As the lame duck President of the MGSA.PM, I can't help but to abuse my power. So I am using this blog as my BAEP 553 Cases in New Venture Management Final Assignment, which includes a couple thoughts I've gathered on entrepreneurship throughout my MBA journey. (Btw, the class is freaking awesome, worth the 400 points every semester!! I hope Professor Mednick is reading this!!)
Support System
Whether it’s a team of dedicated employees or a board of advisor or a knowledgeable mentor, you need a group of people to support you in order to make it happen. Understand your strengths and weaknesses then look for people who complement your skills. Identify people who can give you unbiased advice, who ideally have experience in the field you’re entering. You might ask, where do you find these people? An obvious answer is through networking. Whether it’s going to industry events or leveraging the Trojan network, the key is knowing what you’re looking for and keep communicating that to the outside world. You will find some fitting candidates eventually. Finding the right people will not only provide you with the much needed advisors to run your ideas by, but also put you in touch with potential partners or employees who share the same vision.
Financing Your Business
BOOTSTRAPPING!! Don’t waste your time pitching to VCs 5 times a week! You most likely don’t need their money at this point to get your business kicked off!! And most likely they don’t want to give you money now because you haven’t done anything. They will come in droves once you get your business successfully launched. If you keep focusing on that, what you’ll become good at is pitching to VCs, not starting and running a business. And I’ve heard horror stories of speakers who spoke of how VCs and other investors, due to the difference in their interests, asserted their influence and all kinds of manners and ultimately drove the business to the ground. It is your baby, find a way to feed it and help it grow on its own!
Fad vs. Trend
Fads come and go, trends are here to stay. Fads are like speculating in the stock market and trends are blue chip cash cow stocks. Obviously, if you catch a fad on its upswing, you might be able to reap in a huge profit before it dies out. However, when talking about starting and growing a business, entrepreneurs want to be the trend setting so that the business can continue to grow and the rewards can be collected continuously over a long period of time. A way to transform a fad into a trend is by constantly reinvesting and improving on the product/service. If you continuously reinvent yourself and meet the needs of the market, you’ll not only turn the product into a staple of the market, but also brand your company in a positive way that will go a long way for years to come.
Dealing with Investors (VCs, Angels...etc.)
In dealing with investors, whether they are bankers, venture capitalists, angel investors or just family & friends, always keep in mind of what they’re interested in: ROI. Obviously, different groups have different ROI needs, ranging from different rate or return to time it takes to reap their promised rewards. Not only must you understand the aforementioned ROI related issues, you always bear in mind what they are willing to do to get that they want. They might go the legal route, or they might assert their influence by strong-arming you to relinquish control. Having a good understanding of all that will help you not only protect yourself, but also the business you worked so hard to build.
Family
When starting a business, always keep in mind of the toll it may take on your family. Not only might the less time spent together strain your relationships, but also the stress might get indirectly transferred onto your family member. Make sure your spouse is on the same page and is fully supportive of your business or it’ll become a huge burden for both of you. Warn your family ahead of time as you’ll spend less time with them, become more stressed, and there’s a chance of financial hardship. Also avoid bringing family members into the business, as family businesses create a whole new dimension of trouble if it goes bad.
Organic Growth vs. M&A Growth
Growing a business through M&A is an exception to bootstrapping your business because it is practically impossible unless you’re Mr. Buffet or Mr. Gates. Growing through M&A is usually reserved for businesses that need to reach scale fast in order to become successful. And when acquiring other businesses, always understand what is it you want to get out of the transaction. I’ve learned new reasons to acquire businesses from one of the speakers: strategic partnership, location, relationships, human capital and more. Truly understand your business, its needs and path to growth before deciding between growing organically or otherwise.
Opportunity Recognition
A very common path to recognizing a real business opportunity is through long-term immersion into a field or industry. Many of the entrepreneurs who spoke in class spoke of how their extended work and process in a certain field allowed them to not only identified needs, but to also create solutions unique to their perspective because of their experience and network in the field. Others spoke of their long-term passion and practice in a subject matter (not necessarily working in it), such as computer science…etc. Obviously, that’s not the clear path to finding an idea, as there are many who worked in the same field for years but never had the entrepreneurial spirit, creativity or motivation to start a business. Nevertheless, it can serve as a good reference for people who have had a long-term immersion in a field and start paying more attention to what’s going on around them.
Know Thyself
A common theme among all successful entrepreneurs is that they know themselves very well. From the passion they have for their idea to where the passion came from, these people know it inside out. They have a great sense of who they are, why they’re doing what they’re doing and most importantly, their strengths and weaknesses. By knowing yourself, you can continuously find the drive and motivation to push through during hard times. By knowing yourself, you can find partners that complement your own skillsets and alleviate your weaknesses.
Entrepreneur to Entrepreneur CEO
Imagine this, you’re 22 and you’re about to graduate from college, you don’t have a job lined up but all you do is play video games all day. The day will come sooner or later when you realized, “OMG, I am an adult now, I better start acting like one or I’ll end up in my parents’ basement for the rest of my life.” At some point, an entrepreneur will come to the realization that their business has gotten to a certain point where they have to act and behave different in order for it to be successful. I emphasize on the realization point because once you realize it, you can do something about it, such as hiring a professional manager, finding someone to complement your skills, selling the business, getting an MBA…etc. But if the time has come and you don’t know it, you might be dragging the business to its grave.
Business Models
The biggest lesson about business models is that what you plan probably won’t work out the way you designed it. Many spent tens of thousands of dollars and maybe years writing the perfect business plan. But how many of them actually translate to a successful and sustainable business? All of the entrepreneurs who visited the class would agree that a good business plan might help you get funding, but it’s never the roadmap to a successful business. Just like financial projections, even the slightest change on one of the assumptions will dramatically change the results. Then how do you find a business model that works?? By trial and error. Obviously you can’t just jump into a business without a plan, a plan should be a framework that is based on the latest and most relevant information gathered to minimize risk just to get the business kicked off the ground. But by paying close attention to your customers, revenue sources and constantly making adjustments, you’ll eventually find a unique business plan that works for you, and most likely, it is completely different from what you had in mind.
Entrepreneurial Spirit
Entrepreneurial spirit? WTF does it even mean?!? I’ve taken multiple BAEP classes, heard from numerous entrepreneurs and even used the term a few times, but I don’t think I truly understand what it means until I looked back and tried to tie everything together. I’ve come to the conclusion that there’s no universal definition for entrepreneurial spirit (even Mariam Webster is wrong). Successful entrepreneurs have the following qualities:
- Passion for the business which usually contains a greater cause and never focus only on profit
- They understand themselves deeply
- They’re problem solvers, whether it’s finding the resources needed or the right person to do the job
- They learn from their mistakes and always comes back strong
- They’re eager to learn and are always on the lookout for new information that might need to a new idea or a way to better their business
- Win or lose, success or fail, they control their own destiny
- They “swim in the river of life”
With experience, they get to a point where their capabilities and confidence are so developed that they’ll likely to succeed in any venture. This is why many successful entrepreneurs tend to be serial entrepreneurs and this is why smart investors fund the people, not the ideas. That, to me, is someone who embodies the entrepreneurial spirit.
Just Do It
Ultimately, entrepreneurship is about just doing it. Someone famous once said, “Talk minus action is shit.” So take in what was mentioned above, and get cracking on starting that business!!
Hope you enjoyed my humble 2-cents on entrepreneurship!! But why settle for just my thoughts? Go take the class, hear the stories and learn from the real entrepreneurs who taught me these lessons!!