Know Thyself
The common picture of the relentless entrepreneur forging ahead against everyone’s advice does nobody any favours. Mike says this heroism is overrated: smart entrepreneurs open their eyes and ears to everyone around them.
There is wisdom in knowing when to abandon a bright-sounding but actually doomed idea. Once you get your business going, hopefully that will no longer matter – it’s happening, well done. But the skill of self-examination and the discipline to face up to the outcomes of that examination are still needed. We still meet too many businesses with great products but serious deficiencies in their organization (the former, of course, hiding the latter. For the moment.)
Many start-ups lack a true finance cornerstone. We’ve already talked about the phenomenon of the tame accountant, who gets wheeled in once a month to ‘do the books’. Such a person is usually very unmotivated to bring bad news, and often only does so when it’s too late. Hardly surprising, if they’ve been given no role in creating company policy; even less surprising, when, like the occasional company we come across, the accountant is not the first person to have the job – their predecessor having been fired for telling the company that the entrepreneur’s Golden Plan for World Domination wasn’t quite working out as planned.
Sales cornerstones will have no such fear of speaking up – but their forecasts need to be treated with a measure of scepticism. The whole team should look at the sales pipeline, performing the role of the sales manager in a big organization and quizzing the sales cornerstone on the accuracy of the probabilities they have attached to future sales. Any prospect that has been stuck on a particular probability for a while needs to be looked at particularly carefully – chances are, the customer has actually gone away but the sales cornerstone is still living in hope.
Technical issues are harder for the team to assess: we can all understand sales pipelines and most of us can manage monthly accounts, but when it gets technical the whole game becomes harder. A culture of clarity in the organization helps enormously here. If the non-technical people promise not to speak management-ese, the techies are more likely to honour an obligation not to blind everyone with techno-speak.
Please note that in none of the above cases are we talking about deliberate deceit: it’s genuine self-delusion that ‘it’ll get fixed tomorrow’ that is the problem.
All this points to the importance of a team approach rather than the Lone Entrepreneur model that’s often touted in entrepreneur hagiographies. If individual cornerstones can fool themselves that everything in their corner of the garden is rosy, how much easier is it for a lone heroic entrepreneur to do the same thing? This is, of course, why people employ consultants – but consultants, like accountants, can be fired if they start saying the wrong thing. Better to bite the bullet and create a culture of honesty inside the organization than bring someone in to do this job.
Customers are, of course, another source of self-awareness. Sales cornerstones should be the voices of the customer in the company boardroom – sadly, too much sales is about getting people to buy things. That is the wrong kind of sales for the small business. You must be allies with your customers, not antagonists in an amusing but ultimately destructive game of who can deceive whom best.
If you suddenly do find things are going wrong, what should you do? Action is clearly called for – but words are more important first. The first person you should talk to is your mentor. It’s at times like this that you realize quite why it was worth putting in all that time and effort to get an old greyhair interested in your project.
Next, talk to the rest of the founding team. Get over the blame stuff, and work out a plan of action together. Then talk to any key customers who may be affected by problems.
There’s a school of thought that says you must at all costs conceal cracks in the framework. But take a lesson from big companies, who learn over and over again that attempted cover-ups end in disaster, and that customers and other ‘stakeholders’ appreciate honesty.
Your bank manager is among the people you will have to talk to. We’ve not always been complimentary about the service banks provide small businesses, but many start-ups don’t help by keeping the bank in the dark about what’s going on. If you hit problems, tell the bank about them – along with the plans you have for getting things sorted.
But let’s end on a positive note. If you have a balanced team with real responsibility; if you have a culture of openness, not blame; if you have a mentor on board who you can really talk to; if you keep other key stakeholders informed (and they are happy) – then you can be pretty sure you’re winning.