The Information Problem…

Todd Hannula has blogged about the possibility of an open source information platform for social entrepreneurs.  He posits that such a platform might help more social entrepreneurs get the information that they need at the right time.  Sounds like the kind of idea that the public purse might get interested in investing in.

But does it stack up?

  • Is the Internet not an open source information platform?
  • Is it possible to provide any more information within a few clicks?
  • Is the supply side of business support not already rammed full to the gunnels with information and workshops?

I think that the answer to the information question lies in an exploration of the ‘demand side’  for information rather than thinking about how we can develop the information ‘supply side’.

If entrepreneurs REALLY want to succeed (rather than look and feel good for a while) they should get the right team in place before they start.  A team that is as obsessed about financial management and marketing and sales as it is about saving the world.  With a balanced team seeking information and ‘better practice’ in each of these domains they are much less likely to fail as a business and the demand side of the information market place will be more robust.

So let’s have less encouragement to individual entrepreneurs to change the world single handed and more encouragement to them to build powerful and balanced teams.

Todd suggests that the realisation for most social entrepreneurs that they are ‘not very good’ at business comes ‘just too late’.  This is an unpalatable (and therefore largely unspoken) truth for nearly all entrepreneurs – social or otherwise.

They nearly all get a massive shock at some point.

  • They run out of money.
  • Customers get angry.
  • Products and services don’t work as well as was planned.

The question is how to respond?

  • Are they prepared for the shock?
  • Did they know it was likely to come along?
  • Do they have the networks and resources to work through the shock and to learn from it?
  • Or do they bail out thinking – ‘I am not cut out for this’?

How do ‘support agencies’ make sure that they are ready to face these traumas when they almost inevitably come?

Because the painful traumas of business start-up might discourage some people from starting, they are often swept under the carpet.

We might use some euphemism, like ‘You need to do a little more work on your business plan’, but we rarely help the client to explore the unvarnished truth; No matter how much planning they do they will never be ready.  There will be nasty and uncomfortable surprises.  It is the ability to deal with these shocks and their ramifications that will separate the entrepreneurs from the wannabes.

I choose to consistently focus clients on the possible downsides of their business as much as on the upsides.  I usually beg them to find some less risky way of following their dream other than starting their own business.  I make them explore the things that might go wrong – and of the devastating impact that they could have on finances, relationships and reputations.

People say to me ‘Mike, they will never start a business if you keep pointing out all of the downsides…’

Well I make no apologies.

If someone is put off starting a business by a good exploration of the possible downsides then they are probably making exactly the right decision.

It is not more businesses that we need, but better businesses.  Businesses that have a pragmatic understanding of the risks that they face (bankruptcy, debt, damaged relationships etc) – and are still prepared to take them.  Businesses whose antennae are tuned to both problems and opportunities.  You can’t stop a business like this from avidly consuming information.  They seek it out.  They devour it.  Even if it is hard to find or ambiguous.

Instead we often find ourselves trying to resource dozens of ‘wannabe’ hopefuls buoyed up by a raft of interventions to promote enterprise on a sea of support agencies whose criteria for success is based on counting start-ups rather than survival rates.  And then we have to find ways to spoon feed them information like medicine that might keep their business off the rocks – and we wonder if there is not some better way of shaping the information supply side.

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