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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