Winning at Entrepreneurship. Rod Robertson

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       LEADING MANAGEMENT MISTAKES

       BUSINESSES WITH BEST RATE OF SUCCESS AFTER FIFTH YEAR

       BUSINESS WITH WORST RATE OF SUCCESS AFTER FIFTH YEAR

      Source: http://www.statisticbrain.com/wp-content/uploads/2011/07/businessfailure.jpg.

      In virtually every sector looms the fear and specter of a competitor taking quantum leaps ahead that will eclipse your own Herculean efforts. Endlessly we hear the lament of a business owner about some far-off company or competitor, an obscure participant on the playing field, who suddenly releases a new product that has dire consequences for the rest of the players!

      Time and timing are your two cruel enemies. There is no longer the luxury of stepping back and admiring what you have created. As an owner, what you have built today you must metamorphose drastically month after month. Scalability and foundations for growth will be your hallmarks of success. Unless you have a unique patent or technology that needs not be deployed, the race or “land grab” for market share is always underway in a helter-skelter rush to market prominence.

      Why is the failure rate [of new businesses] so high?

      There are too many “unfit” entrepreneurs entering markets for the wrong reasons. They are drawn to entrepreneurship by the perceived image of the entrepreneur—a rich, famous, smart individual who stands out as hero … I use the term “unfit” here to refer to people who, while [they] may be good at the technical work they do, are NOT good at creating, running, or growing businesses.¹

      Over the last decade, the rapid turnover and creation of new businesses has shifted the focus of small to medium-size business from “build to hold” to “build to sell.” The enormous amount of capital that can now be deployed by strategic partners, private equity groups, angels, and family offices to buy what once would have been considered a firm not ready for market has changed the playing field forever. This is all good news for the entrepreneurs who have come out of the chute hard and built their company to be acquired. These professional buyers and investors are not necessarily looking for a perfectly humming company. They are seeking to acquire an organization that is advancing rapidly in its industry and oftentimes has a large geographic or industry footprint. These future buyers of entrepreneurial businesses pride themselves (for right or wrong) in having a deep bullpen that can join or direct the entrepreneur’s firm to even more rapid growth. These professional buyers seek to combine it with other synergistic partners to drive the company further and faster in a way a stand-alone entrepreneur never could.

      If, however, entrepreneurs seek a lifestyle business or want to buy a job, then their goals and aspirations are different from a “build to sell” campaign. The long-hold owners can run their business in a much looser fashion and take liberties that they will not be called on the carpet for. Being part of a stable industry and supplying a service or product to their community is an honorable and less risky affair; it has lesser returns but more sanity. Long-term owners do not have to heed midnight calls or texts that the world is coming to an end from investors or potential buyers focused on maximum productivity. The risks and rewards shift dramatically for the long-hold entrepreneur— lesser risks in their favor, rewards not so much!

      One of the major stumbling blocks we see is people who have horse blinders on and willingly ignore the truth because it undermines their dream. It is amazing how many people plow their life savings, sacrifice the well-being of their families, and risk their physical health in a business endeavor that is doomed from the outset. With horrid fascination, we watch these slow-motion train wrecks unfold. At some time in this disastrous process, they grasp reality. But, then, are they too late to salvage or set their course for salvation?

      No matter where you are in the life cycle of your business, you must surround yourself with trusted advisors. There is a difference between advisors and decision makers! Entrepreneurs can call the shots as it is their show, but they should make sure they have wise and learned people weigh in for each key component of their business. It is never too early or too late to have up-to-date pertinent opinions from successful professionals in their area of experience. Don’t let the lawyer give the buyer advice on the balance sheet, and don’t have the accountant weigh in on a growth strategy. Instead, accumulate their opinions at critical junctures, and as the buyer/entrepreneur, make your own informed decisions. Perhaps the buyers/operators should have a Grand Wizard with whom they speak on their overall strategy tying in data and feedback from each of these disciplines. Even a buyer/operator’s closest friends and colleagues don’t like to work for free. An entrepreneur should find a way to bind them to the firm for the duration, as common goals and joint history give great insights for decision-making.

       NOTES

      ¹ Raymond Adeyemiking, “The failure rate is so high because …,” http://adeyemiking.com/post/319250723/the-failure-rate-is-so-highbecause.