All successful entrepreneurs are hardened believers in the idea they want to bring to market. They have a hands-on understanding of every aspect of their start-up from the outset. They are avid learners and don’t fear making mistakes. They know of the unmet needs in the market through direct research and study of trends; they have a good idea of where to find their potential customers; they network actively and are aware of the competitors in their chosen industry; they are mindful of their ideas’ USP (unique selling proposition) and communicate the same effectively; they are financially astute and disciplined; and they start off by doing most of the stuff themselves, relying on outsource partners, where needed.
They roll up their sleeves, work days and nights, by getting into the nitty gritties of organizing the business, making of products and/or delivering of a service. All this while, they know that they cannot go at it alone. It is when the game plan is clear in their head that they start looking for people who will become part of the dream they are pursuing. And this is why they lead by example, to inspire others to join them as partners or associates in their mission.
Here’s an example of what happens when you don’t lead by example. I have known an investor in London, who received GBP 500,000/- as a start-up fund from one of his wealthy contacts. This young gentleman had friends who were interested in starting their own businesses. One was keen on launching a real estate venture, the other, a recruitment business, and the third, a corporate finance advisory/consulting practice. The investor set up a holding company, which later took equity in these three businesses in return for providing capital. Approximately GBP 100,000 was invested in each enterprise, with the balance GBP 200,000 kept as a contingency fund.
The investor remained hand-off from the outset and relied entirely on his friends to make a success of their respective ventures. The early days were exciting. New offices came up in different parts of the city and people were hired. Projected revenues did not materialize in the first six months, and more funds were injected to cover overheads. Within a year, two of the business collapsed, and only one managed to break even and survived for a while. The investor relied on this third entity – the real estate business – to make profits in the ensuing months and years. This too didn’t materialize. Instead, the business continued to struggle for a year more, barely managing its monthly overheads, and not having funds to invest in much needed technology and promotion. In his progress review meetings with his friend, all he would hear is excuses. Sadly, the investor didn’t know enough about the market and the nature of business to make a useful contribution, other than rely on what he was told and the promises he was given. Within the space of two years, the half a million pounds seed capital came to naught.
The investor failed because he was unable to lead by example. He had no idea of the intricacies involved in each type of business and the key factors that would have led them to success. His friends were well meaning and had knowledge of the businesses they started through experience with their previous employers. However, they had never run a business on their own. The investor did not have the ability to assess the competence and commitment levels of his friends in terms of the tasks they were undertaking. Instead, he relied on their word and confidence alone.
Success in any entrepreneurial venture comes from leadership – both personal and business. To lead by example, any aspiring entrepreneur needs to be self-aware i.e., he should have a good sense of his strengths and weakness; must be self-motivated and self-disciplined to go the distance; have the essential competencies – functional, strategic and managerial with which to turn his passion to serve, into a resounding reality.The good news is that most of these competencies are acquired on the job by learning from mistakes. Experiencing setbacks in the initial years is a common feature among startups of all kinds. Being aware of such risks and having plans to mitigate them is of the essence.
Only when you lead by example, can you build credibility. Through credibility you attract talented individuals who share in your dream and have needed skills to strengthen your enterprise.