Entrepreneurship: Disruption in the face of the “Era of Big”

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.

There has been a rush to embrace entrepreneurship over the past ten years, especially since 2008. Every college, every university now offers courses in a discipline once perceived by the public as reserved for misfits, gamblers and tech high rollers. Of course that’s one of the many myths and misconceptions about entrepreneurship. Those mystical entrepreneurs so far removed from the average life have always been but a small percentage of those who take control over their lives and pursue opportunities at any level

Another of these misconceptions is that you can only become a true entrepreneur through trial and error gaining experience along the way. You could just as well say that about any group or profession. None of us are totally happy if our lawyer is conducting his first case. How many of us would enjoy the prospect of surgery if we found out that our surgeon was a novice. Of course like any other endeavour we entrepreneurs gain insight and judgement from as Nike says just doing it. However there is something to be said for better preparation through shared experiences. We need far more mentors teaching and sharing ideas with would be entrepreneurs.

My series The Entrepreneurial Edge is focused on doing that. You see I tell stories with characters that are making important life decisions that centre around being entrepreneurs. Would be entrepreneurs at any age and at any level of education relate well to these stories full of real life anecdotes from a forty five year career as a serial entrepreneur. Having run workshops on the book I find it works well with high school students right up to PHD graduates and from business novices up to people that have been in business for years. If you are an academic teaching or a business coach mentoring, the first book Everyday Entrepreneur will enhance your efforts.

In a world dominated by rapid change, still dealing with economic uncertainty, where job stability has vanished in the face of multiple jobs over the course of one’s work life, entrepreneurial thinking is critical whether within your own business, working within a large organization or most critical in managing your career. In the face of government gridlock and inefficiency social entrepreneurship is becoming essential for solving societal problems My goal in writing the series is to encourage as many people as possible to consider entrepreneurship and put aside the myths and misconceptions preventing them from making the leap of faith in their ability to solve problems and make things happen. In the process I hope to better prepare them by sharing experiences and potential problems in advance. Most of all I hope to help them understand the philosophy of being an entrepreneur – success is much more about the mindset than the skillset.

Fred Dawkins is an author and serial entrepreneur, currently writing a series on entrepreneurship for Dundurn Press. He is also a partner at the Creative Destruction Lab at the Rotman School of Management at the University of Toronto

With Joseph Rotman at the Creative Destruction Lab

Joseph Rotman invested a great deal to improve the future of this country. The Rotman School of Management at the University of Toronto is a lasting legacy showing both his commitment and what we as Canadians are capable of achieving. An important part of  that legacy is the CDL which is really just getting started.

It is both enlightening and alarming to discover that more than 350,000 Canadians live and work in Silicon Valley. More than one percent of our population and a much higher portion of our intellectual capital have left us for the world’s most prestigious and most productive ecosystem. This is both a problem and an opportunity but not one that government can solve or even try to solve. So how do we stem the tide? There is no quick fix. We are producing world class talent and such talent is inevitably attracted to the epicentre of success, achievement but most of all opportunity. It is the opportunity that we need to focus on. The Creative Destruction Lab does that. It creates opportunity here in Canada. The leader and founder Professor Ajay Agrawal is a dynamo.

Ajay is living evidence that entrepreneurship can be taught, an academic with the drive and mindset that can match anyone in the business community. When he approached the Rotman school to start this program he was told ‘you can use the facilities but you must find the funding yourself’. He has worked relentlessly ever since  to do just that in the process bringing in a very accomplished group of proven entrepreneurs to act as mentors. The stated goal of the Lab is to generate equity – specifically to create at least $ 1 billion in equity in the first ten years. After the first two years approximately $ 130 million has been achieved.

Financial targets are how we keep score but the greater purpose is to keep the best and most brilliant we produce here in Canada, helping to build our own world class ecosystem and offering a valuable example to others. Ventures receive the very best of mentorship. It is amazing to see how they evolve in less than one year. Watch for results – they have already started but many significant ones are ahead in the years to come.

As a partner of the Lab and member of the advisory board I am proud to point out that this program is not just another accelerator to help brilliant tech students bring their ideas to market. For me the Lab represents far more and has the opportunity to change and influence this country. We are traditionally small ‘c’ conservatives who let our brash cousins to the south take the outrageous risks and create the startling successes. We don’t lack for success stories but too often those successes happen outside our borders. Now when we are in an era where entrepreneurship is viewed as what I like to call the economic wonder drug of the 21st century, it is absolutely critical that Canadians embrace the mindset of an entrepreneur and become agents of change in a world where ironically change is the one constant. In that sense the Lab can be a leader and help change the narrative for Canada.

For me the Lab has three main purposes. The first as already outlined is to produce successful, scalable ventures flourishing as sustainable businesses right here. The second very unique goal and  achievement  of the Lab stems from the way in which students of the Rotman MBA program are engaged with the ventures and the  mentors. We need these talented business minds creating new businesses and making them succeed in Canada. The Lab immerses them in the startup culture and introduces the potential for success outside the world of investment banking. In this new era of entrepreneurship when every university and college around the world is trying to teach entrepreneurship this may be the most effective way any of these institutions has found to date.

The third and potentially greatest influence of the CDL program is as an example of what can be accomplished in Canada. We are building a pyramid of success. The ventures that go through the full program will be shining examples at the top of that pyramid. But there are many other levels of success below these which can be achieved and make an important contribution to our economy and our society. Not every success story relies on innovation. The potential multiplier of the Lab comes from encouraging all Canadians, at every level to adopt the mindset  that we can make things happen here and to apply innovation to a whole myriad of business solutions and applications. These potential ventures will be the foundation of the pyramid we hope to build and can have rippling effects across our economy for generations to come.

This is exactly what Joseph Rotman hoped to accomplish and thanks to him, it is a real possibility when we sorely need it.

Misconceptions about Entrepreneurship – Time to end the nonsense!
By Fred Dawkins, author of Everyday Entrepreneur
We are entering a New Era of Entrepreneurship where there is no room for prison thinking in a world dominated by rapid change. Embracing change requires resilience and adaptability which are key characteristics for all entrepreneurs. Unfortunately the existing stereotypes for entrepreneurs discourage countless people from embracing the role. These perceptions prevent too many from taking the leap of faith required to become one. The first step in breaking free is to dispel some of the myths that are holding capable people back at a time when they need to welcome the opportunity to create and manage their own careers.
Two of the most flagrant misrepresentations that discourage people are that entrepreneurs are gamblers who take reckless risks to achieve high rewards and that entrepreneurs need to fail in order to succeed. Many people are risk averse and most of us fear failure. These traits do not disqualify us as potential entrepreneurs. In reality entrepreneurship is not about the risk that you take but entirely about the results that you achieve. Being entrepreneurial relies on the determination to make things happen especially when many others don’t see that possibility. Becoming an entrepreneur is all about the mindset not the skillset. Entrepreneurs find the way to make things happen they don’t always know the way. Too many good opportunities die prematurely because people are risk averse. More people need to make the leap of faith based on their determination and the foundation of a viable opportunity.
However, being prudent prevents you from taking reckless risk and directs you towards managed risk which is the hallmark of free enterprise. Entrepreneurs are proactive and solve problems through determination not by taking unwarranted risk. Successful entrepreneurs always have a downside plan allowing for adjustment which mitigates risk. When they make plans they analyze a range of possibilities rather than marrying themselves up to a single goal or result. In this way they build a framework which helps them adjust on a timely basis. Put your best foot forward: at the very beginning establish the viability of your opportunity. Too much time, energy and money are spent trying to convert whimsical ideas into a sound business. A high tolerance for risk is not enough to make a bad idea succeed. This is the essence of the lean startup. Test your premise. Talk to your potential market. Get feedback and adjust. Manage your risk from the outset. Don’t plunge blindly ahead on the premise that risk is an integral part of the undertaking. To be sure there is risk but recognize it and manage it as best you can.
The concept that failure is a prerequisite for success is more nonsense and stems from rationalization by those who fail initially. Successful entrepreneurs abhor failure. For many of them the fear of failing is a powerful motivation. Most manage their risk effectively, anticipate problems, adjust quickly, bounce back from setbacks and manage to avoid failure – if they do fail they learn and move on. We all learn more from failure simply because we take the time to analyze it. In that sense setbacks do make you stronger and they only constitute a failure if we give up. On the other hand success is exhilarating and it masks our faults. Just as initial failure can set the stage for success to follow; initial success can lead to a sense of entrepreneurial infallibility. When that happens, as it does to too many, the critical things that built those initial achievements are often forgotten and ignored.
In order to break down these established stereotypes we have to understand how they evolved. Both derive from two specific types of entrepreneurs. First are the misfits or rebels who either cannot or will not conform; the gamblers to whom few of us can relate. Second and even more prominent are the tech entrepreneurs immersed in the world of venture capital where risk is high, failure is frequent and the rewards for success are dramatic. However Silicon Valley is not the center of the universe and these are not the definitive entrepreneurs; they are but two types of many, both removed from the traditional economy and the rock solid problem solvers that collectively form the engine that drives the economy. Those are the achievers that do make things happen especially creating jobs while big business is chasing lower costs around the globe.
In this new era, defined by constant and rapid change, we must all become more entrepreneurial. We can choose to establish an independent business or we can choose to become disruptors within the culture of big business or within the bureaucracy of big government. Collectively we are defining a new normal; one that is less stable and more dynamic. Regardless it is in our best interest to embrace the mindset of an entrepreneur, an attitude focused on action fueled by determination. We must indeed create and manage our own careers. Job stability is disappearing. The distribution of wealth is favouring capital not labour. Upward mobility is in decline. All of this means new and different opportunities. We can become the architect of our dreams or the victim of others’. Whatever you choose; don’t let misguided and outdated ideas limit your choices. .
Fred Dawkins is a serial entrepreneur with over 40 years’ experience and achievements in manufacturing, retail, land development, consulting and import/export. He holds a B Com in commerce and finance and a M.A. in economics from the University of Toronto. His business has allowed him to travel extensively, giving him insight into the emerging global economy and making him a passionate advocate of entrepreneurship in the 21st century.
Everyday Entrepreneur [Dundurn Press] is the first book in Dawkins’ Entrepreneurial Edge series, and is currently available at all booksellers, including Amazon.com, Amazon.ca, Barnes & Noble and Chapters Indigo. His novel, 2020 Hindsight, explores major contradictory trends in society in a compelling contemporary fiction narrative, and is forthcoming as an e-book on Amazon.com.
Website: https://fcdawkins.com/
Read More “My article: The Misconceptions about Entrepreneurship”

One of the premises in the introduction of my new book Everyday Entrepreneur is that I wrote it to encourage entrepreneurs of every stripe across the spectrum. Since the high tech entrepreneurs have been getting the lion’s share of the attention and encouragement from the public and investors alike, they were far from my target market. Tech innovation was the creator of venture capital, setting a precedent for high rates of return that can’t be sustained in other areas. Virtually all other types of entrepreneurs have to struggle for funding because they simply don’t meet the criteria for venture capital. Those that have attracted VC funds often flounder to the detriment of the entrepreneur because the VC gets an agreed upon return which can sap a moderately successful business.

The Creative Destructive Lab at the Rotman School of Management at the University of Toronto (my alma mater) is focused on extreme success with a strong emphasis on taking tech developments from gestation to dynamic success on the international stage. On the surface this seems to be exactly the area that I previously suggested didn’t need my help or encouragement as people are lined up to help in almost every area to develop these type of businesses. So why did I choose to support these high achievers by becoming a partner of the CD Lab? Well here are my reasons:

1. I strongly support that we need to keep our brightest and best talent here in Canada – we are in the midst of a world wide competition to attract talent – success starts with keeping our own
2. Success at this level sets a terrific example for anyone in this country that wants to become an entrepreneur and start a business at any level
3. Both of these factors are critical for us to build a culture of entrepreneurial success to maintain a strong economy and bring in the new talent that every country is striving to attract.
4. If in the process I can influence some of the brilliant MBAs we are graduating to circumvent the conventional and lucrative path to becoming a business executive in favour of applying their abilities to becoming entrepreneurs who solve problems, make things happen, create jobs and provide the drive that leads to success, then my time and effort will have been well spent.
5. The very talented people who apply to the Lab are brilliant in their innovation but still need nurturing on the personal issues involved in becoming an entrepreneur, the fundamental business issues they will encounter and the overall philosophy inherent in being an entrepreneur.

My book will out at the end of November. In the meantime I am enjoying my involvement with the Lab targeting success in a global economy which I firmly believe will centre upon a New Age of Entrepreneurship.

Quite a number of my friends are professionals. Often they let me know how lucky I’ve been to own and operate companies with employees who keep churning out results even when I am at the cottage or on the golf course. For them time is money-they generate the revenue. They have to be there or nothing happens. I don’t even have to show up.

The traditional idea is that once you get to be the boss, you coast while others do your bidding. Maybe that idea’s grounded in the reality that most people get promoted to their level of incompetence where performance falls off. Of course it’s delusional to think that you start your own business and find a gravy train of financial success, freedom and success, all with little effort. This rarely happens but we do revere examples when it does like some the instant successes that have materialized in the tech world. Frankly that type of success is equivalent to winning the lottery which isn’t going to happen for many. Unfortunately this is the romantic side of entrepreneurship- rare but appealing.

If your goal is to get to be the boss and then take it easy , perhaps you should look to the public sector where that is at least a possibility. Being a true entrepreneur means living in a revolving door with each turn bringing a new problem to solve. If this lifestyle is meant for you , it’s like getting the business equivalent of a runner’s high, every day, all day. If not welcome to chaos. The faster the problems come the more you must thrive on the process. The last thing entrepreneurs want to do is sit idle while others do the work and get all the fun of problem solving.

That’s why they succeed in startups but struggle in managing established businesses even though they may have built those same businesses. No matter how great your innovation, converting that project to a successful business requires entrepreneurship. Success takes determination, adaptability, resilience, commitment and the certainty that you will take the project to completion and make that project happen. It is not the project that makes an entrepreneur. It is definitely the process! Very few are content to level their business and enjoy the fruits of success. So if you are all about power, money or prestige maybe entrepreneurship isn’t for you. Being the boss is just a necessary evil.