Advice for Small Business Owners: Curb Your Enthusiasm
Every small business is born from excitement and enthusiasm. Without large doses of both, no venture can hope to succeed.
But exuberance to such an extent that it clouds better judgment and masks the multiple realities of launching a business is not a good thing, says George Leddicotte, principal at Small Business Advisory Group in Clovis, Calif., and it can bring a great idea to its knees before that idea even gets off the ground.
Indeed, most people who want to start a venture get carried away by their excitement, Leddicotte says, whether it’s because “they think they can be the next multi-million dollar company” or simply because they believe that theirs is the “next greatest idea.”
Leddicotte has worked with more than 700 small businesses across the U.S. and Canada and he believes that “most ideas can become something,” but not on enthusiasm alone: Small business owners who want to succeed must always walk the tricky path where enthusiasm guides but reality prevails.
This is not easy, Leddicotte says, but it is the only way that an entrepreneur can hope to succeed in his or her business, and it’s up to the consultants who work with them to keep their entrepreneur clients on this path.
Leddicote always puts his clients through “the test of reasonableness.”
“I ask them where they want to be after the first 12 months and then I help them understand what they need to do to get there,” he says. “Because as much as every concept is interesting and viable, it can only launch successfully in a realistic and reasonable way.”
Whether an idea works out or not depends largely on an individual and their environment, says Jennifer Riden, a business consultant with Penn State University’s Small Business Development Center, who works with student entrepreneurs to coach them through the process of setting up a business.
“If they have the tenacity and the passion for an idea and a good support structure, they can make it happen, even it what actually transpires wasn’t their original plan,” she says.
Students entrepreneurs, of course, have the advantage of operating in a low risk environment with free and unlimited access to both college resources and to professionals who are generous with their time. But Riden still believes it’s important that students should keep things real and go through the same rigorous process as any other entrepreneur. This includes writing a thorough business plan to gain further perspective, and to really understand their product, market and competition. Each stage of that process brings more questions, she says, “but it really does make a difference once they see how much work really goes into putting a business plan into action. It helps them get to the next step and once they are there, we can talk about where to go next, which questions need to be answered and so on.”
As much as too much enthusiasm can nip a business idea in the bud, so too can the knowledge of the realities of getting a venture off the ground, the financial nitty-gritties in particular. So many enthusiastic entrepreneurs haven’t even taken the time to do baseline financial planning, says Channing Schmidt, St. Paul-based director of advanced marketing for Minnesota Life and Securian Life, company affiliates of Securian Financial Group, and once they sit down with an advisor to learn about it, they’re very often disillusioned.
“There are so many financial ramifications to starting a business and an advisor has to make their client aware of these,” Schmidt – who works with advisors and their clients on a variety of business ownership matters -- says. “A very important part of doing a financial plan for someone who wants to start their own business also means weighing in on whether the idea can go forward or not and unfortunately, it also means making people aware of the fact that they may not get capital for a very wacky idea.”
A LONG PROCESS
Financial advisors, like other consultants, want to see their entrepreneurial clients succeed, so “it’s our duty to encourage their enthusiasm and make sure that we work with them to give them the proper roadmap to channel that enthusiasm and energy in the proper direction,” Schmidt says. “Even if the plan doesn’t materialize and it has to be shelved, I believe the process gives someone the necessary tools for the future, so that the next time they have to go through the decision-making process, they are more prepared, both in terms of thinking their ideas through a bit more and financially.”
These days, more and more people seem to be going the entrepreneurial way for different reasons, Leddicotte says, but even for those who do manage to launch their ventures, success isn’t a constant guarantee unless both enthusiasm and reality continue to work hand-in-hand.
“A business owner just cannot get into a state of complacency – they constantly need to ask themselves ‘what is working, what isn’t, what is missing and what needs to be fixed,’” he says.