Ventures often start with the customers they can attract the most quickly, which may not be the customers the company eventually needs. Similarly, entrepreneurs who begin by bootstrapping, using money from friends and family or loans from local banks, must often find richer sources of capital to build sustainable businesses. For a new venture to survive, some resources that initially are external may have to become internal. Many start-ups operate at first as virtual enterprises because the founders cannot afford to produce in-house and hire employees, and because they value flexibility.
But the flexibility that comes from owning few resources is a double-edged sword. Just as a young company is free to stop placing orders, suppliers can stop filling them. Furthermore, a company with no assets signals to customers and potential investors that the entrepreneur may not be committed for the long haul. A business with no employees and hard assets may also be difficult to sell, because potential buyers will probably worry that the company will vanish when the founder departs.
To build a durable company, an entrepreneur may have to consider integrating vertically or replacing subcontractors with full-time employees. The hard infrastructure an entrepreneurial company needs depends on its goals and strategies. They must invest more in organizational infrastructure than their counterparts who want to build simple, single-location businesses at a cautious pace. Few entrepreneurs start out with both a well-defined strategy and a plan for developing an organization that can achieve that strategy.
The founders of such ventures improvise. They perform most of the important functions themselves and make decisions as they go along.
Once that becomes their goal, however, they must start developing formal systems and processes. Such organizational infrastructure allows a venture to grow, but at the same time, it increases overhead and may slow down decision making. How much infrastructure is enough and how much is too much? Delegating tasks. As a young venture grows, its founders will probably need to delegate many of the tasks that they used to perform.
To get employees to perform those tasks competently and diligently, the founders may need to establish mechanisms to monitor employees and standard operating procedures and policies. Consider an extreme example. Randy and Debbi Fields pass along their skills and knowledge through software that tells employees in every Mrs. Fields Cookies shop exactly how to make cookies and operate the business. The software analyzes data such as local weather conditions and the day of the week to generate hourly instructions about such matters as which cookies to bake, when to offer free samples, and when to reorder chocolate chips.
Telling employees how to do their jobs, however, can stifle initiative. Companies that require frontline employees to act quickly and resourcefully might decide to focus more on outcomes than on behavior, using control systems that set performance targets for employees, compare results against objectives, and provide appropriate incentives. Specializing tasks. In a small-scale start-up, everyone does a little bit of everything, but as a business grows and tries to achieve economies of scale and scope, employees must be assigned clearly defined roles and grouped into appropriate organizational units.
An all-purpose workshop employee, for example, might become a machine tool operator, who is part of a manufacturing unit. Specialized activities need to be integrated by, for example, creating the position of a general manager, who coordinates the manufacturing and marketing functions, or through systems that are designed to measure and reward employees for cross-functional cooperation. Poor integrative mechanisms are why geographic expansion, vertical integration, broadening of product lines, and other strategies to achieve economies of scale and scope often fail.
Mobilizing funds for growth. Cash-strapped businesses that are trying to grow need good systems to forecast and monitor the availability of funds. Outside sources of capital such as banks often refuse to advance funds to companies with weak controls and organizational infrastructure. Creating a track record. If entrepreneurs hope to build a company that they can sell, they must start preparing early.
Public markets and potential acquirers like to see an extended history of well-kept financial records and controls to reassure them of the soundness of the business. If performance is sluggish—if, for example, growth lags behind expectations and new products are late—excessive rules and controls may be stifling employees. If, in contrast, the business is growing rapidly and gaining share, inadequate reporting mechanisms and controls are a more likely concern.
When a new venture is growing at a fast pace, entrepreneurs must simultaneously give new employees considerable responsibility and monitor their finances very closely. Companies like Block-buster Video cope by giving frontline employees all the operating autonomy they can handle while maintaining tight, centralized financial controls. Culture determines the personalities and temperaments of the workforce; lone wolves are unlikely to want to work in a consensual organization, whereas shy introverts may avoid rowdy outfits.
Culture determines the degree to which individual employees and organizational units compete and cooperate, and how they treat customers. More than any other factor, culture determines whether an organization can cope with the crises and discontinuities of growth. Unlike organizational structures and systems, which entrepreneurs often copy from other companies, culture must be custom built. The rambunctiousness of a start-up trading operation may scare away the conservative clients the venture wants to attract.
Like other rapidly growing companies, PSS has tight financial controls. PSS employees are motivated by the culture to provide unmatched customer service. When entrepreneurs neglect to articulate organizational norms and instead hire employees mainly for their technical skills and credentials, their organizations develop a culture by chance rather than by design.
Once a culture is established, it is difficult to change. Entrepreneurs who aspire to operate small enterprises in which they perform all crucial tasks never have to change their roles. In personal service companies, for instance, the founding partners often perform client work from the time they start the company until they retire. Transforming a fledgling enterprise into an entity capable of an independent existence, however, requires founders to undertake new roles.
If the business model is not sustainable, they must create a new one. To secure the resources demanded by an ambitious strategy, they must manage the perceptions of the resource providers: potential customers, employees, and investors. While they are sketching out an expansive view of the future, entrepreneurs also have to manage as if the company were on the verge of going under, keeping a firm grip on expenses and monitoring performance. They have to inspire and coach employees while dealing with the unpleasantness of firing those who will not be able to grow with the company.
Few successful entrepreneurs ever come to play a purely visionary role in their organizations. Bill Gates, co-founder and CEO of multibillion-dollar software powerhouse Microsoft, reportedly still reviews the code that programmers write. Gates no longer writes programs.
One entrepreneur speaks of changing from quarterback to coach. Whatever the metaphor, the idea is that leaders seek ever increasing impact from what they do. They achieve this by, for example, focusing more on formulating marketing strategies than on selling; negotiating and reviewing budgets rather than directly supervising work; designing incentive plans rather than setting the compensation of individual employees; negotiating the acquisitions of companies instead of the cost of office supplies; and developing a common purpose and organizational norms rather than moving a product out the door.
In evaluating their personal roles, therefore, entrepreneurs should ask themselves whether they continually experiment with new jobs and responsibilities. Founders who simply spend more hours performing the same tasks and making the same decisions as the business grows end up hindering growth. They should ask themselves whether they have acquired any new skills recently. An entrepreneur who is an engineer, for example, might master financial analysis.
Entrepreneurs must ask themselves whether they actually want to change and learn. People who enjoy taking on new challenges and acquiring new skills—Bill Gates, again—can lead a venture from the start-up stage to market dominance. But some people, such as H. Wayne Huizenga, the moving spirit behind Waste Management and Blockbuster Video, are much happier moving on to get other ventures off the ground. Entrepreneurs have a responsibility to themselves and to the people who depend on them to understand what fulfills and frustrates them personally.
Many great enterprises spring from modest, improvised beginnings. William Hewlett and David Packard tried to craft a bowling alley foot-fault indicator and a harmonica tuner before developing their first successful product, an audio oscillator.
Speedy response and trial and error were more important to those companies at the start-up stage than foresight and planning. But pure improvisation—or luck—rarely yields long-term success.
Hewlett-Packard might still be an obscure outfit if its founders had not eventually made conscious decisions about product lines, technological capabilities, debt policies, and organizational norms. Entrepreneurs, with their powerful bias for action, often avoid thinking about the big issues of goals, strategies, and capabilities. They must, sooner or later, consciously structure such inquiry into their companies and their lives. Lasting success requires entrepreneurs to keep asking tough questions about where they want to go and whether the track they are on will take them there.
You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Create an account to read 2 more. Decision making and problem solving.
What are my goals? Do I have the right strategy? Can I execute the strategy? Bhide recommends asking yourself these questions: Where do I want to go? Consider your goals for the business: Do you want the rush that rapid growth delivers? A chance to experiment with new technology? Capital gains from selling a successful company?
How will I get there? Is your strategy sound? Will it generate sufficient profits and growth? You can keep the answers to yourself but you must answer the questions with a brutal honesty and self-analysis.
There are no right or wrong answers. Just a less enjoyable path if you fool yourself when considering the questions below. Entrepreneurial success stories abound. There is a huge survival selection bias.
Those that succeed love talking about how great it was, those that fail tend to keep it a bit quieter. The problem with this is that people think being an entrepreneur is cool and easy. Oh, and that you also magically become very wealthy somehow. Nothing could be farther from the truth.
It is very cool. And you may become very wealthy at the end of the process. But note that the stats are stacked against you. Instead, you should focus on the essence of being an entrepreneur and whether becoming an entrepreneur will make you happy.
Will you be a happier person if you become an entrepreneur? Becoming an entrepreneur is going to have an impact on your personal and professional journey. This includes the obvious financial perspective but also personal relationships and everything in the between. Consider these profound changes carefully. There is never a right time, but there are definitively some wrong times.
Think carefully and be very honest to yourself: do you want to start a business that will sustain you and your family? Or are you starting a business because you want to make the world a better place and you are driven by a sense of purpose and mission? In my case, I'm entirely driven by a sense of purpose and mission. I started my current Insurance startup Rnwl because I came across a problem and I want to make the world a better place for consumers.
Turn your passion and beliefs into a business. Are you passionate about health and fitness? Become a nutritional consultant or open a gym. You have the ability to create a business as well as impact people through your passions and beliefs.
You can make people happy. These products bring a smile to faces of millions every single day. Sure, Apple is making billions of dollars, but they are also making their customers happy. You will never hit a ceiling. Some jobs have a growth cap and you can only advance so far. When you are an entrepreneur, there is no growth ceiling. Earn a living doing what you love. Feeling appreciated is great. Build your own security. You will never stress about having the wrong person in charge of a business.
You get to constantly learn. As an entrepreneur you are always learning lessons -- sometimes the hard way. Eliminate downsizing or layoff fears. Businesses make cuts and lay off employees daily. That can be extremely stressful. Bad days could always be worse.
A bad day as an entrepreneur is better than a bad day working for someone else. No degrees or pieces of paper stand in your way. In fact, some of the most successful tech billionaires dropped out of college. You get to push the envelope. There are no boundaries -- create, invent and disrupt as you wish. This is how brilliant ideas are born.
Satisfy your personal curiosity. Most entrepreneurs are curious -- will my idea work? Can I grow this into a sustainable business? Can I be a good leader? No more boring meetings. Gone are the days of boring meetings -- now, if you are in a boring meeting, you have nobody to blame but yourself. Media and press acknowledgement. When your company receives media coverage and validation it is extremely satisfying.
Recognition for the hard work you put in helps fuel your inner fire. You become a provider. As an entrepreneur you will become a provider for many. Your employees will depend on your leadership and decision-making, as it will directly impact their livelihood and well-being. Create your own corporate culture.
You get to create a corporate culture based on your beliefs. Want to allow your employees to work from home on Fridays? How about providing in-office daycare to allow your employees to bring their children to work? You get to develop the corporate culture that you believe will provide the best environment for success and excellence. Experience personal growth. It is a great feeling when you look back and see how much you have grown as an individual.
The growth and success of a business is often directly related to the personal growth of the entrepreneur behind it. You become an expert problem solver. As a business owner you become very resourceful and over time you will learn to overcome anything and solve any problem placed in front of you.
It never feels like work. Once you do find that you will never refer to what you do as work. Johnny Earle, the creator of the brand Johnny Cupcakes , is proof that not even a learning disability can stop an entrepreneur from succeeding. Endless life experiences. You get to travel to new places and interact with different people all the time.
What some might see as just a business conference, you see as an opportunity to visit a new part of the world and meet people you would never have met otherwise.
You develop an iron jaw. You are going to get hit and knocked down. Learning to take the punches and continuing to get up turns you into a stronger business owner and individual. You get to walk on the wild side. When you put your own livelihood and finances on the line because you believe in something percent, it becomes an extreme rush. You conduct your own performance review. You can get competitive with yourself.
0コメント