April 16th, 2013 → 1:20 pm @ Norman
There are lots of things to be afraid of on this planet. Business failure isn’t one of them. Yet many would-be entrepreneurs are paralysed by the fear of failure.
As I write this, the TV is showing the first reports of the Boston Marathon bombings. Such events are now commonplace around the world and are so frequent in some countries that they barely make our news. Then we have car accidents, disease, muggings… there are plenty of things to be afraid of if we’re prone to fear. For most of us, these events are just risks we live with. We shrug, take some precautions, and carry on.
Starting a business offers a substantial up-side in financial security and in a sense of accomplishment. The down-side is unpleasant; bankruptcy, anger from investors and family, perhaps some ridicule… but that’s all. So why are so many people who want to start businesses prone to paralysing fear?
Unlike things which can happen to us, like muggings and car accidents, starting a business is a matter of personal action and presumed control. We think we are totally responsible for the outcomes, and our egos become hugely invested in the process. Failure is a sign of personal inadequacy. (more…)
February 4th, 2013 → 10:35 am @ Norman
I’m helping a young entrepreneur to get a franchise business going. The business model relies on franchisees having sales reps knocking on the doors of local businesses. But before we can recruit franchisees, the entrepreneur has to prove that the sales model works. That requires her to make the first sales herself. And that’s where the problems started. (more…)
November 14th, 2012 → 7:24 am @ Norman
I was at the first meeting of an ‘Entrepreneurs Club’ the other day. The discussion focused around how to get into international markets, and specifically whether we should use a traditional goal setting/marketing driven systematic approach, or should instead focus on chasing ‘easy wins’ to build credibility and cashflow.
One academic suggested that entrepreneurs are timid because we often focus on markets we know and contacts we can leverage. An advisor from a large consultancy firm supported that view, arguing for more market-focused planning to ensure we find and understand the best market to address.
Their views reflect a common opinion of entrepreneurs. We’re seen as unstructured and often undisciplined, like hounds chasing rabbits in a field of opportunities. The evidence cited is the lack of a complete plan, and a tendency to abandon opportunities when better ones come along. But that’s not what I see happening. Entrepreneurship is more like surfing, and the more innovative the business opportunity the more a surfing analogy applies. (more…)
September 4th, 2012 → 1:38 pm @ Norman
I decided to chop a couple of trees down last weekend. The idea was simple enough; they’d grown tall enough to begin blocking my ocean views. So I thought I’d launch a pre-emptive strike and remove the threat before they removed the view. The problem was that the trees were growing on a cliff, and I had no ropes with me.
I did a risk assessment. The biggest problems were the quantity of loose material which would give a false impression of safe footholds, and an overhang. Otherwise, it was a pretty small, simple cliff. I felt pleased with myself. I have been accused in the past of undue recklessness but I believe I’m mellowing with age. I knew I should have gone for ropes, but I had enjoyed free climbing when I was young; and this was such an easy cliff… (more…)
July 30th, 2012 → 5:58 pm @ Norman
Many entrepreneurs I’ve worked with become trapped in patterns of behaviour. They’ve tried a certain sales style, a way of interacting with staff, or a planning process, and it worked. So they keep doing things the way they always do them. Then, because they’re self-confident and opinionated people, they start to see their way as the only way. They preach the mantra of ‘learning by doing’ but they have lost the ability to learn, because they fail to reflect on their own behaviour (using all their reflection time to think about business problems). I help entrepreneurs to regain their flexibility of thought by encouraging a cycle of action, reflection, then more action. That’s pretty standard stuff, and it can be very helpful, particularly if they have to account to me or their Board for the outcomes of the reflection. But now I’m trying something else. (more…)
May 7th, 2012 → 3:13 pm @ Norman
The entrepreneur brought me his plan a few months ago. I agreed it looked achievable, and was ready to go… a nice web-based business. I suggested that he generate some sales before the investors committed their money.
Six weeks later he was back to report the first $30,000 or so in sales…. A good start!
The entrepreneur signed our papers, committing him to the deal. Before the investors would sign, I analysed the actual costs against budget. The costs were much higher. The entrepreneur explained that the model he had originally proposed wouldn’t work, and he had modified it. The modified model had a gross margin of 22%… not enough to build a profitable business. (more…)
March 15th, 2012 → 2:05 pm @ Norman
Most weeks in the company-building game I have ups and downs, and this week has also seen both highs and lows. I am always mildly surprised by the intensity of my reaction to the low points. Even though I’ve preached to young entrepreneurs for years about the need to accept a great deal of failure and rejection on the path to success, and even though I know from decades of experience that it’s the truth, I still find both failure and rejection inordinately painful. (more…)
January 11th, 2012 → 11:13 am @ Norman
I bought a car for my children to use to practise driving. My daughter smashed in the rear, then the right hand side. When she came home with the left side stove in, I asked her what had happened. She snorted with 17 year-old derision. “They put the pillars in the mall carparks in such stupid places!”
She had, once more, been cutting corners. She was a reasonably capable driver, and was fine on the open road. When she got off the road, she immediately forgot about careful driving and began to focus on her next objective (usually buying stuff or meeting her friends at the mall). (more…)
December 2nd, 2011 → 9:49 am @ Norman
I’m in the office of a start-up company. The founder is sitting at one of the two desks. His local Sales Manager is at the other. I am perched on a chair with my laptop open. All three of us have our heads down, as we focus on our keyboards. We’re waiting for team members from the West Coast of the US to Skype in so we can prepare for client meetings tomorrow.
We’re all multi-tasking; fielding emails, throwing comments back and forth about the upcoming meetings, and coordinating our diaries. When the Americans join us, we’ll do more of the same, although we’ll primarily focus on establishing the client meeting goals.
I’ve been in business since before the internet, and I relish the speed with which we can now get things done. But I also see how quickly we can now make mistakes. Tomorrow’s client meeting almost ‘turned to custard’ yesterday. As we prepared for the meeting, along with the client, emails were sprayed to and fro. The leader of the client’s team drew some conclusions about what we were offering, and suddenly his emails became laced with concerns… “Could we really capture the data he wanted?”, “Did we really understand what he was after?” We were quickly on the back foot. A new round of emails and phone calls calmed his concerns, but I have to concede that we created the problem by sloppy communication. We’ve had similar problems with internal communication in the past, again a factor of speed. We’re moving fast, and paying a price for that.
Yet I look at the gains we’re making as well. With a very small team we are making great strides in product development, market understanding, and sales. Our business has a long sales cycle, yet our high speed of action means we can operate for an extended period with a small team, which translates to a small budget. The investors love that. Clearly there’s a balance between speed and effectiveness. Too fast, and there will be too many mistakes to be corrected, and strategic opportunities will be overlooked. Too slow and we’ll burn a lot more money to get where we need to be. But the cash cost of slowing down is my lesser concern. I think back to past start-ups I’ve worked on. All the successful ones had high energy and a high pace. For the others, a slowing pace was often the first sign that we were headed for failure.
Today our energy levels are high, and they have remained high all year. It’s easier to drive hard towards our goals than to plod slowly toward them. For that reason alone, I prefer a high-speed start-up building process.
May 17th, 2011 → 8:23 am @ Norman
Investors spend a lot of time keeping young entrepreneurs focused on the critical tasks. Like a dog in a field full of rabbits, the inexperienced entrepreneur tends to run from one opportunity to another without closing any of them. That behaviour, and the techniques used by investors and Boards to keep the founders focused, are well known.
But sometimes the need for focus can be overemphasised, particularly in the seed and start-up phases of company development.
Typically, in the seed phase, the idea is still being turned into a marketable product. In the start-up phase a company is being organised to get that product to market. In each case, there are typically many variables which are unknown… these may include optional features which may be important, extent of functionality validation required, size of each potential market, specific customer needs, correct segments to target, and many other factors. Now that many companies are “born global” the variables are multiplied as geographic, cultural, and other issues become more immediate. (more…)