Does Your Startup Feel Like a Helpless Baby?
Entrepreneur's New Year’s Guide
In his book, The Emyth Revisited, Michael Gerber explains that most entrepreneurs are merely technicians in their business and not “business people.” For instance, a person may be a highly trained auto mechanic, but decides that he doesn’t not want a job any longer -- he wants to run his own business.
He opens a shop. He may start with a customer following but really doesn’t know much about payroll, marketing or customer and employee retention. So, one of two outcomes are bound to happen. One, the business will plateau. The mechanic essentially bought himself a job. Or secondly, the business collapses because the mechanic is too busy fixing cars and fails to market his business. By the time he takes his head out from under the hood, he realizes the line of customers has dwindled down to nothing.
Unfortunately, this is not an uncommon scenario. The Small Business Administration reports that most new startup businesses do not survive more than one year. But thankfully, for those willing to think outside the box and embrace the fact that there’s no need to go it alone in the early phases of growing their business, there are many innovative ways to avoid this situation.
Afterall, your business is your baby, and, just as with parenting, some form of incubation is essential when your baby is very young.
Hire a business coach.
A business owner can join a CEO peer group or hire a business coach to gain outside advice in the early stages of growth. Cody Sperber, real estate guru and founder of The Clever Investor, a real estate flipping training and mentorship program, says that “getting a mentor or coach you can trust is a must to get to the next level in anything you’re trying to achieve. A person who has real experience and is willing to give it to you is worth everything you have. A good coach will push you out of your comfort zone.” But, be careful, Sperber warns. “You don’t want your coach to become your crutch.”
Rob Dyrdek, a TV personality and founder of Dyrdek Machine, helps young entrepreneurs get a leg up in their business. “Don’t be afraid to ask for help,” Dyrdek says. “Some people are idea people and others are numbers people. A founder of a company needs to fill in the blank skill set with someone who exceeds where the founder lacks. If numbers are not your thing, get someone who is a numbers person. Without strong financials, you do not have a business.”
Invest in an incubator or accelerator program.
Another avenue for new entrepreneurs to get help is to enter into an incubator or accelerator program. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development. Originally, incubators were actual spaces where new companies would pay a fee for office and kitchen space -- with the upside being access to mentoring and coaching by other entrepreneurs under one roof. But lately, accelerator programs have become virtual and very robust because of social media. In addition, incubators, while very popular in the technology sector, can now be found in areas such as the new cannabis industry. Popularity is even growing in the “esports” competition sector -- organized multiplayer video game competitions, particularly between professional players. Many of these new accelerator programs have taken their support to new levels.
BITKRAFT Esports Ventures, the world's first esports-specific fund and accelerator program, provides deep access to connections in the gaming industry. “We rent VIP suites at esports events, host exclusive esports VIP dinner parties, and make sure that our startups gain exclusive access to potential partners (media/esports teams), and directly to their customers (often esports team owners) and potential acquirers," says Kalie Moore, head of communications at BITKRAFT. "This deep network enables our startups to grow and exit much faster than I've seen at more traditional accelerators.”
The Alexandria Group, which is in the life sciences industries, has not only built complete campuses for early growth companies, but has also built other verticals in their business to fill the need of new companies. Joel Marcus, president and founder at Alexandria Real Estate Equities, says that “it’s not enough to just supply a startup company with a roof over their heads and a networking group. Alexandria also will supply seed capital.”
The company has created an arm of their incubator company called The Launch Lab, which awards up to $100,000 in seed capital to promising companies. Alexandria Real Estate Equities does not require an equity stake in a startup company that it has nurtured. Taking a stake or receiving a percentage of revenue is sometimes a requirement to participate in an incubator program.
Joshua Webb and John David, co-founders of GrowthLi in Houston, are using both office and virtual incubation. They have seen that many new business owners have an ego to contend with and are infatuated with their business concept -- whether it works or not. Webb's goal is to help 500 businesses, over the next five years, get past their egos. He helped them grow into something far better than the founder’s original projections. Webb has also helped many well-known national franchise chains such as Applebee’s Restaurants and the UPS Stores. GrowthLi’s premise is to get owners to become open and vulnerable and willing to accept new insights into how to grow their business.
Incubation for franchises.
At NextGen, the International Franchise Association’s in-house, 5-year-old incubator program, John Reynolds explains that they administer what is really a contest among the best new businesses that what do become franchises. Franchise industry leaders see clearly that it’s important to help new, potential franchise owners grow with limited mistakes. But it’s also about giving back.
Within the franchise industry, there are thousands of years of combined business experience and for the most part, everyone is willing to share their knowledge and experience and help the new up-and-comers. David McKinnon, one of the founding members of the NextGen program, says that franchising has allowed him to change his life -- and then change the lives of many others. Within his former business unit, Service Brand’s International, McKinnon was able to help more than 300 people become millionaires within his franchise network. Now, he is offering that information to new, promising start ups. NextGen will receive 500 applications this year from more than 50 countries.
“We are looking for the next best secret sauce in franchising, and we are blown away by how much potential there is out there,” McKinnon says.
Why incubators work.
John Paul Engel, a lecturer of entrepreneurship at the University of Iowa and an instructor/mentor with the school's Venture School program, submerges his students into the world of their business.
“We work hard to set up meetings with potential customers and alliance partners for our participants,” he says. “We leverage our collective network. One advantage I have as a mentor/instructor is that I have decades of experience helping people, and now my former students are friends they are happy, in turn, to help my new students.”
With all the help that is available, there is no need to go it alone. However, if you’re thinking about aligning your company with an incubator or accelerator program, there are issues to consider.
Blake Stevens at Alexandria cautioned that company leaders looking enter an incubator or accelerator program need to understand exactly what they are getting into and fully understand how much they must give up in your company as it grows.
Stevens says that there are four key ingredients to look for in an incubator program that will make it likely that your relationship with them will be a fruitful one:
- The leadership team are true entrepreneurs and have experience in accelerating a business.
- The incubator program should provide the best and latest technology for the new startups to use.
- The incubator should have experience in the industry that the startup is in.
- The program should have its own nurturing culture with a giving spirit.
Webb from GrowthLi says the most important thing to do when asking for help, whether with a coach or an accelerator program, is to be an adult, listen to advice -- and then act on it. Basically, just get out of your own way. “Your business is not your kingdom, and it’s not all about profit.” he says, “Put people first.”