Friday, February 18, 2005

The No. 1 problem in entrepreneurship

A few weeks ago, I met a former banker who now is working on a startup entrepreneurial venture that promises to provide a lot of benefits to a disadvantaged community in society. (Sorry to be so vague, but I want to preserve his privacy here.) Anyway, I was touched by what he was trying to do. When I learned he was having trouble coming up with a name for his business and nailing down his marketing model, naturally I offered to help. (For free. Sigh.)

He took me up on my offer, and we met this week for a working lunch. To my surprise, he didn’t want to talk about the business he had told me about two weeks before. Now he had another idea – a related concept, but much bigger. He wanted to improve the lives of everyone in this socioeconomic group. His new business plan included marketing, distribution, R&D and manufacturing. And there would be a special reward program for customers that would seal the business’s reputation as socially responsible.

The plan was breathtaking. But it was grounded in vapor. My friend is one person, bereft of cash, working alone. He has a personal need to start generating funds soon. Because of family considerations, he can only work 8 hours a day – he just can’t pull the 20-hour shifts that so many startup entrepreneurs know and love.

His plan was totally impractical. Not only that, but his first instinct was to start working on the (highly peripheral) social-responsibility initiative he had in mind.

I have written before in PROFIT magazine about the need to focus and prioritize. Entrepreneurs are practically defined by their limited resources and time. To succeed, you must ruthlessly strip away all the stuff you wish you could do, and focus on the highest, best thing you can do: the service your best market wants most; the products with the quickest payback.

You can add bells and whistles later. But in the beginning, with your livelihood and your confidence on the line, you have to focus on the key activity (or, okay, maybe just a few activities) that has the best chance of getting you to the point where you can actually plan for an expansive future. You have to be successful first.

I tried to explain all this to my friend. I thought he understood. Then, towards the end or our meeting, as I discussed a marketing idea, he asked whether I was referring to his first business model or the second one. I said I thought the first one was dead. No, he said; he wants to do both. At the same time.

Here’s my dilemma. I hate to say anything is impossible. After meeting so many successful entrepreneurs who have launched successful businesses in defiance of the best advice of everyone around them, I will never, ever say, “It can’t be done.” But there is such a thing as limiting your risk. And focusing on one miracle at a time is the best way to start.

2 comments:

Elhusseiny said...

I agree, focusing on best the most successful thing you can do, you will discover the difference and you will feel more success.
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Peter Kao said...

Hi Rick,

I found your blog through Google via some general keywords such as "canadian entrepreneur blog."

I've read a few of your posts and I find them to be really helpful!

I agree with you about what you said, but to be more blunt, the no.1 problem with entrepreneurs is that sometimes they don't know when to stop. Entrepreneurs are naturally optimistic, which is a good characteristic to have when things get tough; however when it is left unchecked entrepreneurs lose their sense of reality.

- Peter Kao
Mind of an Undergrad Entrepreneur - http://peterkao.com