Growing Beyond a Solo Entrepreneur
By: Karl R. LaPan, President & CEO, Northeast Indiana Innovation Center
In a recent Kauffman Growthology Report on proposed visa changes called “the international entrepreneur rule”, Kauffman opined “Many entrepreneurs use revenue as their investment capital, yet bootstrapping is not recognized in the proposed rule as a legitimate way to finance business growth.” While this statement was made regarding ways for immigrant entrepreneurs to benefit from changes in visa rules, this statement is great advice for aspiring entrepreneurs and solo-preneurs on how to fund and build their business ventures.
As entrepreneurs, it’s easy to get caught up in the day-to-day demands of running a business. Inadequate planning, under-capitalization, and missed market opportunities characterize why so many solo-preneurs never break the employment glass ceiling (employing someone other than themselves). The average size (# of employees) of a business is shrinking, and the number of solo-preneurs and contingent workers is on the rise according to the Intuit Future of Small Business Report.
Consider these 3 tips:
- Build a reserve fund for emergencies AND opportunities.
- Iterate, iterate, and pivot in your business model.
- Put passion into it.
The rule of thumb is 3-12 months of operating expenses in the bank so you can weather the long sales cycle, the over-dependency on a few core customers for revenue, or to take advantage on an opportunity to grow, expand or scale your business. If you are bankable, having an accessible line of credit (through your home equity etc.) may be a practical thing to do so when a market opportunity materializes, you can quickly capitalize on it. Note: less than 8% of all the fastest growing companies in America used angel investment.
In the same article cited above, Kauffman observed, “Failure is a real part of startup culture and embraced by entrepreneurs, who realize that the first, second, or even third iteration of an idea may not work. But quick learning and constant refinement of a business model may mean that the fourth iteration is a big success.” Seldom is your first idea your best idea. Discover, validate, iterate and pivot. Learning is about continuous learning, adroit market execution and refinement. Our biggest opportunities live in the uncontested market space between the blue and red ocean space (Remember the book Blue Ocean Strategy.)
You have passion, or you wouldn’t be pursuing your entrepreneurial dream. The best thing you can do is apply that same passion into business discipline and planning for the future.
While we all believe we are super-human on some levels and can do it all, focus and prioritization of our key rocks (think Covey and Harnish) can be accomplished through a commitment to discipline and rhythm. So, with this in mind, commit yourself to:
- Put together a roadmap with triggers;
- Define what success looks like and create an advisory board to hold you accountable; and
- Think a bit bigger and broader than your original business concepts. Be focused, deliberate, intentional and smart on how you seize and capitalize on market opportunities.
- Balance all your stakeholder’s expectations (family, employees, customers, investors, and community etc.). Matthew Kelly speaks of personal and professional satisfaction versus work-life balance. Take the Off Balance Assessment to see how you are doing and to target areas of improvement.
As you head down this path, review your progress regularly. Occasionally, you might have to adjust your plans according to some business and life changes, including adding your first employee, diversifying your business offerings, moving into your first commercial or incubator office to legitimize your business (and to commit to grow) while balancing your personal life – having a child, buying a home or paying back your student loans.
Surround yourself with smarter people. A few weeks ago in a seminar I attended, a speaker said “A players hire A+ players.” Are you following this advice? How have you planned and reimagined your future?