The question of whether you can ‘make’ an entrepreneur, as opposed to being born one, must be one of the most hotly debated topics in business schools and government policy-making teams around the world.
Over the years both Cranfield School of Management and Bradford University School of Management have asked me to add my own thoughts on this subject for their MBA students – and to give my ‘top tips’ for starting a business. Here I distil these, which inevitably tend to be more from the perspective of starting technology companies, and would say that around 50% of the students I meet want to start their own business – or already have.
I recently spotted Lauren Yecies writing on Forbes blog who argues that while you need an entrepreneurial instinct, work experience helps – and I would agree with her comment
“The average age when an entrepreneur starts a high-tech company is 40 – after 15-20 years of work experience. This work experience gives them enough time to learn essential functional and management skills including how to build products, how to market and sell them, and how to build, grow and manage teams. 15-20 years is enough time to have some bumps along the way and, hopefully, learn a bit of humility.”
1. Test, test, test your business idea
My own business experience is in technology. I firmly believe you need to take your business idea and test it out from every angle. Get a list of ‘what ifs’ and see how your business will survive, thrive, adapt in different circumstances.
And also be prepared that you may be ahead of your time. Nearly 30 years ago, I remember telling the BT board that there would be a million people in the UK carrying mobile phones within five years. They simply could not get their heads around this.
In that case, I was right. But I also worked on a plan for an e-cash business. The principle was spot on, but we could not get backers or bankers behind it. It was a few years ahead of its time.
2. What business are you really in
I was talking to a student who had a business (I think in Nigeria) who used to buy cigarettes in bulk. He had a stall in the town and every day would sell small numbers of cigarettes to his clients on credit. On the way back in the evening, or at the end of the week, they would pay him for the cigarettes they had.
He was explaining this to me and asking how he could expand his cigarette business. We talked for a while and I said “You know, you’re not in the cigarette business, you’re in the business of giving credit. So you need to rethink your business plan and look at how you expand your credit business.”
What business are you in – cigarettes or credit?
3. Aim high – and global
I mentor a lot of chief executives and help companies develop strategies. In the excitement of developing a new idea, it is easy to limit our vision to the market/s that we know well, which can make the plan rather ‘local’. It often doesn’t take much more skill or resource to take the business or product global – but it’s generally best to plan this in at the beginning.
4. Accept running a business will consume you
In my own view there is very little to compare with the thrill of building and running a company, creating employment, fulfilling customer needs. But you have to accept that it does take over your life.
Rob Wilmot, co-founder of Freeserve, shares his ingredients for start-up success and says you should get your family on side and take care not to crash and burn. Wise advice.
5. Double the time you think
All businesses take much longer to develop than you think – five years is a good rule of thumb to reach decent profitability. So be prepared for the long haul.
6. Give things away
Be prepared to give things away –give others a slice of your cake. But negotiate the return – whether you do a deal with a business angel or private equity investor for money or skills, web developers or others. This is the way to grow your business.
7. Be prepared to fail
Be prepared to fail. Failure doesn’t mean you are stupid or incompetent. If you are a real entrepreneur you will pick yourself up and start again. Americans have a far more positive and realistic approach to business people who have ‘failed’ – they see it almost as a badge of honour. You will learn lessons you will never repeat – just make sure you do learn from them.
8. Be prepared to be kicked out!
Starting a business does not require the same skills as running a steady ship. The best entrepreneurs recognise their strengths and let go/hand over/get kicked out when the business is ready for a new set of skills.
This is the time for the serial entrepreneur to go and do it all over again!
I think you have to accept that running a business will consume you – and it may destroy much that you hold dear. Houses get mortgaged and lost and marriages flounder, even for successful entrepreneurs. Are you prepared to pay this price?