When starting a business, know the territory

Anthony J. Kubica and Sara M. Laforest

09/12/2009

The national unemployment rate reached 9.4 percent in July. In Rhode Island, the unemployment rate increased to 12.7 percent. Fifteen other states reported unemployment rates greater than 10 percent.
As unemployment continues to rise, we will see more people think seriously about starting their own business. Some will actually do it. And we believe it is an opportune time to do so.
But as you contemplate creating a business, it is important to understand that the entrepreneurial working environment is different from the corporate working environment. What was tolerated, or even rewarded in the corporate environment will very likely be the key reason why you fail dramatically in your new venture. There is truth to the aphorism: forewarned is forearmed.
Here are some key points for you to consider:
• Being in your own business is about being in the marketing and sales business. No money comes until a sale is made. You must market.
• Initially, you will see your entire staff in the mirror every morning, and you really don’t want to be looking at your worst boss.
• Great friends you had in the prior company may not return your calls.
• Vendors who pampered you may not return your calls.
We often see people who leave the corporate environment exhibit behaviors that may have been tolerated there, but which will cause problems in their new venture. For example, these are things you cannot afford to do in your new life:
• Arrive late for meetings.
• Return e-mail and voicemail slowly.
• Not tolerate disagreement.
• Rely on others to get their work done and then take credit for it.
• Not spend enough time working directly with clients.
• Be dismissive to others.
Another behavior we commonly witness is the individual’s unwillingness or inability to mentally leave the position and role they just left. As an entrepreneur starting your own business, you are not the director, vice president, or senior vice president of a large organization. You no longer have the trappings, esteem and support that role once gave you. You are a solo entrepreneur or part of a partnership that is starting out from ground zero. It is best to forget what was and to focus on what is and where you are going.
A colleague of ours in his early 50s decided to leave his position as the chief financial officer of a mid-sized manufacturing company to start his own company advising small companies on financial issues. Twelve months into his solo-practice consulting company, and after securing only one client, he took a director-of-finance job at a larger service organization. What happened? Our colleague never fully realized he was in the marketing business and not in the financial business. As a solo practitioner, he was responsible for finding clients and convincing them that his services would improve their business.
In his previous job as CFO, he didn’t have to market to anyone. Staff came to him and was available to him. Vendors courted him. He was aloof. He did not have to build relationships; others had to build relationships with him. What worked for him in the corporate environment sabotaged his chance for success running his own business.
Here’s what we suggest you do as you set out to start your own business:
• Learn as much as you can from successful entrepreneurs about what they did to be successful.
• Read about successful startups.
• Find a trusted friend or a trusted adviser who will give you honest and candid feedback.
• Understand that you must build a relationship with prospective buyers.
• Understand that responsiveness sends a powerful – positive – message to your prospect.
• It’s OK to take advice from your lawyer and your accountant, but balance it with advice from successful people who are doing what you want to do.
• Do not accept unsolicited advice.
You are leaving a highly structured, hierarchical, politically charged environment where a meritocracy may or may not exist. It may be hubris, cunning and political skill that get rewarded there.
Not so in the entrepreneurial environment, where it’s about the value you bring. It’s about how you can find ways to make your customers or clients better off. It’s about building real relationships. It’s about personally doing what you say you are going to do when you said you are going to do it.
Starting your own business is a worthwhile goal and can be highly rewarding – from both a financial and personal-fulfillment perspective – if you think it through and act accordingly. •