As Centonomy, we were privileged to be part of mentoring young budding entrepreneurs in a particular contest. Naturally after a contest like this especially when a winner is announced there is excitement, a lot of noise and everybody giving their own opinions about what has taken place and/or what should have taken place. After following some comments, it got me thinking about how we sometimes confuse the show or a particular moment with the journey in various ways when running a business. Granted that the finalists in the contest we participated in had gone through a process and grown. But anyone who has run a business for a couple of years can attest to the fact that the real test is only beginning and it rarely has anything to with the noise the people around you are making. Even for the majority of us who did not start out with a contest, there are various ways we still get wrapped up in the show of entrepreneurship rather than the real stuff that makes a business work. In our entrepreneurship class we use the analogy of a car. People buy cars for various reasons some of which are about how it looks, color, how comfortable the seats are etc. However, the real performance of a car is its engine and the people who really know their cars discuss the engine. Are you focused on the engine of your business or the show around it? Here are a few ways we get mislead by the show.
It’s a noble cause so you think it makes business sense. The word ‘social entrepreneur’ is being thrown around often enough. I have met people who even say they are social entrepreneurs. Being a social entrepreneur is not a business, at least not the way people are commonly using social entrepreneurship (Click to Tweet this thought) What exactly do you do? What is the product and how does it have an impact? How do you keep the business running? The fact that it’s a noble cause may get you the attention but if there is no strategy behind it, you will not be able to attract and manage the resources that you do need. A big part of finding business opportunities is identifying solutions to problems but it doesn’t stop there. I met somebody who was trying to raise money for low cost medical clinics. Fantastic noble cause. There is definitely a need. However, she could not illustrate how these clinics would run sustainably even if she did get the capital. That to any investor means she was not ready for the capital. This does not mean that noble ideas cannot be great businesses. They can. But you still have to do the same (and sometimes mundane) checks and balances that you would if you were baking bread. Sometimes we also get caught up in a cool sounding idea. I have been speaking to several people in creative lines of work who definitely mistake the show for the business. Say you are a singer. You may get loads of attention and therefore think that you have business success. You may even have hundreds of thousand or even millions of followers on social media. Don’t confuse this for the actual business. You still have to have a strategy for how to keep creating and distributing your music. Social media fame does not necessarily translate into revenues (Click to Tweet this thought) An App is cool but again it is not the business. It may help in convenient delivery but you still have to think through the business. Yes, we use Uber through the app but it’s really the transport service that we are getting at the end of the day.
For businesses that have been in existence the show starts to be about how you are perceived rather than what you are actually doing. We start to make business decisions and incur expenses that are more about the perception not the actual business. From our interaction with various entrepreneurs we have seen marketing activities that look nice on paper but have very little trickledown effect to the bottom line. Office space rentals that are beyond what the business needs or can actually afford. If the business has been known to be successful and is going through a rough time (like often happens in the life of a business) this perception keeps people from making the hard choices they may need to make. There is also the aspect of the personal show i.e. personal lifestyle interfering with how cash is managed in the business. The fact that you feel that you should be driving a new car has nothing to do with the everyday business of the company. Most likely your clients will not notice and/or not care. We start spending to spend or because it’s there rather than spending to earn which is what a business should prioritise. We sometimes mistake a big client for the right or profitable client. The name of the client sounds good but when we look at the time and resources needed to service that type of client, it may not be the most effective way of operating. Smaller clients have often been known to make decisions faster and pay faster though they may not have the name that will bring attention. So going back to the analogy of the car. The show may help in some ways just like the color of the car may attract buyers. Always remember the business is not the show (Click to Tweet this thought) It’s in the engine which is the product and the strategy behind getting that product to market in a profitable way. This is simply why the greatest ideas are not the greatest businesses. Keep your eye on the right ball.