By Peter Turner, The FD Centre
It is important to map what a successful entrepreneur looks like to where they are in their business life-cycle. An entrepreneur in their first start up has completely different characteristics to an entrepreneur who has been trading for 3-4 years or more, or a serial entrepreneur, especially if they are well-funded.
The main characteristic of great entrepreneurs is that they adapt, change and become great leaders as their business grows. They have a great vision, they can inspire people, are very focused on having a well-run business and they understand their business and their markets. They are often driven and focused.
I was recently told that statistics show that only 5% of all British starts-ups grow beyond £5m turnover and of those only 10% grow beyond £10m turnover. I meet over 200 businesses a year, of which 2—3 will grow to, or are already beyond £10m turnover. I see numerous businesses that are between £4m and £8m turnover, whose revenues have stalled and profits have declined, and I see numerous businesses whose turnover is between £2m and £4m who are heading straight towards the same position as those above.
Great entrepreneurs will grow revenue into the tens of millions. So what differentiates them from the rest and how can you adopt such principles into your business?
At every stage of a business lifecycle, the best entrepreneurs are focused on four key areas…
A vision is important because it describes what you are going to do and sets the framework for how you employ, focus, motivate and measure people as your business grows. If you already employ people, a clear vision focuses their minds and enables your staff to contribute more.
At a business I managed (£6m turnover), we decided our vision was to sell to just 50 clients.
Today, that business has a turnover in excess of £80m, with considerable profits. But that narrow, concrete vision gave us a very clear direction when we needed it and made decisions easier.
While working on your vision, take time to understand your customer base (be quite specific here - you can often double turnover inside a business by reducing the breadth of your current clients) and your routes to market. The great entrepreneurs always look for ways that will enable their business to scale. This will mostly be how marketing works, aligned with the sales team.
People are the most important part of your business. They are the key to success and fortune, to failure and grief. The workforce today is so different to ten years ago: technology, mobility and the wealth of expertise available on a part-time basis means entrepreneurs can up-skill their business considerably quicker and cheaper than previously.
However, unless your staff are mapped to your vision and there is a clear brief and expectation of what you want them to achieve and how you want them to perform, great performance is unlikely. Once you know your organisational structure, build a profile analysis of the people you want in each role.
Seek to build a great team. Again this starts with having a vision and people knowing where they fit within that. You need to build a culture of trust and openness. Develop other leaders in your business at all levels.
Invest in yourself to become a great leader — nothing will motivate and drive performance more than you becoming a great leader. Five per cent of entrepreneurs don’t need training in this, 95% do! Do not be afraid to build a support team for you. The best entrepreneurs do.
Great entrepreneurs are process driven. All you need to do is look at how they manage their time to realise that without structure, process and clarity they could not achieve what they achieve.
Processes should cover all areas of your business. You should have a process for what happens when you make a sale, when a customer returns a product, staff reviews, what reporting you want inside the business, how to manage sales people, how to run a board meeting etc.
The more you put processes into your business, the easier decision-making will be and the faster your business will grow.
Management must be consistent and fair. You can have a hard management style but it must always be fair. You may have an amazing motivational environment, but you must have rules and there must be protocols for when those rules are not adhered to.
For management to be effective you need to ensure people know what is expected of them; clarity is so important. That is not to say that you want people to become robots or unthinking. The total opposite is true: people can add more value because they are focused.
Business Life Cycle
The key to success is how you react to changes in your business lifecycle. There are three stages:
1. zero to £3m turnover
2. £4m to £10m turnover
The £4m-to-£10m turnover stage is where the good entrepreneurs become leaders. In other words:
- They understand their vision, employ the right people and they empower and motivate them. They are focused on building teams not individuals
- They know what organisational structure they need.
- They seek to build a high performance team and are not afraid to employ great people
- They have built strong processes into their businesses.
- The entrepreneur develops excellent communication skills, spends a lot of time with the people inside the business and becomes knowledgeable about their staff, how to communicate with them, and how they like to be communicated to.
- The entrepreneur is the leader, they will be at the forefront of the tough decisions or making the strategic decisions, they are thinking long-term, monitoring short-term. They have strong clarity because it is mapped to their vision.
- Their expectations on deliverables increases and they set clear roadmaps on performance expectations. Additionally, they will not shy away from managing people who are under-performing.
The key for success in this business life-cycle stage is to ensure you, the entrepreneur, as the leader of the business, develop your leadership skills and build a strong executive team around you.
By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.