A Truth About Enterprise and Entrepreneurship?

So here is my contribution to Enterprise Week.

DO NOT START UP YOUR OWN BUSINESS – UNLESS YOU HAVE TO.

Not the message that is usually put out, especially by national, regional and local government, but after 25 years of running and supporting small businesses, that is my best advice.  Don’t do it – unless you have to. Unless of course you have money to burn.

Because the truth is that small business is a really hard game.  You have to provide a great product or service – and one miscalculation, or one bad debt, can put you out of the game and into the bankruptcy courts. Few people succeed in business the first time they try.

It takes resilience, persistence, self confidence and courage.

The chances of success are slim and the levels of commitment and hard work required are, in most cases, enormous.

Your business will almost certainly steal you away from friends and family at least for the first few years, and many successful entrepreneurs talk about how much their business has cost them in terms of their relationships and health, as well as cash.

This is the reality of entrepreneurship that needs to be taught.  (Policy makers please take note.  If we were this honest about the nature of entrepreneurship we might not get as many people involved in enterprise week – but a far higher percentage that did get involved would go on to be successful entrepreneurs.)

Those that ‘have to’ start a business fall into two very different camps.  The first ‘have to’ because they have no other economic option for survival.  Enterprise is their ONLY option.  It is the only way they can make a living.  For those whom enterprise is a forced choice the outcome is rarely great.

The second group ‘have to’ because it is the only way that they can have the freedom to do what they have to do, to be the person that they have to be and provide the products and services that they really have to provide.  Enterprise provides them with a way of becoming the person that they feel they have to be.  It is about their own identity as a human being.

So the rallying call for enterprise week should be,

‘DO NOT DO IT- UNLESS YOU HAVE TO!

Unless it is the only way for you to become the person that you really want to be’.

And if we invested our energy into helping people to really understand who or what they want to become we might find that all of a sudden ‘enterprise’ starts to look after itself.

Of course for those that ‘have to’ enterprise can be a wonderfully powerful vehicle to achieve remarkable results.  I am not anti enterprise – quite the opposite.  I just wish we could present it honestly as the double edged sword that it truly is.

Comments

  1. Phil Kirby says:

    Great post, Mike! I think this does need to be said but I’m less convinced that the policy makers and the people holding the purse strings will listen. Like you I’ve given up on going to these Enterprise extravaganzas. I’m tired of hearing the Just So stories and sick of being talked to as if the enterprise professionals were some sort of fairy godmother; they don’t possess a magic wand and they can’t always make things happy ever after. Building a business is a drama not a fairy story. Often it’s a tragedy, occasionally a farce – but it is always damned hard graft and nobody is really fooled by promises of pots of gold at the end of the rainbow. Time to grow up, stop kidding ourselves and tell a different kind of enterprise tale.

  2. Phil

    Thanks for that. What are the elements of the different kind of enterprise tale?

    For me it would include – becoming unstuck, becoming the person that you want to be, providing products and services to be proud of, creating real value for others based on your own knowledge and skills.

    I think it is also worth separating our enterprise from entrepreneurship. I think everyone should be helped to be ‘more enterprising’ but we should only help those that really have the hunger, who ‘have to’ start their own businesses. Those without the hunger/passion/desire should be helped to recognise this needs to be their first focus – working out what they really ‘have to do’ with their lives. Only then might they develop the energy needed to succeed in entrepreneurship. It is not something to be done on a whim.

  3. Hi Mike

    As such a (derided) policy maker I take your point to a degree, but there’s a big difference between the marketing ‘hooks’ you see to engage people and the responsible service that should make people aware of the risks. On the other side of the coin advisers and coaches are often ignored by entrepreneurs who then end up in a sorry mess.

    I don’t think everything in the pre-start/start-up world is rosy but we certainly have a mantra of ‘quality not quantity’,; plus a service that aims to provide options to limit risk and negate it completely when we can.

    I’ve seen data from the BETA model recently that shows higher start-up and survival rates in LEGI areas. This kind of undermines most of your theories.

    Finally, ‘entrepreneurship’ , running your own business’ and ‘be your own boss’ are used to engage people, mainly because the term enterprise means nothing to them. Engagement in enterprise, enterprise skills and activity is really what much of our support is about. Our independent evaluation shows half our clients say we’ve had a transformative or significant impact on their confidence levels. I think this is a positive, but would like to see it much higher.

    Only about 20% of clients we work with go on to serious pre-start and start-up support; almost three quarters of new starts say they without our support they would have started with less or no support. A significant proportion of these would have started anyway – very few say it wasn’t any help to them so…

    • John

      Thanks for taking the time to comment. Firstly many advisers and coaches have a very pro-enterprise stance.

      Secondly that pro-enterprise stance continues throughout the journey beyond initial engagement. When did you last share a case study where a would be entrepreneur is fighting to stave off the bailiffs and rescue their marriage?

      Thirdly I have witnessed the regional obsession with numbers of start ups. I have not seen survival data published. However where I am closely involved with LEGI and its legacy I know there are casualties. Many face a lingering failure as programmes do what they can to artificiality support businesses by ‘putting work their way’ providing access to finance and providing free publicity. I would anticipate a rise in failure rates once LEGI support is withdrawn (March 2011?). Failure rates after 18 months and 36 months will be interesting to record.

      I am not surprised at all that start up and survival rates are higher in super output areas. I KNOW these areas are ‘enterprising’. It is just economists who count VAT registration rates that assume they therefore lack enterprise. I am not clear how this undermines any of my theories…perhaps you could specify the theories that you are referring to?

      I would love to see a copy of your independent evaluation. Is it in the public domain?

      What do you mean by serious pre-start and start-up support? I think I need to understand more about your model and how it links with the mainstream service providers to make a comment on these numbers. Perhaps if you invite me down.

      My take on most LEGIs I have been close to is that they are curates egg – good in parts – but I do worry about their long term legacy -especially where large capital investments have been made in buildings with weak business plans beyond LEGI subsidies.

      I am concerned if 3/4 of your clients say they would have started with less of no support. This must raise serious questions about LEGI additionality? Perhaps there is a typo here somewhere?

      My interest is not throwing brickbats at LEGI programmes. It is in developing long term and sustainable approaches to promoting enterprise in communities. Again in my opinion the LEGI good times have allowed us to build ‘gold plated’ approaches to enterprise support in some areas that cannot be sustained. DCLG thinking behind LEGI was always about 10 year investments. The failure to deliver on this long term investment will inevitably leave project sustainability compromised.

      I look forward to finding out more about your work in Sheffield.

      Mike

    • Interesting.

      I read this and find it very enlightening.

      May I put across some adjustments in language. Start-up / Pre-start ??? Many small firms are small because they are niche. They exist of 1/2/4/8 people. What I read above shows to me a clear gap between your understand and how it really is.

      They are small because they are supposed to be small. Can we please ensure we use better language rather than grouping people together as “Start-up”.

      I think language is so important as these words are different and the subtle differences are key.

      Risk..! Advice from advisors? The risk is you never sell enough “stuff” and it costs you too much in overhead to run it profitably. Confidence? I am confident that unless the primary issue is dealt with, it will lead to failure, destruction and years of unhappy’ness. The you can throw depression in to the mix. This business stuff is about recognising, creating and being the curator of demand.

      LEGI – I’ve heard Mike mention this. What ever it is, it sounds like tosh. Until you demonstrate to people how to recognise “demand” for services, your always going to be chatting and talking about enterprise and discussing things like LEGI at great lengths.

      Marketing Hooks?
      Yes. Please stop wasting our time with that. It is both a distraction and pointless. If there is a demand for this… well, it will sell without hooking people. Clearly, if your approach is to hook people through marketing the people who train are very likely to fail because you will never teach them the fundamentals of key drivers like demand and of course selling.

      Can we swap jobs for a week?

  4. Annette Naudin says:

    Hi Mike
    Very interested in your post. And I agree with your statement – there is so much rethoric about enterprise as the answer to all our problems. As an educator working with creative / media / arts students, we focus our energy on entrepreneurship rather then enterprise. This is partly because we are not in a business school but simply recognise that our sector has such a high level of freelancers, small businesses and portfolio careers that we cannot ignore the need to support student’s entrepreneurial development. We work on building their confidence, networks, skills and try to have realistic expectations. For example, I had 3 guest speakers in last week who gave a ‘warts n all’ account of their experience – it was really inspiring and the students loved it but I dont think anyone can be under any illusion about the challenges each speaker faced.

  5. I advocate everything that Mike says in this post. Why? I’ve been in the ‘business’ camp for a decade, starting a few years after I graduated with an honours degree in business, young with lots of energy. It’s okay, however the one lesson no-one seems to teach is how to sell, which I still find very disturbing because it is the achilles heal. There are many myths that say it is possible to replace sales with marketing, or that it can be replaced with networking, worst still is ‘motivational’ and ‘public speakers’ who encourage people to continue in what they are doing, which for many with no experience is likely to be the steapest learning of their life… a good product/service, well priced with some marketing promotion still needs to be sold. You need more than ‘friends’ made at a meet and greet evening or lunch.

    Selling and transacting is key. Applying for funding, doing promo jobs for friends – this is not selling. If you are really passionate about teaching people about this stuff, the focus must be on a) initial sale, b) progressing to some kind of contracted orders for residual revenue. Shops are different, there is footfall. All too often I see people creaming striving for some jam (initial sale), with no bread and butter (residual) for a staple diet.

    I have a lot of empathy for what Mike says because it is ‘correct’. It took Mike 25 years of progressive learning to acquire the sum of this knowledge. Respect it, act on it. It is sound, solid and comeprehensive.

    Nb. There is one other type of person: the independent free thinker .!

    BTW: Leaving a ‘name’ in public is bad for business. Yours. Sk

Trackbacks

  1. […] This kind of approach, when well implemented, results in significantly higher survival rates. These high survival rates soon teach others that it can be done – with passion, commitment, skill and hard work.  And although progress on the ‘enterprise agenda’ may initially be slow it will accelerate as the successful entrepreneurs tell their stories and provide local role models.  And on the occasion when it goes wrong the entrepreneur won’t blame the enterprise professionals for ‘encouraging’ them. They will recognise that this is down to them pursuing their dream. Not down to ‘us’ using sticks and carrots to manipulate them in pursuit of a funder’s policy goals. […]

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