Thursday, May 3, 2007

Some Common Mistakes Made By Entrepreneurs in the Start-Up Phase

Whether you have been successful at starting a previous venture or never thought about creating a legal entity to extract money, the biggest character issue and most destructive to your business is thinking that you know everything. When I realize that I cannot make a decision on a matter, naturally I look for advice; this happens to be more often then not. Normally, the advice I need is on a general level so that I receive understanding, rather than help on a technical situation. It is very important to have a great group of individuals who think differently and promote your ability to think outside the box.

If you are looking to run a successful legal entity which extracts money at a consistent pace, then it is necessary to incorporate a group of advisors into your business; the board of directors. Unfortunately, many start-up companies or sole proprietors do not incorporate a board of directors into their equation. A board of directors (advisors) is designed to help businesses stay and play in the community. The board of directors can give the entrepreneur ideas, different perspectives, contacts and referrals, feedback, and advice.

Let’s take a moment mentally to really think about this…If you are a sole proprietor or a legal entity with a new idea, implementing that idea alone is very nerve-racking. The emotional feelings that come with implementing a new idea can keep you up all night because new thinking produces feelings that are very uncomfortable to you emotionally. Maybe it will work, and maybe it will not. You may have an understanding of how to pull it off, but still, you may not. If you had a board of advisors, you could run the idea past them first. They could provide insight to determine if it really is a great idea before you invest a lot of time and energy into it. They may even have ideas about how to improve it, or they may direct you to people who can help you to better implement the idea. That is the purpose of a board of advisors.

In order to run a successful company, you must be willing to lay down your ego and listen. The average sole proprietor or legal entity operating without a board of directors shows all of the signs that they know everything and that they are smarter than their help. Creating a strong, experienced team of advisors can make a huge difference in an early-stage legal entity. One of the things I have shared with partners over the years is how to incorporate different individuals to complement the other’s experience. When looking for board members, you will want people who:

1. Complement your experience by being strong in areas in which you are weak.
2. Have previous board experience.
3. Can give you proper guidance without playing the devil’s advocate.
4. Can receive your vision and can communicate it to others.

Word to the Wise: Never get lost running the day-to-day things and forget to lead the troops.