How do entrepreneurs create their start-up strategy?
Challenges To Entrepreneurs Starting A Business Today
The greatest challenge a new business venture faces is getting the right things done in the right order. Knowing what to do, and in what sequence, is critical, especially since the entrepreneur has very limited time and resources. Craig W. Johnson, chairman of the Venture Law Group, once said that starting companies is much like launching a rocket: If at launch you’re just a fraction of a degree off, you could end up a thousand miles off course downrange.
Are you ready to be the lead entrepreneur?
- The pressures on the entrepreneur leading a new venture are relentless
- The obstacles and challenges are formidable
- Everything takes longer than planned
- Gaining traction through market credibility and respect is very difficult
- Forecasts are rarely accurate, and just making more sales does not always solve a cash crunch
- Relationships with suppliers and buyers are more demanding, and just getting paid on time is not always easy
- Competitors seemingly come out of nowhere at the worst times
- Building a good venture team is difficult and time consuming
- Leading and managing the team is the biggest challenge as there will be numerous conflicts among partners and investors
The problem is entrepreneurship has been rebooted and the rules of launching and financing a venture have changed. The global economy has been struggling along and there is no shortage of geopolitical tensions.
Diane Swonk, chief economist and senior vice president at Bank One Corporation, explained that the drivers of uncertainty in the financial world are both numerous and diverse. In fact, she states that the most uncertain times in global financial history started during the past decade.
Events that caused financial uncertainty in the last decade were:
- 1997: Thai bhat devalued
- 1998: Russian default
- 1999: Brazilian real devalued
- 2000: NASDAQ tech wreck
- 2001: Terrorist attacks on World Trade Center and Pentagon
- 2002–2003: Corporate governance crisis
- 2008: Sub-prime mortgage meltdown
The landscape of business is now integrated with the threat of global terrorism on our soil and the impact on the U.S. economy is only beginning to be understood. This threat of terrorism is slowly being incorporated into business planning and operations. Alexis D. Gutzman, writing in Unforeseen Circumstances: Strategies and Technologies for Protecting Your Business and People in a Less Secure World, tells us that “September 11, 2001 was a wake up call for businesses. Many standard business practices were suddenly identified as risky behavior.” As for business planning, she notes that “any book that was published before January 2002 on the topic of business planning is probably obsolete.”
According to Steve Forbes, editor-in-chief at Forbes magazine, all these events have put investing on hold in the United States. Forbes says that more than $2 trillion was on the sidelines in the cash markets. These stark tales of uncertainty underscore a new reality confronting companies everywhere.
Bill Gartner, a professor of entrepreneurship at the University of Southern California’s Marshall School of Business, looks at these problems through the eyes of entrepreneurs. Gartner says, “It’s not that there’s not money out there, it’s just that the money doesn’t meet up with the ideas.” Entrepreneurs need to focus on the real problem. He adds, “They don’t know the right people, they don’t understand the industry well enough. That’s what they really need to concentrate on.”
Successful ventures coming from today’s challenging and uncertain times will be built on value. For the past twenty-five years Venrock Associates, based in Menlo Park, California, has managed the Rockefeller family’s money. The firm made money on start-ups like Apple Computer and Intel. According to Tony Sun, a Venrock partner, “Historically, the best companies are started in the down times, because during those periods entrepreneurs are very focused on creating core value and building enduring businesses.”
Our Solution: Back-to-Basics Approach
As we stated, knowing what to do today, and in what sequence, is the problem. Our Web site and Web resources help you identify and analyze the right strategic steps, and leads you through in the right sequence. As the rate of technology development and the pace of competitive pressures accelerate, the flying-by-the-seats-of-the-pants approach to management just is not cutting it. Entrepreneurs must now launch and operate their ventures into a highly unpredictable environment.
Our solution is based on a “back-to-basics” approach to entrepreneurial discipline. Discipline is the act of encouraging a desired pattern of behavior. George Washington said that discipline “is the soul of the army. It makes small numbers formidable, procures success to the weak, and esteem to all.”
We say that entrepreneurial discipline is the orderly conduct that holds a new business venture all together. Karen Griffith Gryga, a principal at Liberty Venture Partners, says that “it may feel like tough medicine, but it is aligning the risk-reward profile of today.”
Ironically, the phrase “back to basics” entered the mainstream business management world following the recession of the late 1970s. First prescribed as a solution in 1982, In Search of Excellence by Tom Peters and Robert Waterman went on to become a classic. It is still found in bookstores today.
Jim Collins, co-author of Built to Last, provides sound advice to entrepreneurs in these uncertain times. According to Collins, we don’t need to throw out the fundamentals but just do a better job of applying the fundamentals.
The rebooting of entrepreneurship leaves entrepreneurs running a business today with some vexing questions:
- What has changed?
- What is the next milestone?
- Are we jumping ahead too fast or taking too long?
- How do we manage this process?
- How does entrepreneurial management and practices differ from the management practices we know in the corporate world?
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Global Entrepreneurship Program – Creating Your Start Up Strategy