The Three F’s Every Successful Entrepreneur Should Master
By Kent Lewis. Kent will be presenting “Learning from a Serial Entrepreneur”on Wednesday, June 5th from 6 to 9 pm.
As a long-time entrepreneur, I’ve had the opportunity to found and co-found a variety of businesses and non-profit organizations. More recently, I’ve sat on advisory boards for other companies and have been mildly surprised at the nature of the common struggles they each face. While there are many moving parts required to build a successful business, I’ve encapsulated the most common obstacles into the “Three F’s” every startup must master.
If you’ve read the E-Myth, you know not many businesses come as a ‘vision from above.’ Most are born out of a hard reality: getting fired (like me), laid off, bored or are somehow inspired to make a change. Most entrepreneurs are technicians within a specific discipline expertise (sales, plumber or engineer) who decide it was time to go out on their own. Many of those new business owners start with a new company name and an email to their network informing them of the news. Very few take the time to flesh out the “why” or purposes of their business, let alone create a concrete vision for the company. Some business owners require years of reflection and even failures to clearly identify why they are in business. The backside of initial strategic planning relates to the exit strategy. Most exits involve acquisition, few have a secession plan (for handing over the reins to family or employees) and even fewer ever achieve IPO. While it’s not critical to finalize your exit strategy on day 1, having definition or agreement on which one (or more) of the options is most desirable greatly aids in making business decisions moving forward (even affecting corporate structure during incorporation).
Once a typical startup gets off the ground, the next step is to define product and/or service mix (aka The Offering), determine pricing and supporting resources (vendors, tools, people, financing). While these are all critical elements of an operating business, one or more of these may be overlooked or need major refinement, particularly early in the game. An important element of running a business, especially a startup, is focus. Do what you know best and know what you do best. Manage the business to your strengths and mitigate your weaknesses (typically by surrounding yourself with people possessing complementary skillsets). As you assign roles and responsibilities based on business objectives, define granular projects, owners and associated timelines and manage accordingly. Process is the last element ensuring focus is maintained. Develop processes for all aspects of the business, to mitigate reliance on specific individuals who may use their leverage to gain ownership or over-burdening salaries. Refining and improving these processes leads to increase profitability and additional growth opportunities.
Last but not least, let’s not forget business fundamentals. More than one company I’ve advised in the past has grown under a visionary leader with clear purpose, a product value proposition and key processes in place. Unfortunately, these entrepreneurs fell into the E-myth trap, straddling technician duties (working in the business) with CEO duties (working on the business). Further exacerbating the challenge of wearing many hats (answering customer calls while raising money) is the technician’s relative lack of business prowess. Most entrepreneurs do not graduate with an MBA, they fall into ownership and have to learn business basics on the job. Those lacking a formal education, training or management experience need to surround themselves with people that have “been there and done that” whether they be sourced via SCORE, Entrepreneurs’ Organization or an incubator of some kind (like Portland Incubator Experiment). Seasoned professionals with expertise in operations, sales or marketing can join a formal board of directors, advisory board (which we’ve recently created at Anvil) or be available as-needed (without adding the burden of a full-time salary). The other essential business fundamental frequently overlooked is comprehensive industry analysis. Who are your business-line competitors? What about perceived or potential competitors? What are the emerging trends and who are your industry influencers? Conducting a SWOT analysis on your industry is always helpful in refining services, market positioning and messaging.
I’ve seen startups grow and mature without mastery of all three elements, but those are either exceptions, or the runway was long enough for them to become sufficiently competent in each area. Why play the long odds? Make sure your startup identifies and leverages resources in all three areas early in the game in order to maximize your potential for long-term success.