Tuesday, October 15, 2013

Support structure for entrepreneurs

Surrounding yourself with the right people is vital for anyone starting up a company. I can hear you all saying that this is patently obvious, tell us something new.

What I’d like to share are some generalised observations on exactly whom the right people based on my experience and what I see and hear from others.

Family
Let’s start with family. The best we can hope for from our partners is that they understand we need emotional support and encouragement to keep going.

I learned early on with my former and current partners that if I actually shared my day to day pressures that they just about imploded from the stress of it all. It’s bad enough that one of you goes into meltdown, but if the person supporting you also melts down then you have no support.

What has worked well for me is to share the dilemmas I am facing and ask for a common sense view on the situation. E.g. what should I do in this situation with a supplier, investor or employee.

If your partner can’t stand the idea of not having regular income and hates that you are taking risks that put their future plans, or plans of your children in peril, then to be brutally honest there is a fairly high chance that you are going to lose your marriage. You have a stark choice between your own ambitions and keeping the stability your partner craves. Good luck.

Friends
Friends are at the same time best and the worst supporters you can have.

When you first start out a lot of friends will be giving you unasked for advice on things.

You might get told that the finished product you are already selling after a large and expensive production run is crap and that it needs to be redone.

You might be told that you’ll never make it – the market is terrible, there’s no money in it, you have no ability to manage, etc.

Please forgive your friends. What they are really talking about are their own fears. They are projecting all the reasons they’d never start a business on to you. Just pat them on the back and tell them that it’ll be all right, and avoid talking about your business with them.

You might also get some friends who admire what you are doing and offer you moral support. Best of all, some of your friends will act like nothing has changed and catch up as per normal.

What many of us find is that your closest friends change over time, and those who can’t get over the negativity end up moving out of your inner circle.

Seasoned veterans
When it comes to obtaining mentorship/advisors to help guide the business then the well trodden path of contacting respected senior managers or retired executives with the experience and connections to help.

I have seen this both work well and go horribly wrong.

The nub of the issue is that you are bringing on board a bunch of grey hairs who have been managing others rather than doing the work themselves for years if not decades.

In other words, they are likely out of touch with the current market and how things have changed (and trading conditions, marketing, etc. always change). As generalist advisors they are great, but on specific matters they may not be the godsend you thought they were. They may in fact be giving you advice that worked in the mid-90s but is completely ineffective now.

The worst mistake I have seen is to put these seasoned businesspeople on the Board, in which case they can ending up becoming armchair generals of the most pernicious variety. Sure give them some shares, but keep them in a separate advisory panel for your own sake.

Professionals
Accountants, lawyers and professional business advisors are an interesting breed. There are good and bad in here.

The plus side is that they have seen the inside of a lot of businesses and can help you navigate the pitfalls of your particular industry and increase your chance of lasting a few years.

The limitation of any professionals as advisors is that they do not have any startup/entrepreneurial DNA.
The worst will tell you to have a BHAG (Big Hairy Audacious Goal) or to buy low, sell high and stick to your strategy. This is just like saying you should eat a good breakfast and exercise three to five times a week – absolutely correct and of no actual use.

For example, let’s say you are down to your last few dollars, you have 3 big customers who are delaying payment by a couple of weeks, your payroll is due in 2 days and your staff have indicated they will resign en masse if you miss another payroll. In this case the above professional advice is absolutely useless.

Your focus is on the day to day matters, hopefully all working to a bigger strategy. You’d love to work on the business and not in the business – but that is a luxury, not a day to day reality for most.

In fact, if you ever meet a CEO who tells you that their company is running smoothly and that they have plenty of time to work on strategic matters you know they are heading for trouble.

Fellow Entrepreneurs
I think that I have learned more from my relationships with other entrepreneurs than all the others, including my university studies.

I finally crossed the line into starting up a business by being mentored by entrepreneurs. What I learned was how to see the world in terms of the opportunities available, how much effort would be involved and what the margins might be to make it work. Not even the best MBA in the world can give you what spending hours talking to experienced entrepreneurs can give.

Seasoned entrepreneurs can teach you how to think, and can point you in the right direction on what you need to do.

However, as an entrepreneur myself I  know my own time is limited and that I can’t share everything with those who want it. Nowadays I often find myself in the position of meeting a bright, passionate and amazing younger entrepreneur, but I can’t give them too much time as they have so much to learn that I’d have no time left  to run my own business if I did. They are going to have to learn a lot of things the hard way, just like the rest of us do. This is especially true of those who won’t listen to advice but keep coming back to ask how to make their business model work.

The best situation is to find a group of fellow entrepreneurs who are at about the same point in company development as you. You are dealing with roughly the same issues at the same time and by pooling your experiences you will learn an enormous amount.

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