Do You Have the Entrepreneurial Edge?

The idea for Shelley Roberts’ consulting company sprung up long before she actually went into business for herself. Perhaps that’s why she’s been so successful. Instead of jumping into a new business without conducting the adequate research or planning, Roberts did the exact opposite, thoroughly testing her concept and even going back to school to get her MBA (with a specialty in leadership) to prepare herself for the road ahead.

“I started this consulting company because I realized we’re still creating businesses that squash people’s enthusiasm. We are living in the knowledge age yet we are still using industrial age business models to analyze cause and effect, so I thought, ‘Why not create a business strategy that naturally energizes groups of people. Why don’t we do that?’” recalls Roberts.

She's now the founder and CEO of Companies Are People, Too, a strategy and performance consultancy that also provides diagnostic tools to help an employer discover who their company is and how to naturally energize it.

“So I started working with my mentor in developing the model for my current business while I was still employed at a previous company; they essentially acted as my ‘guinea pig’ in a way.”

Today, Roberts applies her consulting tool to a variety of companies in both private and public sectors. Her clients range from high-tech firms and healthcare companies to veterinarians and specialty chemical production companies. And although she’s been in business for just two years, Roberts, also an adjunct professor in the School of Management at City University of Seattle, is optimistic her business will continue to thrive, especially since she’s tested the model and has proven it works.

As an entrepreneur, though, Roberts is somewhat of an anomaly. Typically about two-thirds of new businesses fail within the first two years and more than 50 percent will not survive beyond the four-year mark, according to the Small Business Administration’s Office of Advocacy. According to SBA estimates, 649,700 new firms were started in 2006, an approximate 564,900 new businesses closed, and 19,695 new companies declared bankruptcy.

“You’ve probably heard the saying ‘if you’ve gotten through five years you’ve made it,’ well for a new business that’s fairly true. Yet most businesses won’t get that far because they didn’t take the time to do the appropriate planning,” says Willis E. Eayrs, a Senior Vice President and Head of Mergers and Acquisitions at Landesbank Baden-Württemberg in Stuttgart, Germany.

As an investment banker, Eayrs advises companies and their shareholders in the purchase and sale of corporate assets and shares to strategic and financial investors. He also is an adjunct business professor at CityU of Seattle who teaches an online banking and finance course called Financial Institutions and Markets.

Yet even with such daunting statistics, ever increasing numbers of entrepreneurs are launching new businesses. That’s because entrepreneurship can offer many enticing rewards including significant financial gain, increased work flexibility, and more leadership opportunities than is typically afforded when working for an established company or employer.
 
“There are the usual tactical benefits.  For example, I am my own boss so I can take long lunches when I want to.  However, I also have a say in my own life balance, which is extremely valuable to me,” adds Roberts.

Still think that you’ve got what it takes to start your own firm? Here are some tips for success to consider.

The Devil’s in the Details
Whether you become an entrepreneur by starting your own venture or buying an existing company, Eayrs says developing a solid business plan is the first step to success. The business plan not only helps the entrepreneur think through the business concept (for example, if you have a product or service to sell, know who your customers are and analyze the market beforehand to make sure what you have to offer is actually in demand) the document can later act as an instrumental tool to effectively describe, and then sell, the business concept to others.

“Most entrepreneurs we work with don’t have enough capital of their own to buy (or start) a business so they therefore need to convince other people what they’re doing makes economic sense so that they can get the financing for what they want to do,” says Eayrs.

Once the business plan is complete and the company up and running, staying focused is the next challenge.

“It’s important to try to live by what you set out in the business plan at least for an initial period of time, which takes some discipline,” admits Eayrs.

Be Flexible
It’s hard to anticipate all of the issues that may arise once you’ve launched a new business so Eayrs recommends creating a business plan with some built in flexibility. For example, add an extra block for costs for unexpected scenarios that could arise and put them into the business plan, which provides you with an added cushion should you ever need one.

“Small start-up companies typically have liquidity problems and need to be able to meet their short-term obligations; therefore, plans must be in place to cover that because banks (financial partners) don’t like surprises,” Eayrs says.

“Make sure to build a little cushion into the plan so that if something does come up you don’t have to go back and ask for an increase in your credit line (or other types of financing).”

Roberts also thinks having a plan of action is good but stresses entrepreneurs need to remain flexible and be willing to stray off course if need be.

“Don’t be too stuck on your vision for the company. Most entrepreneurs have this mental image that creating a business is very sequential, first you do this and then you do that, as long as you have a plan it will all work out, which is such a myth,” she says. “Starting your own company is more like a scavenger hunt; you have to be okay with uncertainty and ambiguity because you’re picking up clues as to what will work as you go. So build lots of muscle with uncertainty and ambiguity and be willing to change course if need be.”

Price Yourself Accordingly
Another important piece of advice? Price yourself accordingly, and stick to your price. “I see so many new entrepreneurs undersell themselves time and time again; and when you do that you’re not only doing your business a disservice, you’re doing your industry a disservice,” notes Roberts. “Price yourself properly and then stick to it; because in the end you’ve got to be profitable. It doesn’t matter what your higher purpose is, if there’s no (profit) margin, there’s no mission.”

So how do you go about pricing your product or service correctly? One way, says Eayrs, is to look at your costs first, which will then dictate what types of prices you should be charging your clients and whether you can get those prices. “Once you do that, chances are you’ll have a better idea as to who may buy your product or service and at what price,” says Eayrs. “I think some people underestimate this and that’s why they get into problems later.”

Don’t Spend Money Frivolously
Although some new businesses may get into trouble by spending too much on fancy office space, paying an exorbitant amount on rent and other fixed costs, many more spend too much on some of the smaller items such as collateral materials. “Don’t waste money on brochures,” recommends Roberts. “I believe in the guerilla marketing or relationship marketing approach, which is much more effective. If you want to spend money then get really expensive business cards but don’t waste your money on fancy brochures and printing; it’s a waste of money and they just end up in the garbage.”

Get the Word Out
Don’t pass up the chance to network. Networking can be a powerful tool for entrepreneurs, enabling them to market themselves and their companies effectively, which can lead to more customers, additional business partners, or even financial investors for their business.

“Who you know can be as important as what you know,” says CityU President Lee Gorsuch. “Let’s face it, if people aren’t aware of what you know, it will be difficult for you to demonstrate your value to a prospective employer, business associate, or potential customer or client.”

For Roberts, her love of teaching has not only provided her with a great creative outlet, it has become another way for her to spread the message about Companies Are People Too and its overarching goal.

“I tell my CityU students you can love your job and you can make a difference; you can create a work environment that people want to come to,” says Roberts. “I find that teaching is a great Petri dish to get lots of ideas, to see how people can take their learnings and put them to use right away.”

Believe in the Work
Besides having a ton of courage, Roberts believes to be a successful entrepreneur you have to be clear about the work you want to do and also believe in the work itself.

“To be successful, it doesn’t matter what type of business you create.  What matters is that it is work you believe in.  It doesn’t even matter if you know how to do it at first.  All that can be learned,” says Roberts. “What’s important is that you believe in the work – and that the works gets done.”

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