Focus on Strategy

Entrepreneurs like to get their hands dirty and are involved in doing stuff. This is as a result of their expertise, desire and passion.

What happens as their company grows? They cannot be only involved in “doing,” they have to focus on strategy.

An analogy would be that of an entrepreneur who is an expert in building a widget. He/she can spend enough time on developing and building the perfect widget. However, at some point the focus should be on developing a strategy of how to market and sell the widgets, building lots of widgets at a low cost, creating the organization to build and sell widgets, opening new locations, and so on.

Entrepreneurs have to shift their role from “doing” to “strategizing” in order to get to the next level.

Ravi Patel

 

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Published in: on July 19, 2010 at 5:36 am  Leave a Comment  
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Being the Best versus Biggest

Entrepreneurs, what would you like your company to be – the best or the biggest? A quick, flippant answer would be to be both.

Becoming the biggest is a lofty objective, but achievable if you have a special niche in the marketplace. Being bigger, with reasonable profitability, allows access to resources for further growth. However, the entrepreneurship spirit is often lost as the size of a company gets bigger. More importantly, being the biggest says nothing about the quality of the organization. Being the biggest could mask inefficiencies in the short term.

On the other hand, being the best reflects a philosophy regarding the quality of products and services, processes, customer service, people and so on. All these have to be exceptional to be the best. While short-term costs may be higher to achieve the status of being the best, the long term prospects for growth are phenomenal. Competitive differentiation is most pronounced with being the best and might allow a premium for one’s goods and services.

Being the best allows you to become the biggest, but being the biggest does not automatically mean that you are the best.

What would you rather strive for – being the biggest or the best?

Ravi Patel

 

Published in: on July 12, 2010 at 5:14 am  Leave a Comment  
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Entrepreneurial Independence

Having just celebrated our nation’s Independence Day, a few thoughts on Entrepreneurial Independence.

Entrepreneurs start their own businesses primarily for two reasons. They either believe that they have a better product or service, or they do not want to work for anyone else. The latter is born out of a desire of having their own independence.

As they grow their companies, Entrepreneurs lose their independence because they cannot effectively manage their businesses and/or get into a financial bind. In such cases someone else has to come to lead the company or exercise financial control (through investors or lenders), depriving Entrepreneurs of their independence.

How can Entrepreneurs maintain their independence?

First, understand one’s limitation in managing the business and build an effective management team to adequately complement the Entrepreneur. An enlightened Entrepreneur might even have to hire a CEO or COO to lead the operations of the company while the Entrepreneur focuses on his/her core strengths.

Second, pay attention to the financial strength of the company. Manage the growth and cash flows effectively such that lines of credit and borrowing are sufficient so as not to dilute equity. Even if equity capital needs to be raised, go for it when the value of the company is high enough so that the Entrepreneur can retain the majority stake.

Entrepreneurs can maintain their independence, but they have to work at it.

Ravi Patel

 

Published in: on July 6, 2010 at 5:44 am  Leave a Comment  
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