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Management and the Start Up

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I work with businesses and organisations at all stages of the life-cycle. Pre-starts, start-ups and mature businesses.

I often see management DNA develop in the start-up phase and it is seldom a pretty site. Habits and relationships are set early and become very difficult to shake off. This is largely because of the mindset of the original founder of the business:

  • This is their baby;
  • They know how they want it to develop;
  • They have exacting standards.

Consequently their management style can be brusque, directive, bruising and ultimately damaging to the long term growth of the business.

Ideally I get to work with a business pre-start and ensure that the entrepreneurs builds their management team BEFORE the business plan is developed. This way all members of the team can own the plan and a more open and collaborative management DNA can be established from the start.

However this is pretty rare.

More usually I am working with an owner manager who has already established a pretty controlling management style. Helping them to see a different way of running the business is tough enough.

Coaching them to make it happen is even tougher.

Often it takes a real shock to the business and the entrepreneur to make them realise that something has to change.  This ‘shock’ can be bankruptcy, divorce or a significant health issue.

But sometimes that is what it takes before the need to change is fully recognised.

New Enterprise Allowance or New Enterprise Alliance?

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Another government, another push for another 10 000 small businesses to be created from the ranks of the long term unemployed.

To me it seems similar to what we already have under the Flexible New Deal, unless I am missing something: it may be a tad better resourced.  But, I am encouraged that Iain Duncan Smith appears to have a real commitment to social justice, at least, he chairs the cabinet committee on it.   Let’s hope that his commitment to social justice rather than newspaper headlines really shapes this New Enterprise Allowance.

So what are the chances of success for the New Enterprise Allowance, and what might be the pitfalls?

To begin with, although I am a big fan of mentoring, I am not convinced that it is the best way to support people with transitions from unemployment to self employment.  The best mentors (as opposed to coaches) have ‘been there, done that, seen the film and got the t-shirt’.  They can offer sage advice and guidance based on practical experience (usually gained over many years in a specific and relevant industry, and importantly should be chosen by the mentee and not assigned to them by a service provider); Mentors should know what it takes and be available to put in the time and commitment necessary.  Let’s also hope that they are properly trained, supported and supervised in the process of mentoring.  And mentoring should not be a mandatory component but an option, we have to recognise that folks learn in different ways and for some the thought of being mentored just does not cut it.

So, if we must have a mentoring programme let us run it well.  Lets take mentoring seriously.  Let’s make sure that we have enough well trained mentors.  Personally I doubt that we will.  More likely we will find an army of middle managers looking to do some CSR, or rebadge existing enterprise advisers as New Enterprise Allowance Mentors.  Plus ça change…probably

I think the enterprise coaching role is, in places where it has not been confused with enterprise evangelism, much more likely to be effective.  Non directive, facilitated conversations that give people space to develop their options and make their own choices provides a sustainable route to more enterprising communities.  Conversations that don’t use ‘benefits’ and ‘enterprise’ as carrots and sticks to manipulate people to meet government targets and trigger payments by ‘results’.  Our industry is riddled with such practice.  We need conversations that respect people and their right to choose.

I suspect that mentors will work with mentees primarily on ‘the business plan’.  I doubt they will have the coaching skills to really work on developing the person rather than their idea.

Will a decision not to start up be valued and rewarded as highly as a decision to start?  I hope so.

Will the New Enterprise Allowance engage ‘the community’ in supporting local people struggling to make the transition to self employment?  No sign of community panels and networks to support the formal delivery structures.  It is not so much a New Enterprise Allowance that we need in our communities as a New Enterprise Alliance….

Will the scheme be designed to encourage the formation of team based start-ups where complimentary skill sets and personalities ensure that all functions in the business are adequately covered?  I doubt it.  It will, if history is our guide, take the shortest, lowest cost, route from benefits to self-employment, not the route that is most likely to result in a sustainable business with the potential to grow.  While we should be looking to maximise return on investment I suspect we will look to minimise investment.  Cost per start-up will be the metric of choice.  And the sooner we get the better.

The New Enterprise Allowance will be for long term unemployed who ‘want’ to start a business.   Finding the people who really WANT to will be an enormous challenge.  Personally I don’t think it is anywhere near enough for someone to want to start a business.  It needs to be something that they HAVE to if they are to have a decent chance of success.

We have approaching 800 000 people who have been unemployed for more than 6 months.  The New Enterprise Allowance hopes to help 10 000 of them to start a business this year, that is just over 4 in every 500.

  • But which 4?
  • What percentage of the 800 000 will wish to engage with the programme?
  • How many will the delivery mechanism engage with at the start of the process?
  • How many of those will make it through to trading?
  • What positive outcomes will be delivered to those that engage with the programme but decide not to start a business?

This represents a challenge.  To help find the few who really will do the groundwork required and learn what needs to be learned.  It is a challenge both for marketing the scheme and effective psychological contracting between service provider and service user..

And the whole scheme reeks of yet more ‘fast enterprise’.  A couple of mentoring sessions and three half days with a training company and you will be ready to roll.  Well maybe. And maybe not.  Where these sorts of schemes prevail they prioritise the most capable and even then have frightening business failure and loan default rates.  Good business start ups plan and prepare carefully.  They don’t rush it.  There is little point in starting 10 000 new businesses in a year if the survival rates are not good.  And please this time will someone show an interest in survival rates?

Then there is the cash element.  In the transcript of his speech on Conservative Home, IDS is reported as saying:

We will provide business mentoring and a financial package worth up to £2000 to get your business up and running.

Now quite what is meant by ‘a financial package worth up to £2000’ remains to be seen.  Cash grant?  Loan?  Benefits?  But clearly in this transcript it is £2000 in addition to the mentoring provided.

But can anyone explain to me the why the magical figure of £2000?  How about we teach them to access the finance that they need to give their business a well capitalised start?   Whether that is £5 or £5m?  If we are serious about teaching people how to run a small business let’s not cap ambition according to the size of our currently cash strapped treasury pockets.

So at first glance it looks to me like wrong pedagogy, wrong curriculum, wrong ‘financial’ package, wrong pace of change and a failure to embed enterprise culture in the community.  Apart from that all systems are go.  I can already hear the usual suspects sharpening their pencils in anticipation of the invitations to tender.

I hope it is me that is wrong….

What do you think?

Dumb Strategy and State Funding

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I am hearing a lot at the moment from people and organisations that face a scary future because at some point in the past they chose (consciously or not) to develop a business model dependent to a very great extent, in some cases entirely, on public funding.

And right now that looks like a dumb strategy, because the development of mission, the pursuit of purpose, is regulated by a bureaucracy that makes political decisions about what to fund and when.  It decides how success will be measured.  In essence they are in control.

They hold the strategic reigns.

10 Reasons Why You Should Never Start a Business…

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I have just been reading Steve Pavlina’s post on 10 Reasons Why You Should Never Get a Job.  Although written with, in my opinion, an offensive and patronising tone (people with jobs are morons, bosses are idiots etc) it does raise some interesting points.  Including the one about ‘getting paid while you sleep with a pregnancy body pillow‘ rather than while you work.  Seductive stuff!

But like so much of the self help and entrepreneurship industry it lacks balance and feels manipulative. So, in the interest of balance, here are 10 reasons why you should never start a business.

1  It may lead to debt and misery

The stats on business success are not that pretty.  For everyone like Steve that earns $40 000 a month from their website there are hundreds if not thousands who are trapped in a business that does not make enough money.  They work long hours for little or no money.  You talk to a Venture Capitalist and most of them will tell you the same.  For every 20 businesses or so they invest in the majority never make a return on the investment.  A few will just about break even on the investment.  And, if they are lucky, perhaps one or two will make some serious money.  Serious enough to cover the failed investments in those other businesses.  So what are the odds?  Are you sure you will be one of the lucky ones?

2  It will put strain on your relationships

When you run your own business it nearly always takes time.  A lot of time.  If you have had children and gone through the ‘terrible twos’ then you will understand what I mean when I say a new business is demanding, just like a toddler.  It takes time and energy.  Of course, so does holding down a job, but running your own business is way, way more invasive.   Many successful business people have left behind them a trail of broken marriages and damaged friendships.

3 It is difficult

Don’t believe those that tell you starting a business is easy.  ‘Just follow these 10 simple steps to business success’ etc.  Business is hard.  And small business is the hardest of all.  Because often there is only you to get the product right, to deal with customers, to do marketing and sales and to manage the money.  In a small business one mistake can take you down for a very long time.   Big business can afford the odd dodgy product launch.  But for small business it may be the end of the road.  You get sick as an employee and there will probably be a job for you to go back to when you are well.  You get sick when you are the business and that might be curtains….

4 Everyone becomes a mark

Unless you are careful the pressure to sell your business will turn everyone that you meet into a potential sale.  Not so long back I heard a primary school teacher telling one of the charges in her enterprise class that ‘everyone you meet is a potential customer’ and ‘remember you are ALWAYS selling’.

5 You become a mark

Once you have got a business everyone is trying to sell you something.  Mobile phones, office equipment, a sure-fire way to earn money while you sleep – yada, yada…And if they are not trying to sell you something they will portray you as a profit obsessed capitalist taking us all to hell in a handcart, profiting from the poor and ruining the environment.  You had better have thick skin.

6 You may become obsessed with money

Because that is how you ‘keep score’ in business.  It is  not enough to do good work. That work has to be profitable.  And if you have not got deep pockets it has to be profitable quickly.

7 You become a lackey to Government

Contributing to their goals of a sustainable growing economy, rather than a sustainable planet, collecting taxes for them and generally helping them to maintain their economic scorecard

8  You become that evil bovine master

When you start a business you are the daddy.  Or mummy.  You are the idiot.  And the hero.  It all rests on your shoulders…

9 You will have an inbred social life

I have met so many entrepreneurs for whom their business has become their life.  And they are trapped in it.  They can’t stop trading, but nor can they make good money. And if they do make good money then they have no-one or no time to spend it with.  They are literally married to the business.

10 You become a coward

If you are lucky, you find what works and you stick to it.   You don’t take major risks.  You can never walk away.  Just day after day the same old same old feeding the beast.

Now of course my 10 reasons are no closer to the truth than are Steve’s.  And that is the point.  No-one can tell you what the right thing is for you to do.

Not now.  Not ever.

So, the next time a slickly dressed and white-toothed smiler promises you that jobs are for idiots and that you too can make money while you sleep, well my best advice is just to look that particular gift horse in the mouth, very carefully.  Especially when they close their post with a link to your very own ‘Make Money Online’ business.

Crib Sheet for The Entrepreneur’s Workshop

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A Crib Sheet

Workshops are fascinating and dangerous places. In the right hands they can produce things of great beauty and real lasting value.  In the wrong hands they can do great damage and wreck lives.

The entrepreneur’s workshop is no different.

True enough; the tools in the entrepreneur’s workshop have no sharp edges, burning fires or high speed drills.

The entrepreneur’s tools are a set of ideas, principles, practices and habits that, applied with care and passion, can produce a wonderful lifestyle.  Learn to use these tools properly and they will serve you well.

Misuse them and the consequences are likely to include debt, damaged relationships and misery.

10 of the most powerful tools in The Entrepreneur’s Workshop:

  1. The Truth Detector – How to decide what might work for you
  2. Want to or Have to…?
  3. The Double Edged Sword
  4. Getting Organised – doing what has to be done, and doing it well
  5. Entrepreneur Artisan or Artist?
  6. Have, Do, Become…
  7. Build a Team OR Do it All – the choice is yours
  8. The ‘investment ready’ Business Plan
  9. Situational Enterprise – the importance of technique and motivation
  10. Towards the Total Quality Enterprise – a tool to decide ‘What’s next?’

For more information contact Mike on 07788 747954

Twitter: @mikechitty

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