If you missed last week’s launch, you can read the introduction to this blog under “Introduction to this blog” above and catch up. Each week, I’ll start with a numbered insight, such as the very first one below. These are divided into eleven stages of an enterprise’s life. We begin with “IGNITION”, stage one. As always, I look forward to your comments posted at the end of any blog posting on the site…
As an early stage investor, the first test for me is whether the entrepreneur is flexible in both the plan and execution of his or her vision (since from experience almost everything about a business plan changes over time), and whether the entrepreneur, no matter what age or experience, is coachable.
Doctoral theses have been written on this subject. Early stage investor groups often list these traits at or near the top of their list when filtering opportunities for investment. And I have numerous stories from personal experience that reinforce these two traits as the most positive indicators of future success in business.
In my book, “Extending the Runway” (Aspatore Press, 2006), I explore the thesis that there are five basic types of resources an entrepreneur must exploit in growing a successful business: time, money, process, relationships and context. Understanding the effects of each upon an entrepreneur and early stage business plan is critical. Being able to adapt to the realities and changes in the fast-moving environment is essential.
[Email readers, continue from here…] Flexibility: the context in which a business plan envisions the enterprise in its marketplace is constantly changing as new products and services challenge competitors to innovate and adapt. A plan written last month may easily need tweaking this month to recognize changes in the marketplace, the central context of the plan itself. Everything happens faster these days than even a few years ago, especially in the arena of technology, where many new businesses are developed each month to solve problems or take advantage of opportunities that existed at the moment of an entrepreneur’s vision for the future.
And the money and time required to bring the young company from idea to market extends out as changes require rethinking the plan. We’ll explore this reality in later insights as we explore the stages of business development.
One of the best indicators of future success for an entrepreneur and an early stage idea is the quality and depth of great relationships with industry veterans or technology gurus, or experienced successful business leaders. Those relationships would be impressive but worthless if the entrepreneur was not coachable, open to suggestion and criticism from those who have experience enough to surface the issues unspoken but obvious to the coach.
And finally, there are always ways to improve the process of design, test, roll-out and marketing a new idea. And many potential coaches out there have made mistakes in these processes at the expense of their employers or even their personal savings. Since we all learn from our mistakes, it seems reasonable that we should learn from the mistakes of others, particularly those who freely offer their experiences as lessons for our enterprise.
I’ve seen entrepreneurs go through the complete process of raising money for a business from investors, many of whom were experienced and well beyond just friends and family, only to ignore all advice and execute a flawed business plan to death, ignoring the pleas and attempts at coaching by others including those investors.
Don’t be one of those. Be flexible and be coachable.
Hi Dave,
I love your blog and look for to reading more from you. I am a serial entrepreneur in the B2B2C hospitality technology sector.I will be sharing your advice and helping build your blog via re-tweeting your blog on twitter.
Do you happen to have a twitter account? I was looking however couldn’t find it.
To your success!
Garen
Dave,
What a great insight! But what a challenging requirement for someone who’s spent months developing a sound business strategy. On the other hand, as you so astutely point out, lack of coachability, except in a few rare instances, is a real deal killer for most experienced investors in emerging growth businesses.
How common do you find this problem to be? What percent, approximately, of deals that you would have otherwise invested in, or recommended to others, have you screened out because of this issue in the last five years?
As you know, I built up several major enterprises here in Southern California before “retiring” to work with, at most recent count, a thousand CEOs of emerging growth companies.
There is no question as to your superstar status in this constellation.
More importantly,I’ve known you for over twenty years, and have truly been impressed with your generosity in guiding the great “entrepreneur” engine of growth for our economy, and now, in particular,we certainly need all the growth we can get. So, thanks Dave for doing what you are so capable of: helping entrepreneurs and their advisors to be more successful.
I’m looking forward with great enthusiasm, to your continuing weekly wisdom.
Bob
Excellent advice, Dave. One test angels often use to assess coachability is to confront the entrepreneur with information contradictory to that presented in their pitch or Executive Summary merely to see how they react. After all, as Aldous Huxley said…..”Facts do not cease to exit because they are ignored.”