I have since attended hundreds of networking sessions, spoke to wantrepreneurs (once being one myself) and established business owners alike. Up till today, I haven’t used a SINGLE piece of knowledge from my business classes from business school. I have come to a conclusion, not everyone understands entrepreneurship and knows what they are talking about when it comes to business. Not even business professors with pHDs to their names.
Here are the 4 entrepreneurs I usually come across.
1) The Idea Entrepreneur
I started a dating consulting company thinking that all my client want to hear about was my smartness about human psychology. That’s because that’s what I cared about. It wasn’t what my customers cared about. They cared about their needs and desires, not MY course curriculum.
In start up events, I meet ‘idea’ people (some times highly educated with some Ivy League degree) to their names and they’ll fancily come up with an idea. The Uber or Airbnb of anything.
They’ve never built a single website, rarely done any sales in their life and they think that their SINGLE idea is going to change the world.
90% of business is sales and marketing. It’s NOT about your damned product OR idea. 99% of business is IMPLEMENTATION. That means DOING IT. That means build websites from ground up, running traffic to it, getting leads, following up and then pitching them a price or product in exchange for CASH.
It’s NOT playing around with pitch decks, coming up with the next ‘Uber’ of anything or writing your NEXT business proposal. I have not wrote a single business proposal in my life.
2) The Sales Person Turned Entrepreneur
Thankfully, my first couple of jobs are in sales. It wasn’t in business. If your first business skill set is sales, you have a MUCH higher possibility of succeeding as an entrepreneur. However, sales itself still doesn’t cut it. When you work for huge corporations that have a price point or commission on your products, you are confident in selling.
However, take that huge corporate brand away from you and you’re left to create a brand on your own. Can you sell it? Can you sell YOURSELF? Take away DBS, Prudential, PropNex and all these brands that you can already leverage to sell your products, can you still do it?
Can you SELL when it comes down to YOU, YOUR products, YOUR vision and YOUR services.
I know of people that consider themselves a great salesperson. However, he has never generated a dollar out of his own products and services.
He’s overly concerned about the product. He’s always obsessed about the PRODUCT. You can immediately tell he’s new as entrepreneur. However, he does have the belief that as long as he’s great at sales, he’ll be successful in business. That’s only partially true.
Like I said, as an entrepreneur, your concerns go beyond just sales or your commissions. It becomes a game of free cash flow, marketing budgets, market positioning, scaling, fulfilment, customer service, operations and many more. You’re required to juggle MULTIPLE HATS.
3) The Raise Money Entrepreneur
I was exposed to the idea of raising capital only recent by a friend. He successfully raise 1.6m to fund his media company.
Traditionally, I am extremely against the idea of raising money before profitability.
The raising money entrepreneur is highly concerned with financial projections, pitch decks and predictions on market size. (and fancy start up lingo)
Now, I am not saying raising money is evil, however, I’m saying: pay attention to the primary concerns of the CEO/ top management that runs the company. Is their top concern attempting to raise the NEXT ROUND? Is their concern making the numbers look pretty?
The answer almost is always can be found in a singular concept: skin in the game.
Some of the things I look out for:
- Does management pay themselves high salaries using shareholder’s equity?
- Is their salary tagged to free cash flow/ net profit/ revenue of the company?
- Do they have skin in the game, their own money invested along side IN the company they believe so much in?
Then again, I know working capital can accelerate things. This is why I am NOT 100% closed off to the idea of raising capital. The majority of businesses and built on working capital.
Ultimately, as an investor (if I do become on), I am going to looking at the ethics of the entrepreneur himself, and the way he speaks about his business and his primary concerns. There’s a huge difference between presenting fancy numbers VS maximising shareholder’s equity.
This brings me to my next point.
4) The Ground Up Entrepreneur
Over the years, I’ve spoken to the ‘idea entrepreneur’, the raise money entrepreneur’, the salesman entrepreneur, and the ground up entrepreneur.
The idea entrepreneur is overly concerned about his idea. The more he’s proud of his idea (the product) the more I know he isn’t seasoned as an entrepreneur.
The sales person is merely over confident in his abilities to succeed in business (or mostly anything).
However, the people I enjoy working with and can resonate with the most are the ground up entrepreneurs.
The ground up entrepreneur’s (eg. the previous company I had the pleasure to work for a short stint for) primary concerns is ALWAYS, free cash flow, advertising budget/ spent, lead generation, sales, closes and NET REVENUE/ NET PROFIT.
The HIGHEST concern of any business should be FREE CASH FLOW. FREE FUCKING CASH FLOW FROM OPERATING ACTIVITIES.
THAT’S IT. PERIOD! FULLSTOP!
95% of the ground up entrepreneur’s TIME AND EFFORTS are spent generating prospects and pitching them their service. It’s NOT trying to raise their next round or make their pitch deck look super attractive. It’s NOT trying to build the next Airbnb of ANYTHING.
They almost always have skin in the game by investing a huge amount of their own dollars alongside their business. Their primary concerns are: expenses, free cashflow, return on investment as opposed to financial projections or raising rounds.
Let’s Face It
Let’s face it, as a business owner, you’re NOT in the dating advice business. You’re NOT in the Facebook Advertising business. You’re NOT in the music business. You’re NOT in the real estate/ financial consulting/ plumbing/ aircon repair business.
You are in the SALES AND MARKETING BUSINESS. Period.