The Importance of Passion as an Entrepreneur: You Have To Have It

Passion, it feels good. I think back to projects that I have worked on that were fueled by my passion to do them and to do them well and compare them to the ones in which I just completed to say that I did. I find that not only are the results often sub-par when I lack passion, but my overall attitude during the process is typically terrible and I dread nearly every step that I take towards the finish line, and sometimes I do not even finish. Having passion makes it so much easier to self-motivate, to give it your all, to be proud of the finished product. Being a successful entrepreneur takes passion, you have to love what you do and love doing it. Having passion is exciting and just feels genuinely amazing. Waking up every day with purpose and loving what one does is truly success.

Passion, it looks good. People can tell when you are passionate, and it is surely something to be appreciated. People are more willing to jump on board with a passionate person. As an entrepreneur, this could mean investors or even clients. There have been so many times in my life and career that people have seen me be passionate about something and just offer up resources because of this. Passion helps to open doors of opportunity. According to founder and CEO, David Lucatch, of Yappn Corp, a translator service, the people he has seen achieve the greatest success in their personal and professional lives are passionate people that lead, support, and mentor others with that ‘zeal and zest’ for the work and the people. In this interview with Business Insider, Lucatch goes on to say that passionate people exude confidence. I am the co-owner of a small mostly online boutique, and it certainly takes passion and confidence to sell our clothes. Our clients want to see that we love our products, nobody wants to buy from someone who is simply lackluster. They want to buy and work with people who are energized by passion.

Passion, it spreads. Passion is a fire that spreads. In ‘It’s a Jungle in There” author Schussler says that as a leadership quality, one’s own passion is what galvanizes other into action. I want to be not just an entrepreneur, but also a leader, I want to motivate others in my organization, be a mentor, and encourage those around me to be great as well. I have watched leaders with passion inspire their teams to do amazing things that they had never imagined they could. Lucatch says that professionals who are excited create enthusiasm in their teams and with others. I could not agree more. I had a manager who cultivated me as I worked with her for three years, she was an effective leader and always stayed enthusiastic about our team goals. So even when I had outgrown my position she still inspired me to think outside of the box, create new projects, and even grow in my personal and professional life, all because she was a passionate leader. Passion is an amazing thing. Wars have been won, awards have been received, money has been made, and success has been grasped all on the flames of passion.

Schusssler, S. (2010). It’s a Jungle in There. New York, NY: Sterling Publishing Co., Inc.

Smith, J. (2014, May 13). CEO Explains Why Passion Is The Key To Success. Retrieved October 27, 2017, from http://www.businessinsider.com/ceo-explains-why-passion-is-key-to-success-2014-5

Growing Pains: Scaling issues and how to avoid them

As a founder’s startup moves through the various stages to maturity, it is inevitable that they will face scaling challenges. Scaling a startup can create the opportunity for success for a founder. However, according to Entrepreneur.com there are challenges and mistakes that a founder could face that could sink even the most successful of companies.

First, that many founders end up scaling their startup completely too soon, they jump the gun, or they rev up production and growth without having a solid footing or customer base. The second, is that founders often make the mistake of choosing the wrong people to work or do business with. Thirdly, is putting huge efforts and money behind marketing and sales because they think that is all it takes to take their business to the next level. Next, competing on price just to gain the position as a low-cost leader, often sacrificing quality and profits along the way. Another mistake founders make is remaining stagnant in their management structure even throughout growth and movement through the various stages. Next, some founders choose to ignore issues, as if they will just disappear. Lastly, many make the mistake of not tossing or eliminating the things that do not work anymore.

So, with all of these potential mistakes to be made, how can a founder avoid them and circumvent the crash and burn? Make sure the market has sustainable demand. Focus on building a strong, long-term demand in the marketplace. Choose the right people, at the right time. Find the top performers and utilize their talents to help get through the growing pains. Develop these performers and reward them appropriately. Get better as the company grows and gets bigger. Put energy into creating quality and provide exemplary customer service. Grow, alter, and change the management structure to fit the company as it moves through the stages to maturity. Address issues as they arise and face them head on, ignoring problems does not work and could cause lasting damage. Focus on goals and the overall purpose and vision. If something does not work, either fix it or get rid of it.

Patel, S. (2014, December 22). 7 Scaling Challenges That Can Sink Even Successful Companies. Retrieved from https://www.entrepreneur.com/article/240887

Transitioning from a startup to growth-stage company. (n.d.). Retrieved from http://fortune.com/2013/02/11/transitioning-from-a-startup-to-growth-stage-company/

Investor Dilemmas: Crucial Capital

Capital is crucial. Should a founder self-fund or get financial capital from an investor or investors? There are several key points to consider when making this huge decision. Where the investor is getting the capital, how well the founder can access the investor, whether the investor can add some sort of value to the company, and of course, the potential risks associated with taking capital from a particular investor. A founder could avoid these questions of course, if they were to self-fund. Maybe they could start smaller and grow their business, however, this is not always an option as even starting “small” in some industries is very costly. If the funding is just not there or the founder has huge costly plans then an investor or investors could be the solution.

It is highly probable that with my entrepreneurial venture into the fire safety industry that I will need to obtain financial capital from somewhere. The most appealing form of investor to me is an angel investor. The benefits of going this route appeal to me more than going the way of a venture capital as I prefer to keep control out of the investor’s hands as much as possible minus some equity offering. Angel investors can also provide founders with advice and consulting services. They may also be able to provide some human capital which would be very beneficial in this industry. These investors also may have customer lead and contacts in addition to industry knowledge and skills. These benefits alone answer to the question of added value. According to Forbes, angel investors can be found beyond being referred by someone, there are several websites and programs that help founders connect with an angel investor.

Founders should do plenty of research and weigh the benefits and risks of taking capital from an investor. They should have in mind what taking that money could potentially effect within their business. Will they have to give up control, wealth, or both?

Newlands, M. (2017, March 14). 10 Ways to Find Investors For Your Startup. Retrieved from https://www.forbes.com/sites/mnewlands/2015/07/06/10-way-to-find-investors-for-your-startup/#2c67b52f2a13

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

Hiring Dilemmas: Relationships, Roles, Rewards, Retention

Right people. Right place. Right time.

There are several dilemmas founders can face when hiring. In “The Founder’s Dilemmas”, Wasserman discusses that these dilemmas fall into the “Three Rs framework”. Relationships (whom to hire), roles (what positions to create or upgrade, when to do so, and the types of people to hire into those positions), and rewards (the compensation and equity that is used to attract and keep people).

Relationships.

Founders can take advantage of social capital and seek out hires from this pool that is already familiar to them, which comes with some benefits and of course some risks. Founders who hire close friends or family members may find that they run into the issue of avoidance when it comes to discussing the more difficult topics or the pain that comes when things do not go as planned within the company. I plan to hire some friends and family into my entrepreneurial venture but not without making certain that they have the necessary skills and drive, and with the understanding that personal is personal and business is business.

Roles.

As a company grows, founders will find that the business has new needs. I have worked for the same company for four years and new positions are created often and some positions are removed. It’s the ebb and flow of things. Not only will positions need to be created but some positions will need to evolve and change with added responsibilities. One of the harder decisions a found may have to make is to let someone go, maybe they are underperforming or maybe their position is no longer necessary, and of course this will come with a “what now”. Firing or turnover is often followed by hiring a replacement, though sometimes the question may be whether the position even need to be refilled. There is plenty to weigh when deciding which roles need to be filled and whom to hire to fill them.

Rewards.

Once a founder has established the needs of the business in terms of workforce, they must then decide how they will reward their employees. Salary, compensation, benefits, and bonuses come to mind. According to Harvard Business Review, rewards only influence temporary compliance. I beg to differ, at least a little. I believe that the success of rewards relies heavily on the individual and should not be the sole motivator or incentive. A company with a poor management team and terrible culture could give hefty bonuses regularly, but it does not mean that they will see productivity or morale shoot off the charts. It may be hard for founders, especially ones in fresh startups to find the balance, but the main idea that founders need understand is that some level of rewarding the A-players is important and that they must be certain to avoid rewarding those individuals that under-perform. This takes us to…we’ll call it the fourth R.

Retention.

Once a founder gets the most skilled, hardworking, dedicated employees, it is important to keep them. People leave managers, not companies. Employees want to work in an environment with strong leaders who respect and appreciate them. The A-players want to work with other A-players and they want to see their hard work mean something and matter somehow. A-players need to be coached, encouraged, and appreciated. Roles need to be defined, goals need to be set, responsibilities need to be established, results need to be measured, and a value needs to be placed on roles. Founders need to put time in effort in hiring and keeping employees to reduce pitfalls and dilemmas.

Recruitment, hiring, engagement, and retention are crucial to a success in a business. Employees are assets. Done correctly, it can create huge a competitive advantage. “Leaders who create great companies never do it alone. They always create a team of A-players.”

Herrenkohl, E. (2010). How to hire A-players: finding the top people for your team–even if you don’t have a recruiting department. Hoboken, NJ: Wiley.

Kohn, A. (2014, August 01). Why Incentive Plans Cannot Work. Retrieved from https://hbr.org/1993/09/why-incentive-plans-cannot-work

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

 

Role Dilemmas and The Hiring Pool

Role Dilemmas

Too many bosses not enough workers. This is a problem that founders may find themselves facing if they do not find a way to divide responsibilities and assign titles that address the division of labor. Startups with multiple founders may find that everyone wants to be CEO when it is just not possible.

This is something that I have experienced first-hand in my retail venture. When my business partner and I started up shop we decided on both claiming the title of CEO and then she would also hold the title of CFO handling finance/accounting and I would take CMO on and handle the bulk of marketing and advertising. This was the easy route, we both invested time and money into the business, mostly equally, so to us it was the obvious decision. It works and then it does not at the same time. If a decision deals with money or finances alone, she makes the call. If it’s a marketing question, I get to the solution. If a crucial business decision falls somewhere outside of those categories though, things slow down a bit, sometimes to a halt. The biggest problem is that we waste a ton of time waiting on a stance that is agreeable to us both, tossing the ball back and forth, with nobody really taking the lead on pulling the trigger, some decisions sit days or weeks, we risk missing out on opportunities or lose out on max return. We get along, but I know that if we ever want to truly grow, things will have to shift tremendously if the business is to reach full potential.

This type of hang up could certainly be avoided. Founders should take the time and care to establish roles and build a more hierarchical-centric versus strictly egalitarian way of running things especially if they want to see the company grow. However, they should be sure not to lean too far in and end up with an autocracy. A hierarchical model can still incorporate advantages of an egalitarian approach and make them work to the benefit of all.

The Hiring Pool

So once a founder has figured out their business structure, the next step is hiring the right people. Good employees with valuable experience and skills are amazing assets for a business. Hiring is hard, hiring great employees is extremely hard. Hiring the wrong people who lack important skills can be detrimental, not just to the bottom line and productivity, but these bad apples can certainly cause the good ones to run out of the door.

Founders need to locate talent pools with the skills that will help breed success. For instance, my dream venture of founding a fire safety company needs people who can work with their hands and be both consistent and accurate. They also need to be able to obtain new clients by providing information and selling the right products to the right businesses. Sure, some if not all of these skills could be taught, but with the right kind of recruitment strategy we could find A-players who already possess skills that would make the transition into our company easier for both us and them. Plus, timed saved is money made. A mechanic is good with their hands and technical concepts, a factory worker has skills like these as well. An individual from a similar company or a competitor would be perfect. A former entrepreneur who owned a B2B would have the skills to talk to other business owners who need fire safety services.

Wasserman suggests finding the pool right for the company in question and tapping deep into it, there will lie the best of the best. Researching and understanding talent pools is important and can prevent founders from having to deal with the headache of having the wrong people, not to mention reduce turnover, and save money.

Herrenkohl, E. (2010). How to hire A-players: finding the top people for your team–even if you don’t have a recruiting department. Hoboken, NJ: Wiley.

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

Homogeneity and Team Building: The Founder’s Casting

Birds of a feather flock together.

People are drawn to others who are like them, it is human nature, it is in our instincts. Thus, it is not surprising that founders would be inclined to build a team of individuals with common threads. It’s natural yes, but as with everything, homogeneity offers up both benefits and risks.

Often for founders, homogeneity means filling positions with friends and family. The most obvious problem founders face when hiring these people is that existing relationships can get in the way of business decisions. Beyond this common occurrence though is homogeneity that involves choosing individuals who are not friends and family, but are highly relatable in other ways, such as demographical or behavioral qualities. Why do founders go this route?

It’s quick and easy…

Well of course building a company is not going to be quick and easy, and finding the right people to join the team will never be a brisk and breezy. There is work to be done, hard work. However, one of the benefits of homogeneous teams is they most certainly forge the path of least resistance. Going with what they know, can save a founder a ton of time as they attempt to build a successful and effective team. Working with and communicating with individuals that one can relate to on some level is significantly easier, a certain level of trust exists by default. Homogeneity can also make creating an ideal culture simpler, and while culture is important, one built on the idea that a team should be made up of strictly relatable individuals can leave other desirable aspects of a successful team, neglected.

It comes with some risks…

Homogeneity can limit diversity, an important value for many businesses and companies. Diversity can facilitate out-of-box thinking and increased creativity within teams, more diverse teams will breed more diverse thoughts. In Harvard Business Review’s article “Why Hiring for Cultural Fit Can Thwart Your Diversity Efforts”, author Celia de Anca discusses how hiring for cultural fit or homogeneously can cause two major issues. A team that is based on personality cohesiveness rather than a team focused on the completion of and the success of the goals and work at hand. The second problem, founders can miss out on those individuals who do not fit the mold, the ones that could bring new and unique ideas. That’s a risk they should not be willing to take.

Founders must make the hard decisions and realize when choosing to build or partially building a team on homogeneity is a solid plan and when it is not. There should be a balance, and if done correctly the founder can build a team that is both diverse and culturally sound.

The Founder’s Role

There is no question when it comes to whether a founder should be involved in the building of their team. A big part of a successful business is the people who work within it. Hiring the right people, for the right positions, at the right time is essential. The individuals that make up a team are just as much assets as the building or equipment. Therefore, founders should find themselves with a highly involved position in building their team, selecting their cast members, and making sure they are the best individuals for the team. One bad apple can spoil the whole bunch is not just about fruit. Having hardworking team players, A-Players, will not only make for a desirable environment for everyone to be effective and productive in, but it is also helpful in attracting additional quality talent. Founders should be excited in having a role in building their team, the level of return on this investment of time and energy could really make or break a business.

References:

Anca, C. D. (2016, April 25). Why Hiring for Cultural Fit Can Thwart Your Diversity Efforts. Retrieved October 09, 2017, from https://hbr.org/2016/04/why-hiring-for-cultural-fit-can-thwart-your-diversity-efforts

Herrenkohl, E. (2010). How to hire A-players: finding the top people for your team–even if you don’t have a recruiting department. Hoboken, NJ: Wiley.

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

Building Social and Financial Capital

Near the end of my undergraduate studies, I attended a study and preparation session for my certification test in hotel industry analytics. The head of the Hospitality Tourism Management program at Western Carolina University, Dr. Steve Morse, led this session. During this review, to a room of about 20 of my classmates and myself, Dr. Morse proclaimed, “The opposite of networking, is not working.”

With my undergraduate degrees in Marketing and Hospitality Tourism Management the subject of networking is thoroughly covered in nearly every class, especially in courses with curriculum center-focused on fine-tuning student skills to help them to become an asset and an effective leader within a successful organization. Networking is social capital.

Two things are of upmost importance when we are discussing the pursuance or an entrepreneurial venture, financial and social capital. Of the two, I dare say the latter is so vital that it should be weighed much heavier in importance and be of great focus, even and especially when placed next to the former. The cliché, “Who you know is as important as what you know” (and it could be argued that it is more important than what you know), is undoubtedly true. Perhaps, a better statement would be, who you know is as or more important than the finances at hand or the potential financial capital to come. Financial capital is important too, but finances to fund a venture can be accumulated and accessed in a variety of ways. In fact, in “The Founder’s Dilemma”, Noam Wasserman points to research that has shown that people who can accumulate more social capital before founding are able to attract more financial or seed capital much easier and much more quickly.

Networking really pays off, knowing and meeting the right people can really turn things in the founder’s favor. In Stephen Key’s article for Entrepreneur.com, “Meeting the Right People Is Worth It, Even If You Have to Pay for Access”, he addresses a very relevant question, “When Is It Advisable To Pay For Access [to meet/network with the right people]?” In other words, when should you invest (social capital is very much an investment) in networking. Key says, “Yes, your business might be limited on funds, but if you’re burning through cash because you can’t get in touch with the right people, maybe you can’t afford not to.” This is such a crucial point, it is easy to see how social capital can work in favor for a founder in assisting in gaining financial capital and help to soften the blow between starting up and staying afloat.

With Keys advise, the actuality is that a founder would be taking a bit of their financial pie and utilizing it in a way that would influence the construction of social capital which in turn would help create financial capital growth and in the long run, wealth and profit. Nevertheless, most networking that we do is free or even available at a low cost, whether it be a little time or a little money. The people we meet that could help us in our entrepreneurial journey, are priceless.

Who you know, can help you grow.

References:

Key, Stephen. “Meeting the Right People Is Worth It, Even If You Have to Pay for Access.” Entrepreneur. October 03, 2014. https://www.entrepreneur.com/article/238026.

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

 

Wealth Versus Control: The Great Dilemma

The great entrepreneurial dilemma, riches versus control. Can a founder have both?

To begin, I’d like to establish my overarching goal in my entrepreneurial venture. My plan is to start a fire safety company with my husband to serve Western Carolina and then expand outward to serve commercial and residential establishments in counties beyond the area. Creating wealth, for me, tips the scale much more than control does. When I really think about how I would like to see this venture run.

When comes down to it, my vision of success and my dreams for growth (i.e. not having all my eggs in one basket) exposes the tell-all. The only way for me to maximize growth and wealth, while still leaving time and resources for each to flourish is to relinquish certain levels of control. Sure, in a perfect or ideal world, our company would become infinitely wealthy and we would hold all the control in our hands, everything we touched would turn to gold in an extremely Midas and simile sort of way. Those instances do exist, for some companies, but they are rare. Realistically, there can be an environment in which both wealth and control can exist, but they must weigh in with some differing of levels to create a complimentary balance.

In Harvard Business School’s article, “Rich or Royal: What Do Founders Want?”, author Sarah Jane Gilbert, asks Wasserman the questions, “Is it better to be focused on one or the other? Is it possible to have a healthy balance between the two?” He highlights the obvious first jump for most presented with these questions, explaining that most of the founders that he has studied, started off wanting to become both Rich and Regal. He goes on to say that this desire is reinforced by the prominent Rich and Regal greats of the entrepreneurial realm, people like the Mark Zuckerbergs of the world. What is ignored though is that great founders with great wealth and control simultaneously are the exceptions, the rarity, the unicorns who achieve both. Wasserman says that many founders that he has studied that have tried to mixed the Rich and Regal desires, have often ended up being left with neither. He goes on to offer up a more successful and viable approach to this dilemma. It requires a founder to take a step back, realize their true motivation, and make decisions that align it. While it reduces the chances of being both, it increases the chances of achieving the founder’s true motivation.

I can agree with this approach and I think it all comes back to establishing that overarching drive. That is the heart of a successful venture, true focus. It is knowing as a founder, what it is that you want and driving towards it. It is about making decisions that stay true to the visions for your venture and not falling victim to trying to have it all and then being left with nothing.

What I truly found interesting in this article, Wasserman continues and goes so far as saying that in his analyses he found some of what sets the Rich and Regal apart from the founders who are forced to choose between the two. The biggest finding was that the Rich and Regal often leveraged prior financial and social assets to build their venture.­­

I will touch on financial and social leverage in my next blog post.

References:

Gilbert, S. J. (2006, November 29). Rich or Royal: What Do Founders Want? Retrieved from http://hbswk.hbs.edu/item/rich-or-royal-what-do-founders-want

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.