THE ENTREPRENEUR AND MAKING MONEY
Recently I met a young man in the US who is very talented at what he does. Unfortunately, he is having trouble funding his ventures. His problem is that whilst he understands the importance of business principles, he does not really like the business side of his projects, e.g. preparing a business plan for starters.
Unfortunately, this young man is not alone in the entrepreneurial world. Too often we see great entrepreneurial minds lose their way in the business world. This happens mainly because of their lack of business acumen and willingness to learn how to deal with the people with the money.
Therefore I thought it timely to put forward a number of ideas for entrepreneurial minded people to consider when considering entering the business world. Hopefully these ideas will assist entrepreneurs create a more viable business which allows them to achieve their commercial potential.
BUSINESS PLANS - are an essential part of developing any business, especially if you hope to obtain finance from others to fund your business. Here are four points to consider.
1 A business plan is one of the means by which entrepreneurs and finance people communicate with one another and understand the possibilities of any project.
2 A business plan helps the entrepreneur define their project to the market, to define the possibilities, to identify the approximate costs etc. of their project.
3 The business plan helps the entrepreneur understand and define their own project to themselves.
4 The business plan is the starting point for the finance person to evaluate the entrepreneur's ability to understand their own project.
5 A business plan does not have to be a fancy long winded document which is set in concrete.
FINANCIAL STATEMENTS - An Understanding
Whilst it would be a good attribute for an entrepreneur to fully understand financial statements, the reality is that most entrepreneurs will never fully understand these documents.
What the entrepreneur should do however is have a basic understanding of the core figures of their business. Just like a Director who is responsible for what happens in their business, the same applies for the entrepreneur. Responsibility for their financial welfare ultimately rests with them.
Therefore, the entrepreneur should have a basic understanding of the Balance Sheet and the Cashflow Statements. This level of understanding is required so the entrepreneur is be able to pick up any major discrepancies and can ask relevant questions. For example, questions such as, if sales are up, why are profits not also up, or what assets does the business own and what liabilities do they have to pay?
These financial and business issues are as important to the entrepreneur as is the work they do or the ideas they bring to their business.
A TRUSTED ASSOCIATE OR MENTOR
The hardest relationship to develop in business, is the one between an entrepreneur and a trusted associate or mentor. Most entrepreneurs must understand that a trusted advisor or mentor is there to protect them. In other words, their trusted advisor or mentor helps protect their back in the tricky world of business.
The difficulty in developing this type or relationship is caused because of the aforementioned characteristics are so far vastly different. What you need is an entrepreneur who understands their ultimate success comes from accepting a degree of financial and business discipline. The trusted associate on the other hand, understands that within reason, they must support the entrepreneur in their ideas and creativity. Their use of the word NO needs to used carefully
These explanations identify why this is a truly special relationship. However, when the right relationship is developed where trust and empathy for the other party is developed, financial success can follow.
The entrepreneur is usually very good at what they do, such as being an artist, painter etc. However they are usually very bad at managing the business decisions which lead them to commercial success.
Therefore to succeed in what they like doing AND be a commercial success, the entrepreneur would be wise to learn how to complete a business plan, gain a basic understanding of financial documents and find a trusted advisor or mentor.
If the entrepreneur can understand these concepts, they are more likely to gain the finance they need and be a financial success.
May you be paid today rather than tomorrow