Few day’s ago I met with Ashfak, an entrepreneur. We discussed about many issues. He also share his vision and thinking. Here is the conversation.
Clarifying Goals: Where Do You Want to Go?
An entrepreneur’s personal and business goals are inextricably linked. Whereas the manager of a public company has a fiduciary responsibility to maximize value for shareholders, entrepreneurs build their businesses to fulfill personal goals and, if necessary, seek investors with similar goals.
Before they can set goals for a business, entrepreneurs must be explicit about their personal goals. And they must periodically ask themselves if those goals have changed. Many entrepreneurs say that they are launching their businesses to achieve independence and control their destiny, but those goals are too vague. If they stop and think about it, most entrepreneurs can identify goals that are more specific.
What kind of enterprise do you want to build?
Long-term sustainability does not concern entrepreneurs looking for quick profits from in-and-out deals. Similarly, so-called lifestyle entrepreneurs, who are interested only in generating enough of a cash flow to maintain a certain way of life, do not need to build businesses that could survive without them.
But sustainability—or the perception thereof—matters greatly to entrepreneurs who hope to sell their businesses eventually. Sustainability is even more important for entrepreneurs who want to build an institution that is capable of renewing itself through changing generations of technology, employees, and customers.
What risks and sacrifices does such an enterprise demand?
Building a sustainable business—that is, one whose principal productive asset is not just the founder’s skills, contacts, and efforts—often entails making risky long-term bets. Unlike a solo consulting practice—which generates cash from the start—durable ventures, such as companies that produce branded consumer goods, need continued investment to build sustainable advantages.
Can you accept those risks and sacrifices?
Entrepreneurs must reconcile what they want with what they are willing to risk. Consider Joseph Alsop, co-founder and president of Progress Software Corporation. When Alsop launched the company in 1981, he was in his mid-thirties, with a wife and three children.
With that responsibility, he says, he didn’t want to take the risks necessary to build a multi-billion-dollar corporation like Microsoft, but he and his partners were willing to assume the risks required to build something more than a personal service business. Consequently, they picked a market niche that was large enough to let them build a sustainable company but not so large that it would attract the industry’s giants.
To set meaningful goals, entrepreneurs must reconcile what they want with what they are willing to risk.ASHFAK
Entrepreneurs would do well to follow Alsop’s example by thinking explicitly about what they are and are not willing to risk. If entrepreneurs find that their businesses—even if very successful—won’t satisfy them personally, or if they discover that achieving their personal goals requires them to take more risks and make more sacrifices than they are willing to, they need to reset their goals. When entrepreneurs have aligned their personal and their business goals, they must then make sure that they have the right strategy.
Setting Strategy: How Will I Get There?
Many entrepreneurs start businesses to seize short-term opportunities without thinking about long-term strategy. Successful entrepreneurs, however, soon make the transition from a tactical to a strategic orientation so that they can begin to build crucial capabilities and resources.
A new company’s strategy must embody the founder’s vision of where the company is going, not where it is.ASHFAK
Is the strategy sustainable?
The next issue entrepreneurs must confront is whether their strategies can serve the enterprise over the long term. The issue of sustainability is especially significant for entrepreneurs who have been riding the wave of a new technology, a regulatory change, or any other change—exogenous to the business—that creates situations in which supply cannot keep up with demand.
Entrepreneurs who catch a wave can prosper at the outset just because the trend is on their side; they are competing not with one another but with outmoded players.
But what happens when the wave crests? As market imbalances disappear, so do many of the erstwhile high fliers who had never developed distinctive capabilities or established defensible competitive positions.
It’s easy to knock off an innovative product, but an innovative business system is much harder to replicate.ASHFAK
Are your goals for growth too conservative or too aggressive?
After defining or redefining the business and verifying its basic soundness, an entrepreneur should determine whether plans for its growth are appropriate. Different enterprises can and should grow at different rates. Setting the right pace is as important to a young business as it is to a novice bicyclist. For either one, too fast or too slow can lead to a fall. The optimal growth rate for a fledgling enterprise is a function of many interdependent factors.
I think the conversation was great. It also helpful for those who thinking for starting their own entrepreneurship.