Added: Judson Fenske - Date: 05.12.2021 03:15 - Views: 20643 - Clicks: 9422
Of the hundreds of thousands of business ventures launched each year, many never get off the ground. Others fizzle after spectacular rocket starts. Why such dismal odds? Entrepreneurs—with their bias for action—often ignore ingredients essential to business success. Moreover, no two ventures take the same path.
How to chart a successful course for your venture? Bhide recommends asking yourself these questions:. Improvisation takes a venture only so far. Of the hundreds of thousands of business ventures that entrepreneurs launch every year, many never get off the ground. Another young company, profitable and growing rapidly, imports novelty products from the Far East and sells them to large U. The founder, who has a paper net worth of several million dollars, has been nominated for entrepreneur-of-the-year awards.
Like most entrepreneurs, the condiment maker and the novelty importer get plenty of confusing counsel: Diversify your product line. Stick to your knitting. Raise capital by selling equity. Act decisively. Hire a professional manager.
Watch your fixed costs. Why all the conflicting advice? Because the range of options—and problems—that founders of young businesses confront is vast. The manager of a mature company might ask, What business are we in? Entrepreneurs must continually ask themselves what business they want to be in and what capabilities they would like to develop.
Similarly, the organizational weaknesses and imperfections that entrepreneurs confront every day would cause the managers of a mature company to panic. Many young enterprises simultaneously lack coherent strategies, competitive strengths, talented employees, adequate controls, and clear reporting relationships. The entrepreneur can tackle only one or two opportunities and problems at a time.
Entrepreneurs cannot expect the sort of guidance and comfort that an authoritative child-rearing book can offer parents. Human beings pass through physiological and psychological stages in a more or less predetermined order, but companies do not share a developmental path. Microsoft, Lotus, WordPerfect, and Intuit, although competing in the same industry, did not evolve in the same way.
The options that are appropriate for one entrepreneurial venture may be completely inappropriate for another. Entrepreneurs must make a bewildering of decisions, and they must make the decisions that are right for them.
The framework I present here and the accompanying rules of thumb will help entrepreneurs analyze the situations in which they find themselves, establish priorities among the opportunities and problems they face, and make rational decisions about the future. Instead, it helps entrepreneurs pose useful questions, identify important issues, and evaluate solutions. The framework applies whether the enterprise is a small printing shop trying to stay in business or a catalog retailer seeking hundreds of millions of dollars in sales.
The framework consists of a three-step sequence of questions. The hierarchical organization of the questions requires entrepreneurs to confront the basic, big-picture issues before they think about refinements and details.
Whereas the manager of a public company has a fiduciary responsibility to maximize value for shareholders, entrepreneurs build their businesses to fulfill personal goals and, if necessary, seek investors with similar goals. Before they can set goals for a business, entrepreneurs must be explicit about their personal goals. And they must periodically ask themselves if those goals have changed.
Many entrepreneurs say that they are launching their businesses to achieve independence and control their destiny, but those goals are too vague. If they stop and think about it, most entrepreneurs can identify goals that are more specific. For example, they may want an outlet for artistic talent, a chance to experiment with new technology, a flexible lifestyle, the rush that comes from rapid growth, or the immortality of building an institution that embodies their deeply held values.
Financially, some entrepreneurs are looking for quick profits, some want to generate a satisfactory cash flow, and others seek capital gains from building and selling a company. Some entrepreneurs who want to build sustainable institutions do not consider personal financial returns a high priority. They may refuse acquisition proposals regardless of the price or sell equity cheaply to employees to secure their loyalty to the institution. Only when entrepreneurs can say what they want personally from their businesses does it make sense for them to ask the following three questions:.
Long-term sustainability does not concern entrepreneurs looking for quick profits from in-and-out deals. Similarly, so-called lifestyle entrepreneurs, who are interested only in generating enough of a cash flow to maintain a certain way of life, do not need to build businesses that could survive without them. But sustainability—or the perception thereof—matters greatly to entrepreneurs who hope to sell their businesses eventually. Sustainability is even more important for entrepreneurs who want to build an institution that is capable of renewing itself through changing generations of technology, employees, and customers.
In fact, a business that becomes too big might prevent the founder from enjoying life or remaining personally involved in all aspects of the work. In contrast, entrepreneurs seeking capital gains must build companies large enough to support an infrastructure that will not require their day-to-day intervention. Unlike a solo consulting practice—which generates cash from the start—durable ventures, such as companies that produce branded consumer goods, need continued investment to build sustainable advantages. For instance, entrepreneurs may have to advertise to build a brand name.
To pay for ad campaigns, they may have to reinvest profits, accept equity partners, or personally guarantee debt. To build depth in their organizations, entrepreneurs may have to trust inexperienced employees to make crucial decisions. Furthermore, many years may pass before any payoff materializes—if it materializes at all. Sustained risk taking can be stressful. Then you learn about all the things that can go wrong. And because your equity now has value, you feel you have a lot more to lose. Entrepreneurs who operate small-scale, or lifestyle, ventures face different risks and stresses.
They may face financial distress if they become sick or just burn out. I would like to sell the business, but who wants to buy a company with no infrastructure or employees? Entrepreneurs must reconcile what they want with what they are willing to risk.
When Alsop launched the company inhe was in his mid-thirties, with a wife and three children. They worked for two years without salaries and invested their personal savings. To set meaningful goals, entrepreneurs must reconcile what they want with what they are willing to risk.
When entrepreneurs have aligned their personal and their business goals, they must then make sure that they have the right strategy. Many entrepreneurs start businesses to seize short-term opportunities without thinking about long-term strategy. Successful entrepreneurs, however, soon make the transition from a tactical to a strategic orientation so that they can begin to build crucial capabilities and resources.
Ventures based on a good strategy can survive confusion and poor leadership, but sophisticated control systems and organizational structures cannot compensate for an unsound strategy. Entrepreneurs should periodically put their strategies to the following four tests:.
Even solo entrepreneurs can benefit from a defined strategy. For example, deal makers who specialize in particular industries or types of transactions often have better access to potential deals than generalists do. Similarly, independent consultants can charge higher fees if they have a reputation for expertise in a particular area. An entrepreneur who wants to build a sustainable company must formulate a bolder and more explicit strategy.
The strategy must also provide a framework for making the decisions and setting the policies that will take the company there. The strategy articulated by the founders of Sun Microsystems, for instance, helped them make smart decisions as they developed the company. From the outset, they decided that Sun would forgo the niche-market strategy commonly used by Silicon Valley start-ups.
Instead, they elected to compete with industry leaders IBM and Digital by building and marketing a general-purpose workstation. This strategy also dictated that Sun assume the risk of building a direct sales force and providing its own field support—just like its much larger competitors.
To be useful, strategy statements should be concise and easily understood by key constituents such as employees, investors, and customers.Business man in town wanting nice encounter
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