Last October I posted a blog entitled Should You Become an Entrepreneur? One of the articles cited in that post came from the Wall Street Journal and was adapted from the book The Wall Street Journal Complete Small Business Guidebook by Colleen DeBaise (Three Rivers Press, 29 December 2009). The article provided “five questions to ask before you start your own business”:
1. Am I passionate about my product or service?
2. What is my tolerance for risk?
3. Am I good at making decisions?
4. Am I willing to take on numerous responsibilities?
5. Will I be able to avoid burnout?
Knowing yourself is a good first step when deciding whether you are cut out to be an entrepreneur. British entrepreneur Luke Johnson asserts, “Being an entrepreneur is not a career. It is more like a calling.” [“Go forth, young business founder,” Financial Times, 22 December 2010]. He explains:
“There are no predictable structures to the vocation, as there are in professions such as medicine, accountancy, law or teaching. Qualifications, job titles and one’s position in the hierarchy are completely irrelevant. Anyway, some might argue that these are mostly paraphernalia designed to bestow status, rather than essential ingredients needed to do something well. By being your own boss, you make up your own journey as you travel – rather than undergoing formal training, you learn skills by practicing them, from sales to accounts. The key is action: entrepreneurs are doers, not theorists.”
Although I agree with Johnson that entrepreneurs are doers, I’m not in full agreement about their not being theorists as well. Most successful entrepreneurs are visionaries — that is, they conceive an idea, consider its potential, and envision a company based on the successful implementation of the idea. That is not too far from what theorists do — that is, they conceive an idea, consider its value, then determine methods for testing their theory. A good theorist is able to take a concept from theory to fact. There is one big difference; generally theorists only risk their reputation while entrepreneurs risk their reputation and their financial future. Johnson continues:
“Going it alone is not the easy path. There is no guarantee that you will earn even a basic wage. But financial objectives are unlikely to be your priority, for as Aristotle said: ‘Youth loves honor and victory more than money.’ All my observations have been that few real winners in business are exclusively motivated by wealth – they are more interested in proving a point, making their mark and creating something worthwhile. There is no security – but job security is a myth these days anyway, be it working for government or the corporate sector.”
In the post mentioned above, I also cited an article by Rajiv Dingra, the young founder and CEO of WATConsult, a social media agency in India [“Are You an Early Bird Entrepreneur?” Wall Street Journal, 3 August 2010]. Dingra believes that young people possess some traits that make them good candidates to be entrepreneurs. Those traits include:
- Age on your side.
- Ignorance can be bliss.
- Greatness NOT money is powerful.
- Early to rise is early to achieve.
Johnson agrees that becoming an entrepreneur at a young age can be a good thing. He writes:
“I get the impression that twentysomethings believe in freedom and independence. Spending your time building your own company is a pretty effective way of achieving those goals. And in some respects grabbing that opportunity as young as you can is a great idea. The sooner you get used to the glories and miseries of self-employment, the better. Most important, you have so little to lose: no dependents, minimal outgoings, and all the time in the world. It is the best phase in your adult life to experiment and perhaps fail. At 21 you are young enough to try again, learn from experience and do it better next time. When you are young you have boundless energy and less inhibition about radical suggestions. The hope and ambition of someone entering the world of work at the start of their adult life should be boundless. Who else can believe in the impossible?”
He isn’t trying to discourage older entrepreneurs. After all, he writes, “The older generation has wisdom.” But, he continues, “It can also be cynical and too proud, too comfortable – and, perhaps, too pessimistic.” As I’ve noted on numerous occasions, one of the universal traits found in entrepreneurs is optimism. Johnson continues:
“Someone fresh can have a different vision, an idea of a better world. There are always demands to be met and problems to solve that only entrepreneurs can satisfy. Each era brings forth transformative technologies that driven individuals commercialize and make popular. Such invention is not centrally directed, but flows from the genius of thousands of enterprising souls who do whatever is necessary to make their business succeed.”
I have noted in past posts that entrepreneurs are often viewed as people obsessed. Obsession can be a good thing when it is associated with good ideas. It can be a tragic trait, however, when it is associated with a bad idea. If you have a good idea, Johnson claims now is a good time to pursue it. He claims that, “in spite of the financial crisis and the weak economy, this is a great time to try new projects.” He explains why:
“The internet makes innovation cheaper than ever. You can buy and market to the world from your laptop. There is also more support in various forms than in the past for young entrepreneurs – whether formal guidance or mentors of one sort or another. There are numerous websites, clubs, books and other ways that entrepreneurs can keep informed and network.”
Johnson concludes: “For idealists who really want to change the world, becoming an entrepreneur is a more effective move than most.” I’m not so sure that idealism is as important as realism when it comes to being an entrepreneur. I would have been happier had Johnson used the term visionary rather than idealist. Even though entrepreneurs are doers, Jonathan Moules claims, “Failing to act is a significant problem for many entrepreneurs too.” [“Key to success is acting on resolutions,” Financial Times, 20 December 2010] He continues:
“One entrepreneur with a reputation for action is Michael Acton Smith, co-founder of online gadget shop Firebox.com and creator of Moshi Monsters, a virtual world designed specifically to be safe for young children to use, developed by his London-based digital entertainment business Mind Candy. … However, Acton Smith admits that even he has fallen victim to prevarication in the past. … Trying to do things on your own can often lead to inaction.”
In Acton Smith’s case, he delayed killing a project that proved to be a commercial failure. The delay ended up costing investors millions of dollars. Looking forward, however, Acton Smith now works with a team and he “claims that one of the reasons things get done at Mind Candy is that ‘being entrepreneurial’ is a part of the culture among all staff.” For him, “being entrepreneurial” and “being a doer” are one in the same thing. Moules continues:
“One way of encouraging [being entrepreneurial] has been to run ‘hack weeks’, where all Mind Candy’s staff are given seven days off from whatever they are paid to do normally to try out new ideas for the business. One innovation from last year’s hack week – adding extra monsters that users can connect with while they walk round the Moshi Monsters virtual world – sparked a sharp increase activity on the website.”
Simply telling people to go out and be creative doesn’t always work and some analysts believe that permitting employees to go off on their own wastes both time and resources. Moules continues:
“JC Duarte, who advises fast growing companies from Sydney to San Francisco about improving their decision-making, says that the key to getting whole businesses to become doers is to break big goals into small achievable actions and to get small teams putting these into place. Decision-making often grinds to a halt when companies pass the 150 employee mark, Duarte says. ‘A really good business plan will go down the proverbial toilet because the owners will not have the time or money to act on all the ideas they are having.’ The process of taking action as a business is not much different to sticking to a New Year’s resolution, Duarte tells clients. ‘One of the keys to success is to make it personal,’ he says. Just as it is more difficult to stop smoking or lose weight by making a dramatic change in lifestyle, so it is with business strategies. Duarte cites an example of an online retailer in southern Europe, which grew from 250 people to 600 and beat its own aggressive sales target by 160 per cent, simply by picking five micro-strategies each quarter that small teams of staff felt they could achieve. ‘Acting on a decision is only effective when the outcome can be visualized and is quantifiable,’ he says.”
Duarte’s advice sounds a lot like the advice given to someone tasked with eating an elephant. “How do you do it?” the person asked. The answer, of course: “One bite at a time.” Moules notes that not all actions deal with strategic choices (i.e., choices that help a company reach a desired end state). He explains:
“Often the most difficult actions that entrepreneurs need to make are not strategic, but relate to people. Jennifer Janson, managing director of PR agency Six Degrees, admits that one of her biggest regrets was spending the best part of three months prevaricating over the firing of a senior executive. ‘Not acting meant that I was not able to dedicate time to my business. It also had a personal impact because of the worry and sleepless nights,’ she says. Of course, once she acted, Janson’s greatest fears – about damage to morale and industrial tribunals – proved unfounded. ‘Once we had the conversation, he said that in fact it was not working for him either,’ she recalls. The two parted amicably.”
Of course, not all partings are amicable. As a President and CEO of a company, I know how gut-wrenching the decision can be to let someone go. Even though the decision is based on sound business logic, I know that the decision can have significant personal consequences. Such decisions are necessary, but never easy. Moules concludes:
“Sometimes, however, it is as important not to act. Errol Damelin, founder and chief executive of online lender Wonga.com, is another entrepreneur with a reputation for never shying away from change. Since Wonga started trading in 2007, it has doubled its size every four to five months and Damelin attributes a lot of this to constant changes, whether it is refining the software behind the service every fortnight or making sure that every meeting held in the company’s west London headquarters results in an action. Such fast movement is a competitive advantage in the banking industry, where the incumbent players are generally more cautious about change. ‘We compare ourselves to Google and Apple,’ Damelin says, adding that mistakes are tolerated so long as people have prepared a ‘reverse gear’ to resolve a problem if things do go wrong. However, Damelin also spent a year doing nothing but analyzing the concept behind Wonga before going to market. ‘There needs to be a time and a place where you are reflective,’ he says.”
Being reflective and doing nothing are not exactly the same things. Being cautious and being a perfectionist are not exactly the same things either. There is saying that goes: “Better is the enemy of good enough.” Many a procrastinator has waited to go to market because he or she has wanted to make their good enough product better only to see someone act ahead of them and capture the market. Since this the beginning of a New Year, it might be a good idea to make a resolution to act more quickly when a decision needs to be made. If you have prevaricated, don’t fret too much. In a future post, I will discuss the benefits of coming late to the game.