Painful Realization

One of the most difficult moments for entrepreneurs can be the point when they realize that they can no longer effectively manage the companies they created. This is not an unusual event, but it is most often met with complete denial.
The StartupJournal has an article that shows the struggles that one entrepreneur faced when he owned up to his limitations related to his growing company.
“Mr. Reeve wants to remove himself from all aspects of management and become the company’s chief designer and inventor. This transition is proving easier said than done. The company needs to find a strong manufacturing manager with the ability to satisfy the founder, maintain quality and build profitability. Two managers who were hired in the past three years weren’t up to the task.
Both Mr. Reeve and his wife, Anne, who co-founded and helps run the company, agree something needs to happen quickly. Mr. Reeve is burned out from doing work he doesn’t enjoy.”
There are the lessons that the author of this article, Perri Capell, arrived at from interviewing this entrepreneur:
-Entrepreneurs can be a mismatch for a mature business.
-Management skill cannot always be learned.
-Hiring a successor can be a very difficult task.
Although all of these can be true in many cases, my experience is that if dealt with early enough, many of these challenges can be avoided. I have seen many entrepreneurs make such a transition successfully. It is not easy and the entrepreneur will need to commit to a long term plan not only for the business, but for him or herself. I stress to entrepreneurs that they need to understand that it is not just their businesses in transition, but they need to transition, as well.
One of the best books I have even read on this topic is Growing Pains. It was my Bible during this transition period in our business. The good news for young entrepreneurs is that many are learning about managing growth in their formal education on entrepreneurship. The rest of us old dogs will need to try to learn this on the fly.

More Advice on Home-Based Businesses

WomensWallStreet.com has some more advice on starting a business out of your home that goes along with a recent post at this site.
“Begin by deciding if a home-based business is really right for you by making an honest assessment of yourself and your needs and availability. It’s harder than pointing and clicking, but it’s where the real work begins. Talk to your family about how much time you want to devote to work, and research every option thoroughly – you’ll learn a lot and avoid a bad match. If you’re determined to keep your weekends free, for example, avoid retail and real estate.
Be sure working at home suits your temperament. If being cooped up in the house doesn’t sound appealing or if you’re easily distracted, think twice….”
Successful home-based workers I have talked with all say the you need to set some clear boundaries of place and time that define your working at home. Set aside a “work place” in your home such as a designated office, but only go there during predetermined working hours. This may even require getting two computers and two phone lines–one for working at home and one for family use–to make sure the boundaries are kept clear and consistent. This can help with distractions.

Insurance for Home Based Business

Something that is often overlooked is the need for home based businesses to secure business insurance. This article at NFIB outlines how to evaluate your needs.
“Every owner of a home-based business should consult with an agent experienced in insuring small businesses. Normally, your homeowner’s policy will cover some business-equipment coverage costs in the case of losses due to fire or theft, but if you’re not completely familiar with the details of your homeowner’s policy, snags could develop when making a claim. You may find, for example, that business equipment is excluded from coverage or that the policy’s deductible for computer equipment is higher than the replacement cost. Even worse, you might find that simply having a business in your home voids your homeowner’s coverage.”
Too many small business people seem to want to ignore issues such as insurance needs and employee legal issues. Even if your business is a home based business, it is a business. Don’t cut corners on matters such as these. The odds are very good that it will catch up with you.

Many Baby Boomers Looking to Franchises

We have talked about the growing number of aging baby boomers becoming entrepreneurs later in life. This article at Entrepreneur.com reports that many of my comrades are choosing franchising as their entry strategy. This is not a bad approach, as many of these folks have spent their lives in the corporate environment. Franchises can help provide structure and systems to help with this sometimes difficult transition.

BBBT: Culture

Question: Many entrepreneurs like to talk about a culture of “family” in their businesses. Yet, you talk about the importance of setting boundaries when relating to employees. Is it unwise to build a business with a sense of family as the basis of its culture?
Answer: First of all, the answer depends to some extent whether you are talking about the Partridge family, or the Manson family. In other words, a happy family or an unhappy one? Hint: the former tends to be better than the latter. Because everyone has a different sense of family, I’d state instead what seems to me an ideal to strive for in terms of creating a healthy culture at work.
On the extreme, and not necessarily unhealthy situation, great companies are “cults,” as several experts point out. The individuals feel a strong sense of belonging to and identification with the company, they understand the rules and beliefs and way of doing business. They are loyal to the company, and expect that they will where can i buy topamax serve the company as it will serve them.
In terms of startups, I think the key issue has to do with setting boundaries and being extremely clear about mutual expectations and agreements in the present and evolving future. Because the roles and responsibilities of individuals often cross functions, exceed traditional working hours or settings, and change on the fly, it’s critical that issues such as compensation, responsibility, and authority are explicitly discussed at the beginning, and revisited over time. Moreover, individuals must have some set of goals that are defined in a manner that supports and grows the company. None of these conversations need to be excessively formal or bound in absurdly overdone legal terms. The point is, however, that the people who run the company and do the work must establish a process of managing people that is perfectly transparent and never prey to personal fiddling. This means establishing a formal way of establishing goals, reviewing performance, sharing the upside, and putting so-called undiscussable issues on the table. Anything less essentially invites confusion and conflict down the road.

BBBT: Ethics and Bootstrapping

Question: What are some of the ethical challenges that can be created when building a business through bootstrapping and how best can an entrepreneur avoid them?
Answer: Do the right thing, always. I find it very difficult to discuss ethics in a generalized way. Starting a business can push individuals to stretch the truth for competitive advantage. This can come in any number of ways. Owners might claim to be bigger and more established to lure investors or clients. They could attract employees or customers with exaggerated tales of prospects. They might claim to have certain key elements in place before they are locked down simply to calm key players. The opportunities for fudging will only multiply as a company gains traction. Founder/owners can justify their extreme behavior by saying its all for the company—that it’s business, not personal. But of course it really is all personal, to someone.
So I think the real issue is quite simple. Do the right thing always. Be honest to people. Practice the golden rule. And always do what you say you will do. I truly believe that a culture of openness and honesty foments more of the same, while one that sanctions untruths will inevitably create more lies.

BBBT: Raising money

Question: Why do think it is so important to know how much money you will make before you try to figure out how much money you will need to raise?
Answer: The real issue is fit, in this case financial fit. Different types of companies have very different types of needs, in terms of people, resources, and capital, and you simply need to be clear about what your particular needs will be ahead of time, or run the risk of wasting time chasing the wrong capital, getting too much capital (a problem), too little capital (another problem,) capital that comes with onerous requirements, capital that comes with destructive investor/partners, capital that drives individuals to do foolish and counterproductive things, and so on.
Modest businesses have modest capital requirements. Capital intensive businesses call for, well, intensive capital. Those rare high-potential companies with great growth prospects might qualify for venture buy topiramate weight loss capital. But every choice has consequences—both advantages and disadvantages that the founders must reckon with prior to accepting the backing.
I hate to sound simplistic on this point. Maybe the real point is this: choosing a source and type of finance is essentially a strategic choice that has great bearing on the future of your company. And it’s not just that you need the right fuel in the tank, as it were (whether gas, diesel, or rocket fuel.) Choosing the right financial backing means vetting everything that comes with the funds: are you using this process to learn more about your company’s health? Are you seeking backing from people with industry experience or terrific contacts? Do you see this as a process in which securing the capital is a crucial part of a larger process that moves your company forward?