As an early stage investor, the first test for me is whether “my” 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 s/he, 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” (Second Edition, Berkus Press 2014), 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.
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.
[Email readers, continue here…] 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.