For an entrepreneur the hardest thing to do is to get started. In this final article, Part 3 of three articles, I explain how I have seen others find the same key to entrepreneurship.
As I applied myself to finding, developing if necessary, and selling the software products and services of the software technologies business my wife and I owned I noticed that I was one of a minority. Not many people started their own companies. Entrepreneurs were a minority. They still are. For example I was the only one from my business school class who was self employed. The rest of my MBA class mates had jobs. In almost all respects, except one, my MBA classmates were better off than me. I was paying myself a pittance and ploughing any money that my company made back into hiring new people and buying the associated computing equipment. My classmates had high powered executive jobs and enjoyed good salaries. But there was one thing I could do that my classmates could not do: I could do what I wanted when I wanted even if I had to constrain what I wanted to my very meager, entrepreneurial, financial means.
Little did I know.
After seven years I surpassed my classmates' freedom and income levels. I was semi-retired. Best of all, I would never look back. The the dream I offered people I hired, the people they hired, all were critical factors in entrepreneurial success.
So I found that the second element in the key to successful entrepreneurship is to 'keep going.'
During that seven year period I wondered when financial independence would happen. I never wondered IF it would happen. Long afterwards I learned that both my wife and a key director in our company had been one step away from throwing in the towel in the fifth year of that seven year period. When I found out, I was amazed. My wife and the key director are serious people. They would have been serious when they considered quitting. In retrospect I thought they were extremely fortunate that quitting never occurred to me.
Since then, some of my business school classmates have started their own businesses. One is very successful although his business is predicated on expensively high inventory levels as a method of ensuring good customer service. Each classmate who started a business has had to overcome the hardest thing: getting started.
Over the years I met many aspiring entrepreneurs. One, Mr Graeme Hart, became New Zealand's first billionaire and is now the wealthiest man in New Zealand. Graeme got started early in life. Apparently, in his twenties, with no formal qualifications, Graeme began buying and selling businesses in New Zealand. He kept going; and his experience illustrates the second element in the key to entrepreneurial success.
In 1997 in a colossal blunder that threatened to destroy him, Graeme purchased hundreds of millions of dollars of shares in, Burns Philp, an Australian listed company. It was a dud but this was not evident to Graeme at the time. Despite the naysayers and business media ridicule, Graeme took the chairman's seat in the company and his astute stewardship of the company transformed it into a billion dollar investment. That's why I say the second hardest thing for an entrepreneur is to keep going. After all no-one else is going to keep going on behalf of an entrepreneur.
I have also met aspiring entrepreneurs who were excessively well researched and far too concerned about the adequacy of their capital funding and cash buffers. One entrepreneurial family saved about $NZ60,000. It was start-up capital for a specialised catering business. The family asked me for advice. Should they wait a little longer and save another $20,000 so as to purchase the best catering equipment and sign a lease on big, flashy, premises with wonderful cooking facilities? Or should they get started with their $NZ60,000 grub stake? You can guess what advice I gave: get started today; put your money away; persuade your suppliers to lend you all the equipment and materials; persuade them to advance enough credit so you don't have to use your capital.
The family never came back to me and, to this day, I doubt if they got started.
An extremely entrepreneurial woman asked me for advice about her specialised entertainment and professional services directory business. The woman hired a marketing and sales manager to sell hundreds of copies of the directory. But profitable sales eluded the sales manager. Without sales the business staggered fatally under the overheads and expenses load. The business lacked a pulse; cash flow was negative. If there is one thing I always, somehow, understood from the first day of my company's life, it is that cash flow is the most important objective result in a business. Profits can be zero, customer service can be terrible, and marketing can be non existent, but as long as cash flow is positive then a business will continue to operate. For this reason, I always made it my priority to make, or help make, sales. Without sales, the directory business entrepreneur could not keep going and close-down was inevitable.
Now you know why the hardest thing for an entrepreneur is to get started. And the second hardest thing is to keep going.
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