plan, there's a structure to every business plan so that you have to address things you wouldn't have thought about before. But also in the answers you come up with, there's opportunities for efficiencies. There's opportunities that you may not have seen. And this is where you bring the experience along with this structured plan. And huge getting the business plan and the financial model, the profitable loss, 12-month statement down, open up the conversation about a million things that you just you can't think about without those documents in front of you. Sure, exactly. I I find that when I talk to newcomers to the who have been employees all their life, there's a mentality, uh pivoting of the mentality from working for that Friday paycheck to now I'm writing the paycheck. Boy, that's a big responsibility on my shoulders. And they got to get that attitude straight. So I have them write a business plan like you do. It's not hard. It just takes time and thought. And a lot of people come and say, gee, I got this great idea, and everybody needs what I got. No, you need to research the idea, find out what the competition's doing, research the competition, find out where they're failing, where you can match them, beat them on either quality, price, but you could, you got to find something, uh unique value to your product, the secret source that's going to separate you from the competition. And that's where I find people watch Shark Tank and they're doing their pitch theory. They got three minutes to sell this million-dollar idea to people who probably know a lot more about the business than they do. And somehow they have to decide if they're going to give up a lot of their control of their business. That's been a godsend and also a big responsibility. But these are credible entrepreneurs who would like to own their own business. So there is risk ahead, and the sharks are going to take a big chunk out of that pie when they uh get financed. Yeah. The number of first-time entrepreneurs, when we talk about funding, and we mentioned the two logical steps: there's debt where there's equity that you can bring money into, it's almost universal. They don't want to give up any control. So they don't want to give away equity, they don't want to have a business partner, or they don't want to deal with debt. They don't want to. So if you remove those, I have no idea where you get money from. That's just the way our economy operates. Having said that, though, the people who recognize that this is the ideal partner for me was always somebody that complemented my skills. So I'm a general business specialist, and I'm my ideal partner was somebody who had deep domain knowledge on some subject for which there was an opportunity for a business. And together, it was a wonderful combination. I've had several successes when I was able to get the chemistry right of those skill sets, subject matter expert with business expert, and it works out great. But having a partner is kind of like getting married. Sometimes it's really great, and sometimes you get divorced. So it the key, though, is as you were just saying, is I know something you don't. Let's collaborate. Let's make this happen. We need to bring in money. Do we give up equity? Do we take on that? Let's look at a model. is figure out what is the right answer. It's all in the model. If you do the model, the business plan and the financial forecast, you can see an answer before you've risked any money or time. True. So it's all there. It's all there. But if you have somebody comes what if somebody comes to you, Martin, and says, I know your skills are in marketing and starting businesses and you do very well at that. But I also need accounting. I need legal advice. Can score help me? Yes. And there's two two ends to that, yes. We have lawyers that are subject matter experts that I'd co-mentored with several times. They are really knowledgeable. And then there's pragmatic business skills. I know how to read a contract. I know how to do a chart of accounts and build the financial models and all that sort of stuff. If I can do it, I've always been the idiot test. If I can do it, anybody can do it. And it gives you a just a sense of confidence. I'm not an accountant. I don't do taxes for anybody but me. I'm not a lawyer. I don't write legal documents for anybody but me. But it's just that knowledge base. So my knowledge of sales and marketing in business in general is a natural couple, but there's still that gap, that knowledge that you were talking about, and it could be anything. There was one client who needed deep knowledge on tier one, tier two automotive manufacturing distribution. I got no knowledge on that. But we have them in score. They stepped in and they filled that gap. I did the general business the other guy knew their business and together the three of us answered all the questions that the client had. So when someone comes to score and picks a mentor they're not just picking one mentor you can recruit more people as a team of co-mentors to fulfill all the needs of this client. Absolutely and and our intention is not for someone like me to just find someone and hand them off. Our intention is someone like me gets engaged with the client we find a specialty we'll bring a specialist in when we're done with that we'll replace that specialist with another specialist or we'll just keep going on the general business. So it's not hand them off. It's really stay committed and stay with the client to try to get them all the way through to success. Sure. And we're there weekly monthly whatever we do most of our meetings I think by video calls like you and I are talking now. So it does it's not inconvenient. We just set a business hour and we do a time we take notes and we just move forward and mentor these clients so we're the accelerators they call us accelerators in business. Yep I agree that's what score is about we're accelerators. If and I've had clients that literally are madly writing notes while we're having our conversation I always take notes and I always share them with the client afterwards but the stuff that anybody from school brings and offers up is something that the client should find value in. I've had some clients who did not want to change but that's their choice right if they come to score they're coming to score because they're looking for someone smarter than them to help them fast forward their business. And that's what we're all about we work at the client's pace and we make sure the client gets the very best from all of score. Exactly yeah now you also have sold businesses you that you've started. So I think exiting a business is something you might want to address. Because when we get into a business it's good to know what's down the road and when's the best time to get out to make the profit and move on to something else. It's I've been fortunate I've sold a couple of businesses. I've had a a couple of clients that I've helped acquire a business. So we've done both mergers acquisitions and disposition the fundamental piece in exiting and it's based on an assumption you've got a successful business. You got something that's making profits that someone else will want to buy. If you have a business that is losing money it's hard to find anybody to buy it who wants to take on someone else's burdens right but if they're successful and they are able to take their idea commercialize it and become profitable the first thing that anybody who's going to be interested in buying the business is they're going to take a look at it and they're going to look for the risks associated with buying that business. And near the top of any small business is I think they call it a hub and spoke management model where the owner's in the middle and everyone else reports to that owner that is a huge risk. If you haven't matured the company to the point where you've got more structured organization if it's that hub and spoke how do you replace the founder, right? All of the relationships with the employees, all the relationships with the clients are wrapped up in this person. So that makes that knocks the price down on the acquisition of the business significantly it's really not set to stand on its own. It is 100% leaning on the founder and that that's a huge risk. If you've moved past that you've done it by being able to codify you you've made a code for the success of your business and you've been able to like a cookie cart. This works this is the thing that we're going to do consistently we're going to go make cookies now because I've made this model for success. If you can codify your success now you can get other people to do parts of it because you've taken it out of this mystery of making money and you put it into a document that other people can follow for success. That moves the value of the company up significantly if it's already set to go scale and become success for someone else. So even though Ray Kroc has long since passed on McDonald's franchises are still worth over a million and a half dollars even though he's not around to mentor he he's and his methodology I love his methodology is probably one of the most profitable that I've ever seen it's just absolutely amazing because they're a real estate business not a hamburger joint. They own the property that sits under those franchises exactly yeah that's the way he did it just absolutely amazing. But you'll find all sorts of smart people that have done stuff that most people unless they've studied business a bachelor's or a master's degree where they've actually done case studies on these businesses don't know what somebody else has already done to be successful. And I think that's a lot of what we do as scores we bring this knowledge to them so they don't have to go out and learn the same mistakes somebody already found a solution to let me ask you a question. A lot of people don't have the credit these days they don't have the ability to borrow the kind of money that they dream about having to start a business and banks are loath to lend big sums of money unless you got some skin in the game. Yeah you put in 2000 we'll loan you a hundred a lot of people don't have that can we help people and build their credit and get them some funding maybe special funding that there's so many ways of getting money. We mentioned a few a little bit earlier but there's also grants there's a whole system out there of grants there's too many there's too many grants for score to keep track of them all. So we point them in a general direction. As far as from banks and various other sources we work with SBA and we're very close to any of the SBA banks that are in our local facility in our local community but I think the part that the banks are going to look in and this is the thing that most first-time borrowers don't understand is banks don't take risks and yet that's the first thing the bank does when you go to them they start listing all the risks associated with your business you have to have some money you have to have money the bank won't loan you if you don't have some skin in the game that as you said they won't loan you money because you're not they're putting their money at risk but you're not on the same playing field with them if you're not having your money at risk. How to get money from family how to get I've worked with any number of small groups getting those first few dollars in from friends and family and then helping them grow out from there. It's all doable it's not complex. You should get legal involvement if you're taking someone else's money making sure you have a legal document that everybody agrees to that's just good business. But once they begin to understand what it takes they can build to getting that money it's it is possible to succeed by raising capital, but you can't do it if you don't know the financial processes. And I think that's the biggest thing that I've noticed people may know their business but they do not understand finance. And that kind of leads to ultimately one of the things that I know you and I said we talk about is what would I recommend to anybody about score? And my personal experience and my experience in working with a score lecturer is most people don't know what they don't know. How can you possibly be an expert on business if you spent your entire career working not in business but in a different discipline a different study. Come to SCORE. Tell us your story where are you? Where are you in the process? We'll get you started there's methods and processes and knowledge that's all available and it all starts with a conversation with someone like you or me, Jeff. That's all it takes just reach out to have a conversation we can give you direction what we don't have is a red bill bill, a red pill or a blue pill to change the world in a matrix-like fashion. Those don't exist, but we can help people achieve their visions and goals with some structured process and knowledge. So it doesn't necessarily take a lot of money because I find a lot of the people I deal with may not have great credit, but with a laptop a cell phone and great software these days and artificial intelligence, you can do a lot of the work yourself they say I need to incorporate you can do an LLC yourself in the state of Texas. You can do one on your own it's the website's there it's not a it doesn't require a lawyer. You can get QuickBooks and set up your own bookkeeping or you can run your business from an Excel spreadsheet. I've done that more than exactly you so a lot of this go ahead. I was going to say it's the things you're raising are exactly the thing that we can help them. If they don't know anything they think they got to go out and hire some high-end lawyer you don't need the high end lawyer until later when you're dealing with an appropriate problem that requires that. But yeah no the vast majority of basic skills that people need to get from where they are to where they need to be it's all learnable. It's exactly it's very doable. Yeah Martin go ahead you wanted to say something one last closing thought something that happens quite often with some of my clients as they move towards the end of their engagement with me and they're actually getting a lease for a space or whatever is the next logical step is because the knowledge that I'm bringing to them is real world applied knowledge. It's not academia it's the things of how the world actually works in a business setting. More often than not I have told many of my clients they have a new superpower that I've just given them that superpower includes and it could be you don't have to take the lease the way it was given to you negotiate with people. You don't have to do you don't have to pay someone to form your LLC you can you're smart you know how to do it. The knowledge that we provide to them immediately becomes a superpower once they turn around and apply it in their business setting. And it is so exciting when that happens it's just wonderful. Yeah I love being the leader of the pack going down the path towards success in their business and tell oh no don't do that. Please I've already done that I made that mistake three times it's very expensive. And it's that credibility that we've been there we've done it we've had success but we've also had the expense of failures. Yes they take time. So Martin thanks again this has been really refreshing to hear some input from a real good business person who's been in and out of businesses for many years. And I wish you every bit of luck with score I enjoy just as much as you this is Dr. Jeff Rickin. I'm a score volunteer just like Martin is and we enjoy helping people conversations at Score Houston. If you're an entrepreneur or small business owner we'd love to support your journey you can reach us at 71365 or visit us at 8701 Southgestner suite 1200 Houston Texas 77074 our office is open Monday through Friday 10 a.m to 2 p.m except for federal holidays walk-ins are always welcome to learn more to request free mentoring or to register for workshops visit us online at score.org slash housing until next time keep learning keep growing and remember at score we're here to help you through