There was an interesting programe on BBC Radio 4 last week that discussed entrepreneurship and the rationale for going into business as distinct from searching for paid employment.
The Bottom Line, hosted by Evan Davies, had three people who had left highly paid employment mostly in the financial industry to set up their own small business, together with a representative of a Venture Capital fund who has invested in start-up businesses.
The contribution from the entrepreneurs was perhaps as expected. They enjoyed the relative freedom especially the fact that they no longer were tied to the regular and mind numbing commute into the centre of London.
Add to that the newfound ability to run the home as well as the business was very desirable together with a feeling of freedom in setting the times to work.
All very positive although there were some downsides that were to be expected. In the main they were all surprised at the number of hours that they had to work to make sure that all the bases were covered. If it wasn’t production (one of them was making and selling artisan jams) it was having to do the accounts and indeed all the associated administration themselves.
I recall myself when I ventured into self-employment a long time ago I called it the Copy Syndrome. In my paid emolument to get a copy of a document all I gad to do was to pick up the phone and ask my PA to do it.
Now I had to do it myself and as it was before the advent of copier/printers I had to go to a local copy shop. As it was always raining, or se3emed to be, usually my final decision was not to bother.
This lack of support comes as a shock and has to be combatted. If the business is funded then it is naturally feasible to employ the support from the start but normally it is the owner on his/her own in the big world of business who has to do it.
The other point is the hourly cost of doing just that. I reckon that if many entrepreneurs calculated their actual hourly remuneration it would be seriously lower than the National Living Wage in most cases.
Irrespective of that there is a huge recompense to the entrepreneur in creating something ex-nihilo, that is out of nothing except the desire to succeed.
All the entrepreneurs on the programme made this point as well as the level of hard work that self-employment demanded but without suggesting that it was a problem.
One of the participants ran her business very satisfactorily but had decided that the experience was sufficient and had reverted to getting a job again.
I could relate to everything that the entrepreneurs said but was disturbed by the opinions of the venture capitalist.
For a start he said that potential entrepreneurs shouldn’t go into business on their own and to mitigate the problem they should seek out a partner. In my consultancy days I made good money from unscrambling unsatisfactory 50/50 partnerships that had gone sour.
By all means take on good people who can contribute in the early stages of the business and even let them invest if it is appropriate and if they wish but NEVER 50/50 or even worse, three equal shareholders.
His other dictat was that going into business on your own will be (note: will be) in order to make money and therefore running it for the bottom line was the raison d’etre. Normally a VC will invest in a business to grow it and then to sell it four or five years on so his comment was understandable.
While prudent accounting is an essential part of the process because we want the business to be profitable, the real drive has to be to follow the dream to create something for the future.
It is exciting, very demanding, constantly in the thoughts, creative and completely compelling and most entrepreneurs would agree, they wouldn’t want to do anything else.
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