7 Ways to adjust your business focus
Houston entrepreneur Joe M. Powell, who started and sold three
businesses before starting Worthing Brighton Press in 1995, conducted
a recent study of the critical focuses required of today’s entrepreneurs.
In the process, he interviewed business professors at 28 top graduate
schools. His primary motivation? “I’m frustrated by the noise and confusion
and trendiness,” says Powell, referring to the sea of management
Fads that today’s entrepreneurs are faced with. Lester A. Digman, professor of management at the University of Nebraska, Lincoln, and author of the Worthing Brighton book, ChangeManagement, Human Issues Are the Key, says now is a perfect timeto re-examine our focuses. “A lot of things are in flux,” he says. “Business models are changing, and how you make strategy is changing.” So, without further ado, let us introduce the seven new focuses:
1. Old Focus: A Big Idea New Focus: A Clear Vision
There’s nothing wrong with big ideas, says Powell, except they can’t
survive on their own. They also have to be clear visions.What’s the difference?
A clear vision is executable, but a big idea may not be, he says. Not making that distinction is a common error, says Mike Young, executive director of the Small Business Development Center (SBDC) at the University of Houston. His advice is to chop ideas into distinct, separate chunks. “With definable parts, you can easily make an action plan,” he says.
When Cynthia B. Kaye was starting Logical Choice Technologies Inc.
in Duluth, Georgia, in 1994, she was willing to sell any product or service
that had to do with integrating information systems for public schools.
Today, she has refined her focus to six core competencies that fit on a
single page of paper. “That sheet focuses on what we can do for clients,”
says Kaye. “This way, we sell what we can do.”
2. Old Focus: Technology-Driven New Focus: Customer-Driven
It’s not about what technology will allow; it’s about what customers will
buy, says Powell.Yet entrepreneurs typically enter fields where they’re
technically knowledgeable, which often leads them to focus on product
capabilities more than on what customers need. Even when entrepreneurs
appear to be considering what customers want, they may not be
addressing their real needs.
Of course, technology will continue to be a key driver of entrepreneurial
success. The difference is where technology ranks in the hierarchy. For
entrepreneurs like Mason C. Kauffman, founder and chair of online logistics
software provider Accuship in Germantown, Tennessee, the only
technology he wields is what customers specifically request.
Accuship’s products, which help large companies ship, track and report
on the movement of goods, are highly sophisticated in how they use the
Internet to link high-end accounting and e-commerce software to databases
of shipment information from package-delivery firms. But, says Kauffman,
“we don’t build technology and go sell it.We go to our customers,
and when they say what they want, we build it.”
3. Old Focus: Lots of Funding New Focus: Inexpensive Concept Testing
“Does it really take $50 million just to test your concept?” asks Powell.
For him, the answer is clearly negative. And, despite the excesses of the
last few years, the typical entrepreneur would agree, if for no other reason
than necessity. “Most of our customers,”Young observes, “don’t have
the luxury of having that kind of funding available.”
Luxury is the basic problem for some overfunded entrepreneurs, says
Kaye. “In the past, people would get money and just live high on the hog,”
she says. “They didn’t think, ‘If I spend this money, what will I get back?’ “
You don’t need a lot of funding to get a lot back if you start small and
grow organically, says Kauffman. When he started in 1994, venture capital
wasn’t a glamour business and nobody was giving any money to small
online start-ups. His prototype was funded by profits from consulting jobs
he and his partners took on.
4. Old Focus: Homemade Management New Focus: Studied Management
Naturally, business school professors are going to recommend entrepreneurs
go back to school to learn how to run their companies. But
there may be something more to this new focus than academic self-inter-
est. As Powell wisecracks, “Maybe the management wisdom of the past
has not been repealed by the New Economy.”
His point is, entrepreneurial intuition may not be enough these days.
And he’s not the only one who thinks so. Business schools across the
country are both starting and expanding entrepreneurship programs, but
they’re still not keeping up with demand. University-affiliated small-business
educators such as Digman and Young say their entrepreneurship
programs are consistently oversubscribed, and admission is competitive.
The same is true of more practical education. The University of Houston
SBDC, for example, annually trains more than 14,000 entrepreneurs
and employees, and consults to another 7,000. And more business owners
now look for stints at established companies on resumes.
5. Old Focus: Energy Spent Acquiring Funding New Focus: Energy Spent Acquiring Customers
Customers, not investors, create wealth, Powell contends. Digman
agrees: “The investor is the enabler, but for anything to succeed, it has to
have customers.”
Spending too much energy on finding funding can cripple a growing
business, adds Kaye. She spent most of a recent past year drawing up
business plans and presenting them to investors in hopes of finding expansion
capital. “A lot of my energy, probably 90 percent of it, went to
that—to no avail,” she says. While she was wooing investors, she wasn’t
courting customers, and her business suffered for it. “It was a big learning
experience,” she says. “I stopped looking for equity, and now I’m focused
on acquiring new clients. It’s made a big difference.”
6. Old Focus: Traditional Meat-Ax Marketing New Focus: Creative Surgical Marketing
“The mass market, for all practical purposes, has been dead for a generation,” says Digman. “The effective companies are the ones that have
been targeting, targeting, targeting.”
A target market isn’t necessarily a small market, Digman adds.You
can assemble a number of niches into a mass nearly as big as that
reached by a Super Bowl ad. But when you target your marketing to each
of those niches, you can make far more money. “It’s been all about that
for some time,” Digman says. “We’ve just finally realized it over the past
10 years.”
Entrepreneurs like Kauffman have caught on. He made the decision
early on to target the Fortune 1000. His reasoning? These companies
have the biggest logistics budgets and the most sophisticated needs.
“And I know where the Fortune 1000 is,” Kauffman says, “so I don’t
need ads.”
7. Old Focus: Major Milestone Is an IPO New Focus: Major Milestone Is Market Share
If one thing is clear in the new entrepreneurial era, it’s this: Acquiring
and serving customers, not selling stock to investors, builds companies.
Businesses like Amazon.com that made billionaires of their founders and
pre-IPO backers while making paupers of their later-stage shareholders
aren’t really creating wealth, Powell claims. They’re just transferring it
from investors’ pockets to entrepreneurs’ pockets.
For most entrepreneurs, of course, IPOs are something that happen to
other people. But even for those with the option of going public, it’s not
always the ultimate objective. Kauffman feels his firm could be a legitimate
public company. “We realize an IPO is there,” he says. “But the
question is, ‘Why would you do it?’ “ His company might be able to grow
just as well, and with a lot less trouble, by carefully partnering with larger
companies.
“If your focus is a great IPO, you’re building a house of cards,” he says.
“It sounds kind of hokey, but really your number-one interest is in building
a great company, building great
|
