Entrepreneurship Tips

This is a simple but good question, but does depend on what your definition of “successful” is, too. A lifestyle business is successful if it provides a decent living for the owner. Most freelancers, consultants and coaches are this kind of business. So are most local retail stores. They sell commodity products and services like millions of others. To me, a successful business is one that can reach multi-millions in revenue, create jobs and has good margins for profit that can be reinvested to grow the business. This kind of business can grow exponentially and reach hundreds of millions in...

There are too many to list individually, but most come from having someone with experience. People often confuse smart with experienced and think they can do anything new well. Science and logic says this is not possible with anything complex. Few things are as complex as entrepreneurship. Hardly anyone would read a book on flying and hop in a plane alone to fly it. Or try to climb Mount Everest alone. But everyone thinks they can build a new business for some strange reason. As a result, we have an 85% failure rate of new businesses. Ones with coaches and...

I see the question “What one quality must an entrepreneur have?” and I never answer it because it is a dumb question. Listing one would be imprudent, as any entrepreneur needs many qualities to be successful. No one will ever make it on a single quality, and I would not want to mislead people. Here is my list of several that I believe are all necessary, not optional, to create a significant business: Raw intellect to do critical thinking and analysis so they can make data driven decisions Management experience to hire, fire, coach and manage people. I do not...

Debt if there are assets or cash-flow or a “Play or pay” round. A tactic to force people to ante up a pro rata share because the price is lower than the last one (down round) and so those that do not put in their pro rata share are diluted significantly. Think about it. If you bought in at $1.00 and the company made little progress, but still has lots of potential, then if the Board/CEO offers new stock at $0.30 you almost have to buy if you still believe in the potential or just the new money will get...

You generally only lose control when outside investors own over 50% of the voting shares. That said, many deals contain “Covenants”. Even a bank will request certain things never be done without their approval. For practical purposes, because the management team is likely to vote together unless there are serious problems, when the outside investors collectively own 50% of the remaining shares is what matters. Because if the management team owns 33% (of voting shares), and the outside investors own 66% they would need a lot of unity to override the founder’s board and share votes.  In this example, the...