“I’m not saying that I have this all together…but I am well on my way, reaching out for Christ, who has so wondrously reached out for me. Friends, don’t get me wrong: by no means do I count myself an expert in all of this, but I’ve got my eye on the goal.” – St. Paul
My writings and stories do not come from a place of lofty self-exultation, but rather, the opposite: please don’t make the same mistakes that I have made. I have learned too much as a business owner, entrepreneur, and Impact Capitalist that I can’t not share my experiences.
Being a business owner and entrepreneur has, at times, almost ruined my life, my relationships, and my marriage. Conversely, I have earned an education from the “School of Hard Knocks” that I could never have received from any academic institution in the world. This is not a negative reflection on academic institutions as I have been a professor and teacher at times in my life. However, very few academic courses about business ownership or entrepreneurship – and this includes social entrepreneurship – can truly share what life as a business owner or an entrepreneur is truly like.
To be sure, there is much to be learned by studying business ownership, entrepreneurship, and entrepreneurs. However, the vast majority of business owners and entrepreneurs will likely never have the opportunity to learn in a classroom. Business owners and entrepreneurs are constantly learning, but it is on the fly and, unfortunately, mostly after the fact.
The marketplace can be a fabulous teacher; but the cost of tuition is incredibly high. There is nothing that can keep you from paying: either you experience the gut-wrenching, when-will-this-end, why-did-I-start-this frustration for yourself, or pay someone to help you navigate the craziness of the highs and lows of entrepreneurship. The reality is, however, that you’re probably going to have to pay for both.
With that, we now come to the main topic for this post:
This post, however, is not about the value that your business creates or would create. While it is the aim of every business to create value, much has been written in both academic textbooks and practical “business” books on the topic of value creation.
So, maybe the proper topic for today’s post is not simply “value” or “value creation” but compensating others for providing value to you.
It is a very difficult task to determine someone’s worth, merit, importance, or usefulness, as it relates to you and your business. Value is a very relative and subjective concept. What I may consider a valuable product or service, you may see as something of little use.
Business owners – especially entrepreneurs – by their very nature, are always looking for ways to add value to the economy or society, but they are horrible at compensating others for adding value to their business(es).
Why is this?
From my life as a business owners and an entrepreneur, and from my career of advising business owners and entrepreneurs, I’ve determined that there are three reasons. The first is relatively simple, but it’s difficult to understand: most entrepreneurs and business owners overestimate their own importance. The reasons for this are beyond the scope of this blog post. Maybe I’ll tackle this hamartia in a future blog post.
The second reason is much more complex, but easier to understand: entrepreneurs operate in a mode of scarcity, that is, trying to satisfy unlimited wants with limited resources. Because of this, entrepreneurs choose not to seek the advice of others, especially if there is a cost involved. Hubris and lack of resources are a lethal combination that kills many entrepreneurial ventures.
The third reason is simply that entrepreneurs don’t know where to go for help. Not being able to find or have access to good advisors and resources, while a problem, is less of a problem than “bad” or inadequate advisors when trying to see the supposed “value” of others. Entrepreneurs see these people not as “business builders” but as “business suckers,” actually draining resources from the business rather than adding value.
Yet, for the empowered entrepreneur and impact capitalist that realizes that he or she can not do everything by themselves, they have to figure out who it is that can actually add value to them and their business.
Who are those that add value to the business owner and entrepreneur?
In order for a business owner or an entrepreneur to provide his or her maximum value to the economy or society, the business owner must have advisors.
(Watch out for those who are providing advice for free because they “want to give back.” I’m not saying that all people who provide “free advice” are bad, but there is only one of two outcomes: 1. That person looses interest or 2. That person eventually wants some form of compensation or ownership in your company. For more on this discussion, look to future blog posts.)
So, who are the advisors that business owners and entrepreneurs should look to? While the list below may not be exhaustive, it does provide a list of at least the minimum types of advisors needed for a successful entrepreneur:
1. Someone who knows what you do not. (This could be a partner or a strategic advisor.)
2. Accountant (Be careful…there are “bean counters” and “tax advisors.” Know which one you need; sometimes you’ll need both.)
3. Attorney (Be careful…there are “order takers” and “counselors.” Know which one you need; sometimes you’ll need both)
4. Financial Person (This could be an investor but not a “financial advisor” or an “investment manager” unless they have extensive experience working with and investing in privately held, entrepreneurial ventures, which is highly unlikely)
5. Board of Advisors or Directors (There are benefits and expectations to and for both you and the Advisors or Directors)
In the next two blog posts, I’ll discuss these advisors, their roles, and the four ways that entrepreneurs can compensate others for the value that they add.
“Nothing is more difficult, and therefore more precious, than to be able to decide.” — Napoleon Bonaparte