Since running a small business can be a lonely endeavor, I try to attend any local business functions and participate in online communities. I like being in the company of other entrepreneurs and wildly enjoy talking about the art of growing a business. Lately I have been noticing some alarming trends in the entrepreneurial circles that has left me feeling more the outsider than part of the club. These trends are occurring both locally and more broadly in media, blogs and podcasts.
This post is my personal rant on the state of entrepreneurship today. My rant comes from the perspective of being an entrepreneur before it was cool, before you could major in entrepreneurship in college, before you could even call yourself an entrepreneur because no one thought it was a career choice.
Rant #1 – Defining Entrepreneurship
Entrepreneurs are an innately creative bunch so there are many forms of entrepreneurship. Lately I have heard people trying to define entrepreneurship and who really qualifies. They typically do this by excluding certain types of business models or business owners as not being entrepreneurial.
Recently on a podcast, the interviewer asked “if you buy a business, are you an entrepreneur because it wasn’t your idea?” You can imagine that this comment really set me on edge. Ideas are a dime a dozen – an idea does not make a business. I have not met a single person on this earth who hasn’t had a good idea, but what sets apart an idea from a business is execution. Entrepreneurs execute – they know how to get into the nuts and bolts of a business and build it. Many times the idea person never fully fleshes out the potential of the business because they are ready to move to a new idea and it takes another type of entrepreneur to step in and grow the business. Neither of them are more or less of an entrepreneur, but they are both smart enough to spend more time working in their strengths instead of trying to improve their weaknesses.
In a local entrepreneurial business plan competition, I heard that a ‘lifestyle business’ would not qualify to win the competition. I asked the organizers to define a ‘lifestyle business’ and they said it is one that would not have a national reach, high growth potential and the ability to add many employees. I don’t have a problem with a business plan competition having parameters for what they want, but what really irked me was this dismissal of ‘lifestyle business’ as a lesser than type of entrepreneur or a local business as a small time operator. There is a a pervasive attitude that only high growth companies are entrepreneurial.
Entrepreneurship used to be a more inclusive term meaning the creative risk takers, but now we have super-sized it to mean only high growth companies are the real entrepreneurs. This saddens me for the innovative, up and coming entrepreneurs who believe they must rate themselves against Steve Jobs or other entrepreneurial superstars and anything less is failure. I think entrepreneurship is the only career choice on the planet that truly allows you to ‘have it your way’. That is the beauty of entrepreneurship – you choose your work life, industry, location, the people you work with are all your choice. The heart of entrepreneurship is not letting society or other people define your work.
Rant #2 – Raising Money
When did raising money and getting investors become the most important part of entrepreneurship?
Recently I heard a college student majoring in entrepreneurship tell a startup business owner “you need to get an investor to take it to the next level”. Really? Exactly how do you think a new business gets to the ‘next level’? A cash infusion cannot make your business grow if there is not someone there who knows what to do with it. Growing a business beyond that initial idea is unbelievably hard work – nose to the grindstone, lose sleep at night kind of stuff. The type of creative, innovative work that money cannot buy.
Getting customers to pay for your product or service and generating revenue used to be how you started a business, but now it seems much more fashionable to walk around with your brilliant idea and financial projections asking for money.
When I look at the schedule of upcoming events at our local Entrepreneurial Center – the majority of events are about raising money. Where are the speakers and seminars on customer service, sales, employee retention, managing cash flow, etc? The attitude seems to be raise more money and then outsource those functions to grow your company.
Here is my old fashioned take on raising money. As an entrepreneur, if you spend more than 80% of your time on developing your business then you will attract money when you need it. However, if your business model is to spend 80% of your time on raising money and only 20% of your time generating revenue and improving your product/service then you will fail.
I have never had a problem attracting investors and have also been offered money before I needed it – why? Because I was going to make it happen either way. I have been more successful than I ever dreamed of because I did have investors, however, there was never a doubt in my mind that I would have succeeded without them. The money I have had invested in me was ‘smart’ money too, people who had experience, knowledge and connections to contribute to the business and to my education as an entrepreneur. I didn’t have to go knock on their door because I had already built a relationship with them before I needed money.
Now that I have crossed the chasm where I have money to invest in others – I hate being pitched by someone who talks about today’s valuation more than they talk about customers, revenue and profits. And I loathe when they don’t recognize that they are talking to someone who has already started, grown, bought and sold several businesses; instead they just see you as a checkbook.
Rant # 3 – Entrepreneurship Bubble
Technology has made entrepreneurship easily attainable – just like the banks made home ownership easily attainable from 2001 – 2006. A lot of money is being thrown at ideas and investors are completely willing to lose their money chasing the next Mark Zuckerberg.
Technology has made starting a business so much easier – create a website and you are in business. You can use online tools to research the market, generate a business plan, create projections, survey potential customers, launch your fundraising – all without getting out of your pajamas. Anyone can look like an entrepreneur, but that special ‘it’, that bizarre drive to succeed in growing a sustainable, profitable company – that is not definable and can’t be bought with investor’s money. You cannot define or limit entrepreneurship because the very core of it is an undefinable creativity.
Now that I have that off my chest, I will return to the work of growing my lifestyle business that I bought with my own money.