As an economic development professional, you not only need to be concerned with the health and aspirations of the mid-to–large sized employers in your geography; but, you also need to be watchful of the health of the entrepreneurial community.
Effective economic life cycle management requires a virtuous circle of successful entrepreneurial companies succeeding to become mid-sized and eventually grow into large scale companies which in turn create a demand for new entrepreneurs to help meet business challenges. Economic systems built primarily on entrepreneurial activity are not as robust because the innovation efforts are more narrowly focused on meeting a specific company’s challenge versus broader commercialization.
Failure to have an active entrepreneurial community leads to economic system atrophy and an eventual death spiral as many larger employers run the risk of becoming increasingly irrelevant in the market and demand for their product or service declines. On a macro (and admittedly simplistic) level, effective life cycle management helps minimize this risk and leads to economic health and vitality.
Just as a product brand manager must listen to the voice of the consumer and manage the brand product portfolio effectively by adding and subtracting line extensions to maintain overall profitability; so does the place brand manager need to listen to the voice of the capital investor and adjust the business climate to ensure sustainable long-term job growth and economic prosperity.
In order to create a better business environment for entrepreneurial success, it helps to understand the key drivers of failure. To that end, I asked a group of entrepreneurs, the following question – “Based on your experience, what are the three greatest barriers to entrepreneurial success?”. The answers fell into four categories – 1) capital access, 2) over confidence, 3) non-competitive idea and 4) poor management.
|CAPITAL ACCESS||Lack of Capital (2)Not enough money to get your enterprise aloftLack of Start-up funds in cash and encouragement by the business community to secure borrowed funds for day-to-day operationFeeling like a small potato in a giant field of turnips (not being taken seriously in order to receive actual no or little cost help whether that be financial or council.|
|OVER CONFIDENCE||Eagerness to take on debt. This limits one’s options.Lack of Talent (2)Lack of objectivityFailure of the entrepreneur to understand his/her own skill set limitations.Entrepreneur’s failure to fully recognize the importance of professionally selling the idea or concept. (i.e. thinking a unique or technically innovative idea will sell itself)”The Ladder of Inference”, a principle in cognitive psychology wherein the human mind filters incoming information to support prior beliefs. This tends to distract the listener into distorting genuine new information.
Inability to do proper full-scale consumer research in order to either strengthen the idea or throw it out and start fresh.
Everyone is so involved in themselves, which means the product or service being developed has to revolve around a mindset which is completely closed off to a new idea. People generally don’t allow themselves enough time to truly listen to something that could be a prize especially when the entrepreneur has little money or “official” education.
|NON-COMPETITIVE IDEA||Lack of winning IdeasThe time limitations of making a 60 second elevator pitch as a project manager. American’s like simple answers. Life is not so simple sometimes. A new idea could be genuine and ultimately valid, but if overly summarized, it could appear to be wacko.Inability of entrepreneur to develop products or services that customers actually want and will pay for (listening skills).Most companies don’t: • Define who their brand • Communicate who they are • Deliver what they promise Here’s the checklist: Who are you as a company? What exactly do you do? What makes you different than your competitors? Who cares about all this? Is your difference compelling enough to motivate action? What do you promise to your customers? Can you deliver it? Can you deliver it consistently?|
|POOR MANAGEMENT||A failure to create a business plan that allows for adequate profit.A failure to vigorously control costs. Entrepreneurs should endeavor to be the low cost provider.Lack of processLoss of focus on the best uses for early limited capitalFailure to pull in people with complimentary talents to balance the entrepreneur’s – and willingness to trust and empower themLack of strong marketing and sales support: understanding the customer your product services and ability to reach them
Some of the best talent forgets that as a system becomes more complex, a greater portion of the continuous process improvements result from increased efficiency in inter-personal business relationships. In other words, there are many elements to success in the marketplace, other than just having a better fundamental widget or gadget
Not hiring the right people to get on the bus, and once on, not figuring out which seat they should be sitting in.
Once success sets in and real profits are being made, many first time entrepreneurs seek to increase material possessions transferring company earnings to person wealth rather than taking the profits and re-investing in organizational growth, business and product development, and talent acquisition objectives
Failure to develop a Business Mindset which is required to protect earnings, build bench-strength, and obtain capital assets as well as plan for the future