As I continue down the path of building a business, I’m learning that part of the reason it’s so difficult to win as an entrepreneur is that there is a constant balancing act that must be mastered. Entrepreneurs have to walk a number of tightropes, and they’re not for the faint of heart. Here are three tightropes I’ve noticed through the years. Learn to master if you want to find success as an entrepreneur:
- Healthy Expansion vs. Overextension
One of the biggest reasons small businesses fail? They spend more money than they should and overextend themselves. Another top reason? They fail to expand their business and aren’t built for sustainable growth.
There’s not a uniform test to discern the difference between healthy expansion and overextension, but there are two concrete things you can look at: your bank account and the structure of your business. This may seem obvious, but it can be hard for the overambitious entrepreneur to be rooted in reality and recognize overextension. On the flipside, it can be hard for the head of startup to see that their internal structure needs to change to allow for growth.
Much like the PTA parent that doesn’t think their kid can do anything wrong, it can be hard for entrepreneurs to honestly evaluate their startup. It is, after all, their baby. But a good, honest look in the mirror can help you walk the tightrope of healthy expansion versus overextension.
Additionally, set some ground rules from day one about finances. There’s not a “one size fits all” set of guidelines here. Far more important is that there are agreed upon guidelines that don’t vary. For instance, when I started Vanderbloemen Search Group, my wife and I agreed that there would be no venture capital, and no debt. That limited the fast start a lot of companies need, but for our niche it was the right move. To this day, we stick to those principles and it’s yet to fail us.
- SOS vs. Core Business
By nature, entrepreneurs have what I call “SOS” (Shiny Object Syndrome). We are a people that love to see the new, the disruptive, and the opportunity before everyone else. However, Shiny Object Syndrome can cause you to neglect your business’ core offering/mission in favor of the latest thing that catches your eye. For example, Walgreens actually invented the chocolate malt! But it didn’t make them much money and took away from their core business. Eventually, they had to quit the food prep business and focus on their own bread and butter: pharmacy and grocery goods. They had too much SOS, and not enough focus on their core business. Narrowing their focus was a key to major breakthrough as a business.
I have a friend who works at Bain who once told me that almost every client looking for growth in new areas achieves it by building out their current core business offering. The balancing act here is knowing when to turn off the part of your brain that made you successful in launching your startup. It was that calculated risk-taking, along with the ability to see new things on the horizon before others, that got you this far. But if you can’t reel that in from time to time, it’ll come back to bite you.
On the other side of this tightrope is the importance of trying new things. Great entrepreneurs can spot a need and respond by building a business. It’s how Richard Branson built Virgin Atlantic. He was scheduled to be on a flight to the British Virgin Islands, but the flight was cancelled due to a low number of passengers. He really wanted to get to the Virgin Islands to meet a date, so he chartered a plane, sold seats on it, and Virgin Airlines was born. But more than just an airline, Branson infused his core business (entertainment) into his new one. Virgin was the first airline to offer individual TV screens and channels for every passenger. It all came about organically: the right balance of SOS and focus on core business.
- Sales vs. Delivery
Almost all great entrepreneurs are also great sales people. And that’s needed to make a business grow. If I hadn’t cold called and visited pastors I knew from my previous career when I began Vanderbloemen Search Group, we wouldn’t have had any business. But that love for sales that I share with most entrepreneurs can also be an Achilles heel.
There’s always a danger of outselling what you can deliver. My friend Lizanne Falsetto, CEO of thinkThin, got a huge contract to supply WalMart. It was a great sales moment. But the problem was she only had a few people working for her. She said it was almost worst decision she’s ever made. They made it through and she successfully scaled out her business, but it came at great cost. Do all that you can to deliver all that you can. But if you can’t deliver it, don’t sell it.
I wish I could give you an easy three-step system to find success in your business, but it simply doesn’t work that way. Being an entrepreneur is hard, but if you can master these three tightropes, you’ll be in great position for long-term success.
By William Vanderbloemen
