I’ve been writing a lot about bootstrapping lately – my favourite entrepreneurial word. Partly this has been in the context of the funding required for a start-up business, which is far less than many people assume. Much of the propaganda states that start-up companies must be well-funded. Yet this is not my experience. Most of the successful start-ups I know started small and stayed within their means for the first few years of operation. Meanwhile, many of the swanky companies that strutted around showing off their venture capital (VC) “round” of funding were in reality driving at break-neck speed towards a brick wall.
In his book Start Small, Finish Big (2000) Subway sandwich-chain founder Fred DeLuca (written with John P. Hayes) describes how he started with less than $1,000 worth of investment and bootstrapped his way to a fortune, citing Kinko’s founder Paul Orfalea as another example.
“Start small,” he implores, “it is better than never starting at all.”
By starting small, he states, we learn what to do and what not to do.
“Just because it is small doesn’t mean the business can’t grow,” he writes. “And while it is small you will have the time to learn the lessons that are essential to your future success.”
This is reinforced by two U.S. entrepreneurs Anthony Iaquinto and Stephen Spinelli Jr in Never Bet the Farm (2006). Indeed, starting with a shoestring operation is their ninth principle (of 15) for entrepreneurs.
Modest beginnings cushion your business against financial losses, they state, while the need to be efficient with money can spark creativity. And, if costs are kept low start-up companies can charge less for their products, meaning they can undercut the competition.
“Never reach for a gallon when you only need a quart,” is their pithy way of describing bootstrapping, although I would add some more practical measures:
Offices – the quickest way for any company to go bankrupt is to take high-spec office space that suits the inflated ego of the CEO rather than the cashflow of the company. If the office is a showroom for clients, this may – perhaps – be acceptable (although why not be clever and renovate a quirky space in the wrong area?). If not, a short-lease in a tired building in the secondary business district is an imperative, especially since there are no longer any IT barriers. Of all the business failings I’ve seen, the most common cause has been the inability to pay the landlord. If a flash office is a must (for meeting clients perhaps), you could always find the company with the office you most covet and approach them for a sublet on a desk-rate basis. My guess is at least one in four will agree.
Furniture – one rule of any central business district is that there is more office furniture in circulation than there are offices to put it in. If a bit of mixing and matching is acceptable, I reckon an office can be furnished virtually for free – something we managed at Moorgate because the landlord had a storeroom full of furniture from a previously bankrupted tenant (nice stuff it was too – no doubt from a company that had burnt through its VC money).
Computers and other equipment – again, don’t buy the best. Our printers are from eBay and our computers collected from a variety of unlikely places (though swept for bugs and backed-up nightly). They do the job and are unseen under the desk, so – unless you absolutely need high-spec computers – just buy the minimum needed only when needed.
Transport and travel – take the tube or the bus. Never take taxis – they were for when the old company footed the bill. As for air travel – I used to envy the guys at the front of the plane. Now I see it as their compensation for having to work for some soulless organisation that’ll make them redundant in a heartbeat.
Entertainment – don’t throw big parties. They are impersonal and wasteful and you’ll never compete with the big boys. Targeted one-on-ones are far more effective, or maybe some (very) judicious mixing. And instead of a headline-grabbing restaurant why not source an intimate family-run bistro (maybe outside the central business district) and make it your own. If you go often enough the owner will greet you like an old friend, which will act as an informal business reference to boot. Bonding events for staff can be treated in the same vein – even the end-of-year gig. Again, fantastic Christmas parties are for the corporates offering compensation for a yearlong endurance of a soulless organisation, although young employees may value them nonetheless. Instead, I buy the team individual gifts, usually a nice book tailored to the preferences they have shown throughout the year. And the family-run pub host our very atmospheric and festive gig.
Recruitment agencies – use only as a last resort. With both Metrocube and Moorgate I have been almost constantly recruiting with about a 50 percent success rate over all (i.e. keeping an employee to the point they are promoted). Yet I have noticed that staff sourced from recruitment agencies are no better – though sometimes better qualified – than those I have sourced from free or cheaper options such as the gumtree.com or Craigslist. We have also learnt to be clever – online university careers boards are a great option, and we offer incentive schemes for staff introductions. Anything is better than the dreaded 20 percent of annual salary agency fee for a candidate that had, usually, done no more than put their CV on monster.co.uk, or had simply answered the agency’s advert on gumtree.com.
Club memberships – avoid. Especially in London (though I suspect other cities are no different), the noughties saw a proliferation of private members clubs for PLUs and wannabe PLUs. Yet unless our potential clientele consists of Shoreditch Twats (or their equivalent in other cities) or trainee or junior architects and graphic designers you are simply wasting your money. If you need such clubs to impress clients they are nearly all desperate enough to rent rooms by the hour (and those that are not are probably too trendy to make a good impression on a client).
Otherwise, such clubs will suggest to a client that you are either trying too hard or are perhaps too keen on your social life. Many even have a no suits rule, which is hardly the way to make your clients feel comfortable. Instead, why not be imaginative and meet contacts at an art gallery or museum café – some, such as the Tate Modern in London, even have membership areas for a fraction of the price of those up-themselves hangouts?
I would also extend this rule to those overly-flash gyms. Certainly, my gym membership is a vital part of my existence – my bolt-hole when the stress is getting to me, as well as my daily sanctuary allowing me to think and reflect and produce enough endorphins to get me through the day. Yet it’s in the same building as our office and, given the tired building, is also a somewhat tired gym, which I love. The monthly fee is less than half that of the flash gyms in the same area and has all the equipment I need. It also has friendlier staff – not least because they leave me alone.
Showing posts with label Anthony Iaquito. Show all posts
Showing posts with label Anthony Iaquito. Show all posts
Sunday, February 20, 2011
Tuesday, October 19, 2010
Are you an entrepreneur? Don’t answer that question
Playing around with Facebook this morning and an advert flashes up with Richard Branson’s face as the icon. Do you have the personality of a “great” entrepreneur, it asks? Find out, take the test.
I declined to do so for several reasons. First and foremost, I was sending a message to a friend about a weekend rendezvous and by the time I’d completed the task the icon had disappeared. Yet I’d inwardly sighed anyway because I get fed up with the “mind of an entrepreneur” myth, not least because it’s pedalled everywhere and, for people with fear of failure, it can be extremely off-putting. From the stereo-type painted it is obvious those with high fear of failure do not possess an “entrepreneurial mind”, and this deters many of them from doing what would probably be the most liberating action of their entire life: setting up and running their own business.
Yet the stereo-type is also annoying because it isn’t true. High-FFs (as I call those with fear of failure in my forthcoming book What’s Stopping You?) are perfectly suited to entrepreneurship, even if they fail to fit the image.
How come? Well, first, let’s look at the image. Here’s a description from British entrepreneurial guru Mike Southon in his well-known business start-up guide The Beermat Entrepreneur (written with Chris West in 2002):
“Entrepreneurs are confident. They are born optimists: they simply know they can do it….Entrepreneurs are also charismatic. They inspire people….they have optimism to spare which they radiate and instil into others around them…. Entrepreneurs are ambitious….Entrepreneurs are in a hurry….Entrepreneurs are also arrogant. They know they are good. At everything….Entrepreneurs are also manipulative….Entrepreneurs use people.”
This is a million miles from the attributes of the average High-FF. Yet virtually all start-up business books conjure this image of an entrepreneur as a swashbuckling risk taker: confident, cocky, manipulative, optimistic.
I disagree. I think this image describes the wrong person. Southon is a successful entrepreneur that has made millions. And he is describing himself. However, he is far from alone. Nearly all of the cashed-out big-name entrepreneurs write a book (or pay someone to do it for them) and they all state the same thing – to be a successful entrepreneur you have to be optimistic, ruthless and manipulative, just like me. Indeed, the fact Richard Branson was the image for the “entrepreneur’s icon” on Facebook is another giveaway. Entrepreneurship, it states, is for the giants and the wannabe giants.
Yet the vast majority of entrepreneurs are simply not like that.
Michael Gerber’s important book on why most small businesses fail called The E-Myth Revisited (2004) offers a better perspective. Referring to the “entrepreneurial myth”, Gerber states that people start businesses for many reasons but that most businesses are not started by visionary entrepreneurs trying to become the next Google or Microsoft. They are started by bookkeepers, barbers, plumbers, salespeople and secretaries who grew tired of working for somebody else.
“Great businesses are not built by extraordinary people but by ordinary people doing extraordinary things,” says Gerber.
This definitely chimes with those suffering from high fear of failure. Frustration is a key driver for many High-FFs and that frustration is often directed at a boss or employer that appears to thwart our progress. Many High-FFs feel that their talents are ignored or there is prejudice against them, making running their own business a practical solution despite their genuine fears.
And any reading of Rachel Bridge’s column in the Sunday Times Business section confirms this view. Many of her interviews with British entrepreneurs from all walks of life have made it into several books, including How I Made It (2005). In the introduction she describes the typical entrepreneur, or rather she doesn’t as she states that entrepreneurs come in all shapes and sizes – “they can be old and young, well educated or not, male or female, naturally confident or painfully shy”. She also states that they can be the type of person that “dreams up a dozen new business ideas a day or the sort who has only ever had one – which may not even be original”.
“What makes the whole idea of becoming a successful entrepreneur so very exciting,” she concludes, “is that there are no rules.”
Another strong book on this subject is Never Bet the Farm (2006) by US entrepreneurs Anthony Iaquinto and Stephen Spinelli Jr. They also de-myth the heroic entrepreneur stating that start-up business people are just ordinary people with fears and faults like everyone else. A key proposition for them is that successful entrepreneurs are “risk managers, not risk takers” exploding the myth of the swashbuckling entrepreneur.
Yet even this is too neutral for me. Just stating that High-FFs can become entrepreneurs isn’t good enough. In my view those with high fear of failure should become entrepreneurs – not least because they are perfectly suited for it. Here are six reasons why I think High-FFs have strong attributes for entrepreneurship.
1) High-FFs are cautious. Ignore the myth about risk taking – for every Richard Branson there are a 1,000 that gambled and lost. The best entrepreneurs are more interested in building a sustainable business that means they can pursue their love or their skills for their own bottom line, rather than someone else’s. And that takes careful planning and small steps. Staking everything on a throw of the dice is not what High-FFs do, which means they are far more likely to nurture a sustainable enterprise.
2) High-FFs are “good” with money. The quickest route for enterprise failure is through too much debt and/or over-expansion (perhaps by signing an office lease that was too ambitious or spending too much on a fit-out or other "luxuries"). Yet many High-FFs have financial phobia, which means they hate spending money. So far this has been seen as a negative. Start your own business, however, and bootstrapping is an imperative for sustainability.
3) High-FFs are not “wing it” merchant. Most High-FFs will have a thorough understanding that nothing comes for free. Blood, sweat and tears are required. High-FFs are likely to realise this from the off, meaning they will put in the required effort. High-FFs are mentally prepared for the challenges ahead.
4) High-FFs are facing the right way. As stated the vast majority of businesses are started by people wanting to work for themselves, perhaps because they feel frustrated working for someone else. This, rather than an overwhelming desire to make millions, is what drives the vast majority of sustainable businesses.
5) High-FFs are capable of strong people skills. This may take time as many High-FFs feel they lack people skills. Yet what they lack is confidence and self-esteem, which erodes their ability to deal well with others. Remove those frustrations through the development and pursuit of strong goals and the High-FF can become an excellent people-person because they have empathy for the other person – as long as they can remember what life was like on the other side of the fence. Those hustling, arrogant, high-achievers, meanwhile, go through life trampling on people - in many cases without even realising it. And this will eventually catch up with them: probably the first time their business hits a snag.
6) High-FFs understand fear. As Gerber states, starting a business is a terrifying experience. Yet terror is the natural state of the High-FF, so we are well prepared. More confident people may experience terror for the first time once the safety net of employment is removed, making them less able to cope.
Of course there are also downsides for entrepreneurs with a high fear of failure, of which the most acute must be the tendency to set inappropriate – avoidance-based – goals (as written on many previous blogs and a major theme throughout What’s Stopping You?). Motivation-focused experiments on children in the 1960s found that those revealing a higher-than-normal fear of (especially public) failure had no problem attempting tasks viewed as almost impossible while avoiding achievable but challenging tasks. This was because the cost of public failure remained low. And there was even the potential upside of being judged a “trier” at such a difficult level.
In terms of career choice this often means High-FFs pursue dream-fulfilment careers such as pop stardom or TV fame because the consequences of failure remain limited. They are extremely unlikely to succeed and – they calculate – will be judged kindly for trying. Meanwhile they reject "sensible" (but challenging) career choices due to their fear of public humiliation.
And those following the Richard Branson path towards fortune and fame – with fame being the primary objective – should perhaps re-examine their entrepreneurial goals in order to ensure their ambitions are not part of an elaborate avoidance-based strategy.
Those wanting to join Bill Gates and Steve Jobs may be best-off taking the Facebook test to see if they do have “what it takes”. Those, meanwhile, that want to start their own business because they are fed up with their current employment and feel that liberating their time, skills and endeavours from an unappreciative boss, should ignore all the noise about the personality of an entrepreneur and, instead, plan a strong future of sustainable self-employment.
I declined to do so for several reasons. First and foremost, I was sending a message to a friend about a weekend rendezvous and by the time I’d completed the task the icon had disappeared. Yet I’d inwardly sighed anyway because I get fed up with the “mind of an entrepreneur” myth, not least because it’s pedalled everywhere and, for people with fear of failure, it can be extremely off-putting. From the stereo-type painted it is obvious those with high fear of failure do not possess an “entrepreneurial mind”, and this deters many of them from doing what would probably be the most liberating action of their entire life: setting up and running their own business.
Yet the stereo-type is also annoying because it isn’t true. High-FFs (as I call those with fear of failure in my forthcoming book What’s Stopping You?) are perfectly suited to entrepreneurship, even if they fail to fit the image.
How come? Well, first, let’s look at the image. Here’s a description from British entrepreneurial guru Mike Southon in his well-known business start-up guide The Beermat Entrepreneur (written with Chris West in 2002):
“Entrepreneurs are confident. They are born optimists: they simply know they can do it….Entrepreneurs are also charismatic. They inspire people….they have optimism to spare which they radiate and instil into others around them…. Entrepreneurs are ambitious….Entrepreneurs are in a hurry….Entrepreneurs are also arrogant. They know they are good. At everything….Entrepreneurs are also manipulative….Entrepreneurs use people.”
This is a million miles from the attributes of the average High-FF. Yet virtually all start-up business books conjure this image of an entrepreneur as a swashbuckling risk taker: confident, cocky, manipulative, optimistic.
I disagree. I think this image describes the wrong person. Southon is a successful entrepreneur that has made millions. And he is describing himself. However, he is far from alone. Nearly all of the cashed-out big-name entrepreneurs write a book (or pay someone to do it for them) and they all state the same thing – to be a successful entrepreneur you have to be optimistic, ruthless and manipulative, just like me. Indeed, the fact Richard Branson was the image for the “entrepreneur’s icon” on Facebook is another giveaway. Entrepreneurship, it states, is for the giants and the wannabe giants.
Yet the vast majority of entrepreneurs are simply not like that.
Michael Gerber’s important book on why most small businesses fail called The E-Myth Revisited (2004) offers a better perspective. Referring to the “entrepreneurial myth”, Gerber states that people start businesses for many reasons but that most businesses are not started by visionary entrepreneurs trying to become the next Google or Microsoft. They are started by bookkeepers, barbers, plumbers, salespeople and secretaries who grew tired of working for somebody else.
“Great businesses are not built by extraordinary people but by ordinary people doing extraordinary things,” says Gerber.
This definitely chimes with those suffering from high fear of failure. Frustration is a key driver for many High-FFs and that frustration is often directed at a boss or employer that appears to thwart our progress. Many High-FFs feel that their talents are ignored or there is prejudice against them, making running their own business a practical solution despite their genuine fears.
And any reading of Rachel Bridge’s column in the Sunday Times Business section confirms this view. Many of her interviews with British entrepreneurs from all walks of life have made it into several books, including How I Made It (2005). In the introduction she describes the typical entrepreneur, or rather she doesn’t as she states that entrepreneurs come in all shapes and sizes – “they can be old and young, well educated or not, male or female, naturally confident or painfully shy”. She also states that they can be the type of person that “dreams up a dozen new business ideas a day or the sort who has only ever had one – which may not even be original”.
“What makes the whole idea of becoming a successful entrepreneur so very exciting,” she concludes, “is that there are no rules.”
Another strong book on this subject is Never Bet the Farm (2006) by US entrepreneurs Anthony Iaquinto and Stephen Spinelli Jr. They also de-myth the heroic entrepreneur stating that start-up business people are just ordinary people with fears and faults like everyone else. A key proposition for them is that successful entrepreneurs are “risk managers, not risk takers” exploding the myth of the swashbuckling entrepreneur.
Yet even this is too neutral for me. Just stating that High-FFs can become entrepreneurs isn’t good enough. In my view those with high fear of failure should become entrepreneurs – not least because they are perfectly suited for it. Here are six reasons why I think High-FFs have strong attributes for entrepreneurship.
1) High-FFs are cautious. Ignore the myth about risk taking – for every Richard Branson there are a 1,000 that gambled and lost. The best entrepreneurs are more interested in building a sustainable business that means they can pursue their love or their skills for their own bottom line, rather than someone else’s. And that takes careful planning and small steps. Staking everything on a throw of the dice is not what High-FFs do, which means they are far more likely to nurture a sustainable enterprise.
2) High-FFs are “good” with money. The quickest route for enterprise failure is through too much debt and/or over-expansion (perhaps by signing an office lease that was too ambitious or spending too much on a fit-out or other "luxuries"). Yet many High-FFs have financial phobia, which means they hate spending money. So far this has been seen as a negative. Start your own business, however, and bootstrapping is an imperative for sustainability.
3) High-FFs are not “wing it” merchant. Most High-FFs will have a thorough understanding that nothing comes for free. Blood, sweat and tears are required. High-FFs are likely to realise this from the off, meaning they will put in the required effort. High-FFs are mentally prepared for the challenges ahead.
4) High-FFs are facing the right way. As stated the vast majority of businesses are started by people wanting to work for themselves, perhaps because they feel frustrated working for someone else. This, rather than an overwhelming desire to make millions, is what drives the vast majority of sustainable businesses.
5) High-FFs are capable of strong people skills. This may take time as many High-FFs feel they lack people skills. Yet what they lack is confidence and self-esteem, which erodes their ability to deal well with others. Remove those frustrations through the development and pursuit of strong goals and the High-FF can become an excellent people-person because they have empathy for the other person – as long as they can remember what life was like on the other side of the fence. Those hustling, arrogant, high-achievers, meanwhile, go through life trampling on people - in many cases without even realising it. And this will eventually catch up with them: probably the first time their business hits a snag.
6) High-FFs understand fear. As Gerber states, starting a business is a terrifying experience. Yet terror is the natural state of the High-FF, so we are well prepared. More confident people may experience terror for the first time once the safety net of employment is removed, making them less able to cope.
Of course there are also downsides for entrepreneurs with a high fear of failure, of which the most acute must be the tendency to set inappropriate – avoidance-based – goals (as written on many previous blogs and a major theme throughout What’s Stopping You?). Motivation-focused experiments on children in the 1960s found that those revealing a higher-than-normal fear of (especially public) failure had no problem attempting tasks viewed as almost impossible while avoiding achievable but challenging tasks. This was because the cost of public failure remained low. And there was even the potential upside of being judged a “trier” at such a difficult level.
In terms of career choice this often means High-FFs pursue dream-fulfilment careers such as pop stardom or TV fame because the consequences of failure remain limited. They are extremely unlikely to succeed and – they calculate – will be judged kindly for trying. Meanwhile they reject "sensible" (but challenging) career choices due to their fear of public humiliation.
And those following the Richard Branson path towards fortune and fame – with fame being the primary objective – should perhaps re-examine their entrepreneurial goals in order to ensure their ambitions are not part of an elaborate avoidance-based strategy.
Those wanting to join Bill Gates and Steve Jobs may be best-off taking the Facebook test to see if they do have “what it takes”. Those, meanwhile, that want to start their own business because they are fed up with their current employment and feel that liberating their time, skills and endeavours from an unappreciative boss, should ignore all the noise about the personality of an entrepreneur and, instead, plan a strong future of sustainable self-employment.
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