In my last post, I talked about two styles of entrepreneurship, "Lifestyle" and "Impact". There is another way to look at entrepreneurship and what you want from it. This is not so different from the last discussion, but has a different view point of the same thing.
When engaging an entrepreneur, I ask them the question, "Do you want to be King, or do you want to be Rich?" Most reply that they want to be Rich, without hesitation, but when I look at their business, I see that they are King, which prevents them from being Rich.
Undoubtedly, every entrepreneur has a bit of each. It takes ego to be an entrepreneur, and ego likes to be King. However, it is only through the discipline of suppressing the King ego can we become Rich.
Kings, at least in the old days, had absolute control of their kingdom. They were the end-all of decision making and had absolutely power. Most small business today is run in such a way. This is not to say it is inefficient or unprofitable, but that profit's growth is limited by the organizational structure. Without delegation of power, an organization's growth is limited to only what the King can handle. Different Kings has different limitations, but the limitation exists none-the-less.
Kings often hold all the expertise and believe that they alone know the best way to rule their kingdom. Again, this has growth limitations that are obvious. Kings are often married to one goal as well. That their kingdom will be most successful doing X and Y in the Z market. And they know this better than anyone.
To become truly Rich, one must let go of all these limitations. Responsibility and expertise must be delegated. Control must be relinquished. Others must be allowed to participate in the growth and the rewards. Bill Gates did not become the wealthiest man in the world alone. Microsoft created dozens of billionaires, each with ownership of one piece of that success.
Here is the key distinction: Is it more important to you that you be successful or that your company is successful? Do you want to be King, or do you want your company to be King? Are you willing to give up some Kingship to be Rich?
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Tuesday, December 11, 2007
Two Styles Create Two Outcomes of Entrepreneurship
There are many different ways to become an entrepreneur and many different styles of entrepreneurship. However, entrepreneurship can be very roughly categorized into two styles. These can best be defined by their desired outcomes.
The first is a "Lifestyle Entrepreneur". This entrepreneur wants to create a good income for themselves, wants to be in complete control of that income, and wants the flexibility to make lifestyle decisions- such as take the day off to go fishing, or take three weeks off to take a family vacation. In this path, lifestyle may take precedence over overall return on investment. As long as a substantial income continues, the entrepreneur is happy. Most "mom and pop" businesses fall under this category. Most small businesses also fall here, as well as independent professionals such as doctors, dentists, accountants, and attorneys. The risk is often relatively short lived and minimal. One can make a very good living as a Lifestyle entrepreneur,and if they manage their finances smartly, can become independently wealthy. However, at times, lifestyle may trump finances. The business then runs into problems.
The second style of entrepreneurship is what I call a "Impact Entrepreneurship". The desired outcome is high-growth. This type of entrepreneur typically wants to grow from a small business to a large business. They want to either make an impact on the world or create great wealth- often a combination of both. These people are willing to undertake larger risk over an extended period of time with the vision of large returns. The organization is designed (or should be) for constant and radical growth (2-4x revenue each year). Margins are thin in the first 3-5 years. However, once high-growth has been achieved, some very attractive exit strategies materialize. A first or second round of funding can occur to take growth to the next level. Or the company for a significant profit to the owner. Both can create great wealth, the first allows the entrepreneur to continue to create an impact or "change the world".
Sometimes a lifestyle business will accidentally convert to a high-growth business. This may be driven by changing goals of the the entrepreneur. However, sometimes it just happens because the business is at the right location, in the right industry, with a rapidly growing demand. In these cases, the entrepreneur must make a choice to change personal goals and lifestyle, or to suppress the business. This decision is often be delayed because the entrepreneur is uncomfortable with the related decisions. Delay serves to suppress the business. Organizational, financial, and quality control decisions that support high growth are not made. The business can begin to crumble. Perhaps not immediately, but surely over time.
Lifestyle entrepreneurship is most often engaged to create a sense of independence, that the entrepreneur is not reliant upon anyone for income, expertise, and lifestyle decisions. It takes time to achieve this goal. Lifestyle entrepreneurs are often frustrated with slower results. Further, if presented with a high-growth opportunity, Lifestyle entrepreneurs are often reluctant to give up independence and decision-making power. Impact entrepreneurship is dependent upon many factors. Financial obligation exist to investors, banks, or both. Expertise is generally held by an employee or partner. Decisions must be delegated. The market is often more volatile. Business travel is required. Time obligations are intense. This is a much different lifestyle.
The rewards are different. Successful Lifestyle entrepreneurship creates financial freedom and a fluid lifestyle relatively quickly. It creates a "family" business that can be passed on. It creates the satisfaction of being a business owner. Successful Impact entrepreneurship creates significant personal wealth, but is delayed 5-15 years. This personal wealth creates greater freedom and can be passed on to family or charity. It creates the satisfaction of having made an impact on the world around you.
Neither is the right way. But both have distinctive requirements and a conscious decision should be made at all times to engage in one or the other. You may have to make this decision every year. Your personal goals may change. Life is like that. But we must make the decision and take responsibility for the obligations and rewards associated.
The first is a "Lifestyle Entrepreneur". This entrepreneur wants to create a good income for themselves, wants to be in complete control of that income, and wants the flexibility to make lifestyle decisions- such as take the day off to go fishing, or take three weeks off to take a family vacation. In this path, lifestyle may take precedence over overall return on investment. As long as a substantial income continues, the entrepreneur is happy. Most "mom and pop" businesses fall under this category. Most small businesses also fall here, as well as independent professionals such as doctors, dentists, accountants, and attorneys. The risk is often relatively short lived and minimal. One can make a very good living as a Lifestyle entrepreneur,and if they manage their finances smartly, can become independently wealthy. However, at times, lifestyle may trump finances. The business then runs into problems.
The second style of entrepreneurship is what I call a "Impact Entrepreneurship". The desired outcome is high-growth. This type of entrepreneur typically wants to grow from a small business to a large business. They want to either make an impact on the world or create great wealth- often a combination of both. These people are willing to undertake larger risk over an extended period of time with the vision of large returns. The organization is designed (or should be) for constant and radical growth (2-4x revenue each year). Margins are thin in the first 3-5 years. However, once high-growth has been achieved, some very attractive exit strategies materialize. A first or second round of funding can occur to take growth to the next level. Or the company for a significant profit to the owner. Both can create great wealth, the first allows the entrepreneur to continue to create an impact or "change the world".
Sometimes a lifestyle business will accidentally convert to a high-growth business. This may be driven by changing goals of the the entrepreneur. However, sometimes it just happens because the business is at the right location, in the right industry, with a rapidly growing demand. In these cases, the entrepreneur must make a choice to change personal goals and lifestyle, or to suppress the business. This decision is often be delayed because the entrepreneur is uncomfortable with the related decisions. Delay serves to suppress the business. Organizational, financial, and quality control decisions that support high growth are not made. The business can begin to crumble. Perhaps not immediately, but surely over time.
Lifestyle entrepreneurship is most often engaged to create a sense of independence, that the entrepreneur is not reliant upon anyone for income, expertise, and lifestyle decisions. It takes time to achieve this goal. Lifestyle entrepreneurs are often frustrated with slower results. Further, if presented with a high-growth opportunity, Lifestyle entrepreneurs are often reluctant to give up independence and decision-making power. Impact entrepreneurship is dependent upon many factors. Financial obligation exist to investors, banks, or both. Expertise is generally held by an employee or partner. Decisions must be delegated. The market is often more volatile. Business travel is required. Time obligations are intense. This is a much different lifestyle.
The rewards are different. Successful Lifestyle entrepreneurship creates financial freedom and a fluid lifestyle relatively quickly. It creates a "family" business that can be passed on. It creates the satisfaction of being a business owner. Successful Impact entrepreneurship creates significant personal wealth, but is delayed 5-15 years. This personal wealth creates greater freedom and can be passed on to family or charity. It creates the satisfaction of having made an impact on the world around you.
Neither is the right way. But both have distinctive requirements and a conscious decision should be made at all times to engage in one or the other. You may have to make this decision every year. Your personal goals may change. Life is like that. But we must make the decision and take responsibility for the obligations and rewards associated.
Friday, October 19, 2007
The 2nd Component of Entrepreneurial Manifestation: Time
In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."
Let's talk about time. Time is the one thing that is finite. We can't make more of it. We can make more time available by a variety of time a management methods or simply by paying others to do things for you, hence "freeing" your time. We can not, however, add more time to the overall pool. Time is perhaps the only real direct, flexible expense.
The hard truth in entrepreneurship is also that you may not be able to pay someone else to do what you do. Someone with your expertise may be exceedingly difficult to find. Once you find that person, they may not be able to make the logical leaps you have to get to the right ideas. Or keep those idea secret may be part of your intellectual property. Once you solve all those problems, you could find that another person simply does not fit well in the scenario- they are the wrong person for that "seat on the bus".
Entrepreneurship will take time, and a ton of it. To best ensure the success of the venture, key personnel must be able to commit to the venture full-time. They must clear their time of other things to create as much "free time" as possible. This free time is then "occupied" by the new venture. This takes on a number of strategic advantages. First, the key personnel will not be distracted by other things. This is very important to maximize productivity within the chronological parameters. Second, you will be able to commit the most actual production time within a set quantity of hours. In other words, you will get the most work out of the most time by your key personnel. This moves the venture along as quickly as possible, which is often critical to its success. We will talk more about this when we talk about "action" in the next article.
A talk about investing time energy would not be complete without a discussion of money. Time inevitably costs money. If key personnel are worried about how their mortgage is going to be paid, they can not maximize productivity. And they must be rewarded for their innovation. Reward can be delayed with stock options, and even some salaries can be deferred, but an understanding of compensation must be agreed upon early to ensure that time can be absolutely focused on success.
Let's talk about time. Time is the one thing that is finite. We can't make more of it. We can make more time available by a variety of time a management methods or simply by paying others to do things for you, hence "freeing" your time. We can not, however, add more time to the overall pool. Time is perhaps the only real direct, flexible expense.
The hard truth in entrepreneurship is also that you may not be able to pay someone else to do what you do. Someone with your expertise may be exceedingly difficult to find. Once you find that person, they may not be able to make the logical leaps you have to get to the right ideas. Or keep those idea secret may be part of your intellectual property. Once you solve all those problems, you could find that another person simply does not fit well in the scenario- they are the wrong person for that "seat on the bus".
Entrepreneurship will take time, and a ton of it. To best ensure the success of the venture, key personnel must be able to commit to the venture full-time. They must clear their time of other things to create as much "free time" as possible. This free time is then "occupied" by the new venture. This takes on a number of strategic advantages. First, the key personnel will not be distracted by other things. This is very important to maximize productivity within the chronological parameters. Second, you will be able to commit the most actual production time within a set quantity of hours. In other words, you will get the most work out of the most time by your key personnel. This moves the venture along as quickly as possible, which is often critical to its success. We will talk more about this when we talk about "action" in the next article.
A talk about investing time energy would not be complete without a discussion of money. Time inevitably costs money. If key personnel are worried about how their mortgage is going to be paid, they can not maximize productivity. And they must be rewarded for their innovation. Reward can be delayed with stock options, and even some salaries can be deferred, but an understanding of compensation must be agreed upon early to ensure that time can be absolutely focused on success.
Thursday, October 18, 2007
The 1st Component of Entrepreneurial Manifestation: Comittment
In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."
The first and most important of these is Commitment. Commitment is the basis upon which the other three components can grow and flourish. Commitment is the driving force. And entrepreneurship needs a driving force, for it is a path full of obstacles, hurdles, challenges, doubts, nay-sayers, and do-nothings. It is only with commitment that time, action, and money can maintain momentum in the face of these fantastic foes.
Commitment can be defined very simply as consistent and imperturbable motivation to achieve a defined outcome. This is best identified in the face of adversity, but it can also be equally recognized in the face of prosperity. As individuals, we are equally likely to "slack off" during good times, as we are to be disheartened during bad. Commitment never wavers from the defined outcome, even in the midst of extraordinary middle success. And need it be said that they exhibit the same steadfast character in the face of failure?
Consistent: firm, coherent; steadfast
Imperturbable: not easily excited or upset; marked by extreme calm and composure
Achieve: obtain, attain; perform, accomplish; succeed.
Define: explain, clarify; limit, set boundaries.
Outcome: consequence, effect, result, event, materialization
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The first and most important of these is Commitment. Commitment is the basis upon which the other three components can grow and flourish. Commitment is the driving force. And entrepreneurship needs a driving force, for it is a path full of obstacles, hurdles, challenges, doubts, nay-sayers, and do-nothings. It is only with commitment that time, action, and money can maintain momentum in the face of these fantastic foes.
Commitment can be defined very simply as consistent and imperturbable motivation to achieve a defined outcome. This is best identified in the face of adversity, but it can also be equally recognized in the face of prosperity. As individuals, we are equally likely to "slack off" during good times, as we are to be disheartened during bad. Commitment never wavers from the defined outcome, even in the midst of extraordinary middle success. And need it be said that they exhibit the same steadfast character in the face of failure?
Consistent: firm, coherent; steadfast
Imperturbable: not easily excited or upset; marked by extreme calm and composure
Achieve: obtain, attain; perform, accomplish; succeed.
Define: explain, clarify; limit, set boundaries.
Outcome: consequence, effect, result, event, materialization
Technorati Profile
Wednesday, September 26, 2007
Manifestation and the Entrepreneur
So often, entrepreneurs have the wrong results at the forefront of their mind. They are focused on the wrong things. There is a reason, but before we talk about results, let's talk about focus. Most of us by now have seen The Secret or heard the cliff notes on it. Very simply the Secret talks about Manifestation, which I may talk about often here as well. What the Secret teaches is nothing new. I can cite countless texts back to the beginning of time that talk about it. It is simple, what you focus your energy on, you Manifest into reality. So it is with entrepreneurship. The aspect of your business that you focus on is the part that is most successful.
Let me clarify a point about Manifestation. Manifestation is the investment of energy to create an outcome. This energy must talk more than one form. It must take all forms in order for the outcome to be achieved. Let's take the lottery example that most people use to dispute the Secret. The argument is that just by thinking about winning the lottery, I will not win it. No, that's true. You have not invested much energy into it. You focused your thoughts on it, for 15 minutes. But did you buy a ticket? Did you buy ten tickets? Did you buy 10,000 tickets? What is the level of your energetic investment? Buying 1 million tickets would surely increase the chances of winning the lottery significantly, would it not? Ah, I see. You wanted to get a huge return on a very small investment. Manifestation does not work that way. Sorry.
Entrepreneurship does not work that way either. Entrepreneurship requires a huge investment of energy. Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment. Sometimes more of one will compensate for less of another, but to best guarantee success, all must be present, in abundance. This often means a partnership. Those with abundant money can not always invest time and action. Those with available time and action may not be able to invest money. Those that are capable of action, through experience and education, do not always have the time or money. And so on. A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested. The abundance of those investment determines the level of manifestation.
Future blogs will discuss the four components of Manifestation in more depth. We will also discuss investing in the right results, outcomes, and ideas. These ideas will focus on the creation and growth of business, but I also hope that my few readers can see the application of these principals to their personal lives. For how your business is a reflection and hence, a manifestation, of your person. Initially, this blog will be about the philosophy of entrepreneurship, however, I will try to include some valuable resources and systems to help you on your way. However, the philosphy of entrepreneurship is the cornerstone of successful ventures, and most often missing entirely from the equation.
Let me clarify a point about Manifestation. Manifestation is the investment of energy to create an outcome. This energy must talk more than one form. It must take all forms in order for the outcome to be achieved. Let's take the lottery example that most people use to dispute the Secret. The argument is that just by thinking about winning the lottery, I will not win it. No, that's true. You have not invested much energy into it. You focused your thoughts on it, for 15 minutes. But did you buy a ticket? Did you buy ten tickets? Did you buy 10,000 tickets? What is the level of your energetic investment? Buying 1 million tickets would surely increase the chances of winning the lottery significantly, would it not? Ah, I see. You wanted to get a huge return on a very small investment. Manifestation does not work that way. Sorry.
Entrepreneurship does not work that way either. Entrepreneurship requires a huge investment of energy. Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment. Sometimes more of one will compensate for less of another, but to best guarantee success, all must be present, in abundance. This often means a partnership. Those with abundant money can not always invest time and action. Those with available time and action may not be able to invest money. Those that are capable of action, through experience and education, do not always have the time or money. And so on. A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested. The abundance of those investment determines the level of manifestation.
Future blogs will discuss the four components of Manifestation in more depth. We will also discuss investing in the right results, outcomes, and ideas. These ideas will focus on the creation and growth of business, but I also hope that my few readers can see the application of these principals to their personal lives. For how your business is a reflection and hence, a manifestation, of your person. Initially, this blog will be about the philosophy of entrepreneurship, however, I will try to include some valuable resources and systems to help you on your way. However, the philosphy of entrepreneurship is the cornerstone of successful ventures, and most often missing entirely from the equation.
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