What makes a successful entrepreneur?
This is how most employees sees their business:
He lives from paycheck to paycheck with the constant fear of retrenchment as he progresses up the corporate ladder. He is concerned only with his salary, the amount of increment at the end of the year, the size of his bonus and the number of leave days.
This is how an entrepreneur sees the business.
Not only is he aware - strategically - about the cost structure of his business, but also motivated to be creative and innovative so as to maximize his profits.
Four years into trudging and bruising, I retraced my steps and got myself thinking about what makes an entrepreneur, a business owner, a founder, and what drives them to do the stuff they do.
Most people go into a new venture for the money. Some do it for the publicity. The media does a successful job of dramatizing those who start a business or raise their own fund. In fact, to me, it should always be about the money. I'm not being a mercenary, it's just more commercial. Unless you are operating a charity or social enterprise, starting a new business should always be about maximizing profits. Companies are sometimes willing to provide incentives and discounts to key customers or early takers at the expense of profits. This is fully understandable. That discount is an intangible marketing and relationship building cost - the company expects that goodwill to pay off in the future.
There's a lot of fun in building a business. But beyond the fun and the congratulatory notes from supportive friends, I sometimes wonder if people really know what they are getting into?
I caught up with a friend recently and shared with him what I'd been up to the last few weeks and months. Despite all the gloom around travel restrictions and crimping of dealflow, etc, I was sanguine and I got him enthusiastic about what we've been doing, the multiple platforms we have, the result of our hard work over the years, translating to tangible and "pursue-able" opportunities. He'd loved to be part of the "action".
I really don't think people really appreciate or know, first-hand, the pain and struggles experienced by being a business owner.
The pain of having to put up cash for operating overheads, do payrolls, pay for expenses, source for new revenue, execute, and yet, all at the same time, not having to draw a salary for yourself.
So many choose to see only the rosy side.
And because they see only what they want to see, they tend to be ignorant of what it really takes to operate a business and crystallize those nice sounding opportunities.
I am not trying to be a wet blanket. Neither am I belittling our achievements over the past 4 years, nor am I trying to discourage people from pursuing a dream of starting up. But the struggles undertaken by someone on the path of entrepreneurship cannot be adequately described through conversations, the sharing of anecdotes in webinars, or inspiring commencement speeches and classroom workshops.
Some years back, I'd closed a huge cross border M&A deal. Because of its size and complexity, it drew the attention of senior management, and as a result, I got an accelerated promotion (I think).
More than just the vote of confidence at the workplace, the project gave me breadth to exercise a great deal of autonomy throughout the negotiation process. Although fairly junior at that point in time, I was effectively thrown into the deep end of the pool to learn on the job.
I ran negotiations with various stakeholders in the project, piloted the financial model between two contesting bidders and coordinated the work streams between the stakeholders and lawyers. It wasn't a perfect process: I mucked up some of the translation at some of the meetings between the parties, ran into impasses at negotiations where I felt helpless, and broke some parts of the financial model.
Bankers who work on similar multi-million M&A and IPO deals often wear these similar deal creds like a badge of honour when they speak to their peer or at interviews. Some of them unfortunately become arrogant and get carried away by the false impression that they are highly sought after professionals just simply because they were on the deal team. I loosely coin this the 'hero mentality'.
It is also this misplaced sense of glory and pride that makes bankers arrogant. The hero mentality also leads many disgruntled employees from large organizations into starting their own business, falling flat on their faces and realizing later that it is not that easy after all.
When you are running a deal in an enterprise, your clients see you as the face of the institution you are working for. Most of them deal with you because of where you work, and not for the hero you think you are. Don't give yourself more credit other than the fact that you think you know what you are doing.
When you are operating your own advisory firm, your clients work with you because of who you are personally. You no longer wear the brand of a global institution. You have a significantly smaller reach and network. No one in the market knows you unless you have a personal dealing with them. The strength and extent of these networks are often smaller and weaker than what you think they are.
Assembling an M&A deal takes more than just execution. Beyond financial models and info memos, there are "hidden" work streams involving years of investing into relationships. Most clients will not deal with directly with you or pay you at a commensurate level working for a large financial institution. For them, the credibility and the branding of engaging with an internationally recognised firm is what they paid for.
So if you think that you did a lot of work in executing that M&A deal and deserve more credit than the organization employing you, think again - you probably would not be able to pull it off without leveraging on the global network and brand that is on your name card.
Adding it all up, it looks like the net result between staying as an employee and starting a new business, making profits and then eventually selling it for a buttload of cash could ultimately be the same. Perhaps one key difference there is that: While you can almost certainly live as an employee with a fixed income for most part of your life, there is no guarantee you can exit your business profitably as an entrepreneur.
That being said, the life skills you acquire from being a business owner is starkly different from an employee.
How does one define success in entrepreneurship? Can someone be considered a successful entrepreneur even when you are flat broke? Is the goal always to achieve a billion dollar valuation on your business? Is size the definitive metric for measuring entrepreneurial success?