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Reading Between the Lines of Successful Entrepreneurs
What separates would-be entrepreneurs from entrepreneurs who bring startups to life? Some say inspiration. Some say personal motivation. Some say pure guts. Entrepreneurship is a means of expression, but what it expresses depends on the business owner. Successful business people like to share their pearls of wisdom, and the quotes are always inspiring. However, to get the full thrust of their meaning it is necessary to read between the lines.
Following are just a few examples.
Quote 1: “Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected.” (Mark Zuckerberg; Co-founder, Chairman and CEO of Facebook)
Reading between the lines: Entrepreneurs don’t start businesses just to make money. They see a need in the marketplace or a problem that needs solving. The person has a vision of how a product or service can bring more comfort, safety, security, or happiness into the lives of people (B2C) or other businesses (B2B) or both. A well-written mission statement in the business plan conveys the passion the entrepreneur feels for the effort, sets the tone for the entire document, and defines the purpose of the business. It is also intentionally a short statement because its true intent is to encapsulate the purpose of the company.
Quote 2: “Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” (Tim O’Reilly, O’Reilly Media founder and CEO)
Reading between the lines: The cash flow statement is every bit as important as the profit-loss statement and the balance sheet. Potential investors of all ilks – angel, venture capitalist, equity funder, traditional lender – will closely evaluate the reasonableness of the assumptions underlying the cash flow projections presented in the business plan.
When investors agree to fund a startup or SME, there is no expectation the entrepreneur will repeatedly cruise back to them over and over again to ask for more money to stay in business. Investors are not ‘gas stations,’ and eventually the business must be self-supporting. Developing cash flow projections based on verifiable information and accurate assumptions is critical because it influences the amount of upfront money needs. Get the cash flow projections wrong and the business will surely run out of gas.
Quote 3: “If you can’t feed a team with two pizzas, it’s too large.” (Jeff Bezos, Amazon founder and CEO)
Reading Between the Lines: How much does a business startup cost? The Small Business Administration (SBA) quotes the Kauffmann Foundation research that says it costs approximately $30,000. However, the SBA goes on to say that the real number depends on the type of business and business model. Startup expenses are the costs incurred when readying a business for operation. Some of the costs are tax deductible up to a $5,000 total and the rest of the costs are amortized over 180 months after the business opens. Entrepreneurs should always keep in mind that staff wages and benefits can easily careen out of control. It is a powerful feeling to offer people jobs, especially in the current economy, but the team needs to be right-sized. When hiring people, think pizza.
Successful entrepreneurs offer good advice. They have made mistakes along the path to success so their words carry a lot of weight. The one thing they have in common is a driving passion to bring an idea to life. That is the first requirement for success. The business plan is critical because it forces the entrepreneur to develop the idea with real-world requirements. That is the advice found by reading between the lines of their inspiring quotes.