- One of the
main drivers of entrepreneurial activity
is the promise of exceptional financial
rewards.
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- Entrepreneurs
recognise the value of managing relationships
and using these relationships to achieve
their dreams.
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- Entrepreneurs
want the authority to make their own
decisions and shape the direction
of their business.
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- Entrepreneurs
have a sense of empowerment, flexibility
and responsiveness to determine their
own destiny.
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- Entrepreneurs
thrive on variety and continually
seek out new challenges.
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Entrepreneurs are able to recognise new opportunities and
pursue these with limited resources.
This approach is very different to the corporate environment
where resources are available up-front and in sufficient
largesse to remove the financial risk from the venture.
Entrepreneurs generally create virtual organisations and
rely on access to key resources from other parties. Why
replicate a distribution network or manufacture your own
product if it can be done without the massive up-front capital
investment?
In order to access and co-ordinate resources, entrepreneurs
need to be very good at managing relationships. The ability
to influence others and align them with your business objectives
is critical.
Entrepreneurs value autonomy and variety and seek significant
pay-offs from their years of hard work. It is not only inspiration
required but perspiration too.
In order to better understand entrepreneurs, it is important
to look at their reward values and see what stands out.
There is a wide variation in the types of rewards pursued
by entrepreneurs and this reflects their different backgrounds,
interests, styles and a range of other characteristics.
The top five reward values include:
- Managing relationships
- Financial reward
- Power and influence
- Autonomy, and
- Challenges
Managing Relationships
Entrepreneurs generally start out with the idea and very
limited resources.
The lack of talented employees, technological capabilities,
or access to capital makes accomplishing a set of business
objectives very challenging.
However due to the scarcity of resources, entrepreneurs
need to draw upon their people relationship skills. It is
therefore critical to develop close working relationships
with a wide range of people.
How good are you at developing working relationships? Do
you have the skills to co-ordinate and influence these relationships?
Are you able to close deals with a range of people?
In developing relationships, it is important to realise
that some of these relationships will evolve and change
over time.
The balance of power in the early stage of a relationship
will generally sit with the established players. As the
company grows and becomes financially stronger, the balance
of negotiating power may change.
By developing trust and establishing a track record, these
relationships along with the value of the business will
start to become very valuable intangible assets.
Building the track record requires both selling and closing
skills. Face to face selling is a crucial skill, but the
entrepreneur needs to be able to close profitable deals
as well.
Selling involves selling the company and yourself and not
just the technology or the products.
Are you the type of person that customers are happy to deal
with on a repeat basis? Are customers willing to provide
testimonials for your product and the way the business has
been conducted?
Favourable testimonials won’t happen if these relationships
haven’t been managed well.
Entrepreneurs understand the value of these relationships.
Managing the internal relationships is just as critical.
Talented people are difficult to attract and retain. Managing
and influencing employee motivation will have a major impact
on the company’s performance.
Entrepreneurs recognise the value of managing relationships
and using these relationships to achieve their dreams.
Financial Reward
One of the main drivers of entrepreneurial activity is the
promise of exceptional financial reward. Rewards of the
magnitude sought by entrepreneurs are unlikely to be achieved
from working for someone else.
Entrepreneurs are prepared to sacrifice security and sometimes
lifestyle in the pursuit of these financial rewards.
However, these rewards are based on building a sustainable
business that is of interest to investors or potential acquirers.
The “built to last” philosophy generates the
best pay-off when seeking to realise the grains of many
years of hard work.
Entrepreneurs value the opportunity to generate significant
financial returns. This reward value is not as dominant
in other business professionals.
Power and Influence
Entrepreneurs want the authority to make their own decisions
and shape the direction of the business. This means the
influential decisions like deciding on the business model,
the rate of expansion or the amount cash reinvested in the
business are within the domain of the entrepreneur.
These types of decisions can generate significant risks,
risks that other business professionals may not be prepared
to make.
For example, decisions in the start up phase are entirely
different to the decisions an executive may make in an established
company. The start up decisions may have far more significant
consequences, as the end result may mean the collapse of
the company.
Entrepreneurs value the authority to make their own decisions,
but they are conscious of the risks involved in making these
decisions.
Autonomy
The desire to operate independently, free from big company
politics, and outside the constraints of bureaucracy, is
one of the key reward values sought by entrepreneurs. Entrepreneurs
don’t have recourse to the “comfort layers”
and security of large organisations, but they do have a
sense of empowerment and the agility, flexibility and responsiveness
to determine their own destiny.
Entrepreneurs are generally more concerned about making
the decision and moving on. This approach may not sometimes
result in the best possible outcome.
It is always possible to go back and revisit the decision
and fix any negative consequences, provided it’s not
a life threatening event.
Challenges
At every turn, the entrepreneur is going to face many challenges.
The ability to handle these challenges and the variety of
tasks will be a key determinant of success.
Entrepreneurs will often perform a range of critical business
tasks, from product development, to marketing and sales,
to raising finance. Packing product into boxes may also
become part of the role if an important order needs to be
delivered on time.
Entrepreneurs thrive on variety and continually seek out
new challenges. Entrepreneurs also seek to acquire new skills
that help them deal with these challenges.
The reward values of entrepreneurs do differ from the reward
values of other business professionals. The key question
is “Do you have similar entrepreneurial values to
those outlined above?” If you do, it is just part
of the formula for success.
Peter T Gow is the Managing Director of Creative
Capital Pty Limited. He founded Creative Capital to accelerate
the learning skills of entrepreneurial CEO's and develop
their expertise in capital management, business and strategic
planning, cash flow management and market research and analysis.
Peter has over 12 years of experience in working with growth
companies and has been involved in the completion of over
30 financings in the software, manufacturing and medical
areas. His expertise covers company evaluation, strategy
and market analysis, capital raising, transaction structuring,
documentation and completion. Peter has also set up several
venture capital funds for a major financial institution
and appraised a range of venture capital managers.
Creative Capital Pty Limited
Peter T Gow
61 412 235 455
petergow@creativecapital.com.au
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