Ego and the Entrepreneur
I have been working with a lot of Entrepreneur’s over the last 6 years as a consultant, a business leader, and one myself. There are two types of Entrepreneurs and I have definitions for them: 1. Successful Entrepreneur 2. Unsuccessful Entrepreneur 3. New Entrepreneur Not very catchy definitions are they? Let me define them based on their characteristics because the “New Entrepreneur” out there could save them self a lot of headache if they look for behavior that generally leads them to failure. Sucessful Entrepreneurs These guys are easy. They know the game. They understand why you build a business. They do it over and over again because they love the challenge. They are not in it for their egos, the idea, or the need to have President on their business card. They do it because they can’t do anything else, but build things and then sell it off. They get it started, then hand it off to people to run it. Unsuccessful Entrepreneurs Things just don't work out for the Unsuccessful Entrepreneur. More often than not, they keep on trying, and get it a little more right next time. Eventually, some become successful. Often, they give up and return to the safety net of a 40 hour per week job. Their idea, product, or service just does not solve anyone’s problem, but their own. New Entrepreneurs I have a lot of respect for people that venture out into their own or try to turn an idea into action. These are people that generally don’t fit into the corporate structure, are generally liberal minded (not to confuse the Rush Limbaugh listeners of the world, liberal minded means finding new ways of doing things from how it is always done. Or, it simply means outside the box thinking). Having the audacity to question how things are being done and suggest there is a better way to do it. So the new Entrepreneur has this great idea! Then, they get excited because they could make a lot of money doing it! “I am going to be rich!” So, they embark on the emotional high of becoming an Entrepreneur. They become infatuated with their idea. It is the best idea and the only idea worth investing. Most need money to fund their idea, yet they don’t want to give anything up to get other people’s money. Their valuation of the business is way over inflated and they have no sales. Ego and control start to get in the way. I have been involved in several start-up ventures and this is a common pattern that occurs. As I sit at the Venture Club of Indiana and listen to new ideas being pitched around the table, the pattern is there. The “New Entrepreneur” is excited about their great idea, yet they cannot really articulate how to make money with it. Their assumptions about their market are not well defined and they do not really understand what it takes to get a business going. They don’t understand why no one will invest in their business. They are passionate about the idea and their ego loves the fact that they can now put President on their business card. So what is important for new Entrepreneurs? It is all about sales. When I was President of the Indiana Entrepreneur’s Alliance, one of the guests to our meeting made an important point. He said, everyone says you need and accountant and a lawyer to get a business started. So, everyone goes out and gets and accountant and a lawyer to make you feel good about your idea. This is backwards. He points out that you need customers first to determine if the idea has merit, then go out and hire an accountant and a lawyer. Is what you are doing in demand and are people willing to pay for it? In other words, it is about sales and marketing. As a New Entrepreneur is weighing the idea, the emphasis needs to be on sales and marketing. Get the idea, product, or service out there and see if someone will pay you for it. Do you need an infrastructure to support it? Yes. Do you need to be able to deliver it? Yes. But figure out what kind of expectations you can put out there and manage. As another successful Entrepreneur told me, don’t be afraid of success. You can always find money, if you have a book of business to show an investor. And, you can always find ways to deliver. In our web consulting, we see the New Entrepreneur all the time. Some people are looking for the “Mirror”. “Come in and tell me that I am great, my idea is great, and that you can sell it the way I want it to be sold, even though I have had mediocre success to date.” In our case, the web plays an important part for most customers trying to sell products or services. They focus on their logo and their image, their name. Unsuccessful entrepreneurs gladly feed into their egos and leave results starving at the table. The reality is New Entrepreneurs need to focus on results. In business, results equal sales and profits. Logos, names, and images can have value – only if people buy because of the name, logo and image. Get centered Answering the questions of your buyers: 1. What is it? 2. What is the value? 3. How do I get it? 4. Has anyone else used it? a. What do they say? b. If not? What is the edge I get with it? 5. Yes, I want one! With limited resources and limited time, investment needs to be on finding the market, bringing them to you, engaging the market, and closing some deals or selling product. The question to always ask: Is what I am doing or spending money going to help me generate more sales? Case in point, people always feel like they need to reinvent something that has been tested to work. (Ok…I respect out of the box thinking, but dollars can be wasted on IT projects that bring very little value in the end). E-Commerce is an area that people feel the need to “customize”. We had a client that need to change e-Commerce systems because the one they were using did not support standard marketing practices for e-Commerce sites. Yet, they would not do it because the one they were using had a feature that really brought no value to the buyer or their business. Again, was what they were doing going to help them generate more sales? The answer was no, yet they chose to spend $20,000 when $3,500 would have done the job for the next five years. So, New Entrepreneurs, here are some things to keep in mind: 1. No one cares about “the idea.” They care about what the idea will do for them. 2. Investors don’t care about “the idea.” They care if their investment in the idea will make them money. 3. Investors don’t invest in “the idea”, they invest in the people behind the idea. If you do not demonstrate your ability to execute, you will not get investment. 4. Being President of nothing with no sales has no value. 5. It’s about marketing and sales, particularly for start-ups. a. Always ask, is what I am doing going to help me sell more? b. Is what I am spending my money on going to help me sell more? c. Can I apply metrics to what I am doing? 6. It’s about execution. As it relates to the web marketing, the same rules apply. Here is the list to keep in mind: 1. The website visitor does not care about you, they care about what you can do for them. They want to know: a. What is it? b. What is the value? c. How do I get it? 2. Before you spend money on an expensive website, can you answer these questions: a. How big is the market? b. What words do people use to search your product? c. How much to advertise? d. Who are your competitors? e. What are they doing? f. What are they not doing? g. Who are the top ranked sites? 3. Have you budgeted for web marketing? a. Monthly? 4. You are a new business, people don’t know you. And until you spend millions on drilling your brand into the American psyche, they aren't going to know your brand from a hole in the ground. Use what you do, or what your customers call your product as your name. This strategy worked fine in the past and still works fine today. Evidence: International Business Machines, Advanced Micro Devices, American Telephone and Telegraph, General Motors, General Electric, National Cash Register, American Airlines and Budget Rent-a-Car. Not an obscure latin name with an interesting meaning only to you. There is really nothing sexy about Internet marketing. It too is about execution. It is about results. It is not about corporate ego. It is about what your product or service does for the buyer and the investor.