Independence for Entrepreneurs

As we are about to celebrate 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

www.patelCFOservices.com

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Letting Go

Parents have a difficult time letting their children venture out on their own – from the first play date to leaving home for college.

Entrepreneurs are not so different. When their businesses grow and new management is required or when Entrepreneurs need to move on to other things in life, they have a traumatic time letting go.

The successful Entrepreneurs are the ones who foresee such separations and prepare for such. Hiring the right management team, a capable Board of Directors or Advisors, and trust in their people and processes to continue the Mission of the company allows Entrepreneurs to easily transition away from day-to-day operations of the business.

Have you prepared your company and yourself to let go gracefully?

Ravi Patel

 

Published in: on June 6, 2011 at 5:01 am  Leave a Comment  
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Board Presentations by your Management Team

As Entrepreneurs develop their management teams, it might be useful to have key members make formal presentations to your Board of Directors or Board of Advisors.

Making presentations in the functional areas of their responsibility or regarding a major project that they are managing not only provides the management team an opportunity to prepare for and shine in front of the Board, but allows the Board to learn useful information about the company and assess key officers.

The preparation sharpens the communication skills of the members of the management team and allows them a real opportunity to interact meaningfully with the Board. Then the Entrepreneur can then sit back with pride and watch the benefits of developing  a good management team.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com