Entrepreneurship and Globalization

We are entering an increasing – no pun intended- age where size is dominant. Big Business, Big Government, Big Unions, Big Data and most damning of all “Too Big To Fail”. We have sacrificed the principles of micro economics such as the optimum size of the firm and the law of diminishing returns to build dominant global enterprises- behemoths more closely related to their bureaucratic enemy, government, than they will ever admit. These entities lumber around the world chasing low costs and cheap labour in the name of maximizing profits. If they fail they plead their case in a public forum that they are too significant to let die. They are pyramids paying outrageous rewards to those that scale to the top.

What are the implications for individualism. Job stability no longer exists. Big data is generating information far beyond are ability to comprehend. The rate of change is staggering. 24/7 hyper-connectivity has us all chasing our tails, Are we headed for Big Brother? Globalization is both an opportunity and a threat. Small business is vulnerable to competitors around the world but at a time when things are moving at lightening speed entrepreneurs are flexible and adaptable giving them the opportunity to find a niche and move into it before others. The most important skill to learn in this new era is the ability to create your own job. Without it the threat is the loss of upward mobility for many and perhaps economic independence for most. The divergence of wealth between the rich and the poor and the eroding middle class are forewarnings. Entrepreneurship is critical for the individual.

But it is also critical for these huge entities. Without the impact of disruption based on challenges to the status quo , sometimes referred to as ‘intrapreneurship’, governments and huge businesses will never come close to producing optimum results and solutions. The current conundrum in Washington shows a government that is not only dysfunctional but is mired in a malaise of mediocrity. There are no disruptors coming forward to challenge the party lines and find compromise. Optimum decisions are a pipedream in this environment.

Entrepreneurs make things happen. They are problem solvers. The greater the problem the greater the reward. Regardless we need them at all levels. It is a skill that some are born with but many can learn. We are headed for a tsunami of Big Data that can swamp us. Machines will literally know more than any individual. It’s a scenario that science fiction writers have been portraying for generations. Individual success will be tied to entrepreneurial skills and attitude. Entrepreneurship has never been more important. We live in interesting times.

Originally posted by Emily Barnes, The Creative Destruction Lab The Rotman School of Management, University of Toronto

Businesses large and small can find it tough to spare a few moments to step back and look at the big picture. But immersed in the little details surrounding new product features and releases, you can easily miss a few telltale signs your startup is starting to spiral.

Luckily, Fred Dawkins has done the legwork for you. Partner of the Creative Destruction Lab, serial entrepreneur and founder of The Old Hide House, Dawkins has turned his past experiences into a series of books about entrepreneurship, the first of which is Everyday Entrepreneur. He recently hosted a number of workshops in partnership with the Lab, touching on everything from the misconceptions of entrepreneurship, to the day-to-day trials and tribulations of an entrepreneur, to the increasingly important role of small business in the global economy and all that’s in between.

If you can’t spare the few minutes to check in on that big picture, Dawkins asks that you at least watch for these three signs that your startup is on the out.

YOUR STARTUP BECOMES YOUR LIFE.

Undoubtedly, there’ll be an imbalance. There’s no denying that you’ll have to work long hours – especially in the startup phase and when you run into times of hardship.  Your social life will at times suffer, as will your relationships. But this anguish shouldn’t be a constant.

This may seem erroneous if you’re in the early stage of running a business. Timing is everything, and if you launch too late – especially in tech – it can make or break your success. It’s a bit of a catch-22. But unless you’re an anomaly, if you’re working an innumerous amount of hours, you’re doing something wrong. It’s symptomatic, and signals a discord elsewhere in your business. How strong is your team? Are you delegating?

Despite much popular literature that speaks to the contrary, you truly can maintain work-life balance as an entrepreneur.  Recharging your batteries is critical. Have your hobbies and have your venture. Sometimes the two will overlap. Even then, you must create that separation. When you lose sight of work-life balance, you also risk impairing your business’ vision. It’s important to step away from your company, if only for a few hours.

CASH FLOW – IT NEVER LIES!

If you’re going to be successful, you’ll first need to know and understand your numbers. Metrics aside, look to cash flow. It’s right on your doorstep. Omnipresent, it serves as the perfect warning mechanism. If you’re running low on cash, you’re doing something wrong.

Too often, startups seem to bolt at the first sign of cash flow struggles, looking to investment for relief. Granted, it’s a quick and relatively easy fix (provided you can offer up a good pitch), but too many run into the open arms of deals that offer marginal amounts of cash for large chunks of equity.  It’s easy enough to relinquish control of your business because you have to – to bring in a partner or some easy money. But don’t make rash decisions without properly considering the long-term consequences. Do the math. Beware of commitments that’ll eat up your profits. Brick and mortar businesses tackle high overhead, hardware startups combat production costs, and SAAS businesses at first operate virtually cost-free. Remind yourself of this. In a startup press bubble that’s dominated by one funding announcement after another, it’s all too easy to start asking for money. Don’t forget about sales, the good ol’ fashioned revenue stream.

There’s a lot to be said for natural growth and learning to manage within your means. Bootstrapping isn’t a requirement so much as an opt-in measure of control.

YOU, THE FOUNDER, ARE THE BEST PERSON ON YOUR TEAM.

Things are different when you transition from project to business. Parameters change, and your skillsets need to adapt along with them. But few people have the knowledge or experience necessary to carry an idea through to company, then onto global success. Don’t be afraid to hire people who know more than you do in specific areas.

You’ll be tempted to keep a short leash on success, and find it difficult to relinquish control of even the most minor of tasks. Don’t impede success for the sake of ego. Sometimes you’ll need to let go of responsibility, and sometimes that also means you’ll need to cut off a slice of the equity pie. Your ego will take a hit, and your percentage of future earnings will too, but you’ll mend and the pie may just get bigger.

Recognize your deficiencies. You can’t always keep pace with your company, or grow at the same rate it does – not everyone is that malleable. Hire those whose skillsets can compensate for the holes in your own. You are not your company and at some point your interests may diverge, so have an end game.

Yesterday’s Alberta election produced a dramatic change but more than anything else it resulted from change and the inability of the PC party in Alberta to manage change.  One of the reasons so many experts maintain that failure is an integral part of succeeding as an entrepreneur is because we do learn from failure. We have to learn in order to recover so we take the time to analyze what we did wrong in order to avoid repeating the same mistake. Success masks our faults. It is rare for most of us to understand our weaknesses when we are getting results. Unfortunately for the electorate for a political party getting results means maintaining power as opposed to effective performance. When things are going well as they did for Alberta under the boom of the oil industry it was easy for politicians to look good and to develop some bad management practices. When a serious problem developed with falling oil revenues there was a huge need to adjust. We will never know whether the proposed budget was appropriate or not but remember when you have to provide customers, suppliers or employees with a bitter pill for the longer run good don’t turn around and immediately give them control to vote the new policy in or not.

My mantra for the individual in today’s dynamic world is that the number one skill you can learn is the ability to create and manage your own career, with managing being the key to sustain meaningful success. We face an unprecedented rate of change. Every one of us must have the ability to recreate ourselves in the face of this one certainty: change is a constant, by definition the only thing we can count on besides death and taxes. Despite the perception of many that entrepreneurship requires risk this need not mean reckless risk but instead should refer to managed risk. The PCs had the time and needed it to prove that their budget could work in an economy under duress rather than risking a quick election on the outside chance they would get another majority giving them even more time. So among the small business lessons from yesterday’s election results are the following:

1. Nothing lasts forever including good times in the oil industry

2. Sustained success requires a relentless commitment to adapt even after a long track record of doing so.

3. Managed risk produces results while reckless risk invites failure

4. Knowing your weaknesses in good times and bad will sustain your success

5. A change in leadership does not guarantee renewal of an organization

I’ m sure there are more.

Fred Dawkins is a serial entrepreneur and the author of a series entitled The Entrepreneurial Edge. The third book in that series Ageless Entrepreneur is available from booksellers across North America on May 9th 2015