Advice on Advisors Choose business advisors who understand your business.
There are many ways to learn about business, including college courses, workshops, executive MBA programs and the school of hard knocks. But one of the best ways to learn is from experience—the experience of others, that is.
While we learn from our mistakes, smart business owners learn from the past mistakes (and successes) of others by tapping the knowledge and experience of successful business advisors. When seeking business advisors, quality is more important than quantity.
The Center for Women’s Business Research recently hosted an executive roundtable in New York City and released their latest update on the status of women-owned businesses in the United States. The report included two separate findings that when put together seem to raise major red flags for women entrepreneurs.
First, women business owners tend to use more advisors than men business owners do. Standing on its own, this particular finding is not particularly surprising.
Second, women business owners report using less-sophisticated financial tools in building their business. This includes both debt and equity financial approaches.
If you put these two conclusions together you have to ask, “Who are these women talking to, and why?” If they are spending their most precious resource, their time, recruiting and talking with advisors, why aren’t they also making sure they are the right advisors? While women business owners may consult with more advisors than men, those advisors are seemingly less qualified and sophisticated in their expertise.
Knowing the Destination Before they can help map your path, business advisors must first understand where you want to end up.
Entrepreneurs start all kinds of businesses for all manner of reasons. Some prefer to start businesses that support their lifestyle. These businesses are designed to replace an income from a job with the proceeds of their small business activities.
Other entrepreneurs know from the start that they are more interested in growing a sustainable company that has real potential to create wealth for themselves, their families and (for the wisest and best entrepreneurs) their communities.
And still others, start in one direction and decide along the way to change paths.
Each method, or reason for starting a business, requires different types of directions or instructions on how to attain success. The challenge is selecting the right advisors at the right time. Here are five criteria for getting the type of directions that will help you reach your chosen entrepreneurial destination: Avoid Homogeneity Don’t choose advisors who all “look” alike, and don’t let them all “look” like you.
Think about what knowledge entrepreneurs need and honestly assess what you don’t know. To build a sustainable business, somebody on your advising team needs to understand the industry in which you want to operate, somebody needs to know how to run things (how everything fits together) and somebody needs to know how to start from scratch. Starting from scratch requires a quite different knowledge base or skill set from that needed to run a large, successful company. With Advice Comes Growth Accept that you may outgrow advisors, no matter how closely related they might be. If your business is growing (or it’s not growing but you want it to) your need for advice and guidance will change as well.
In her book, Diary of a Small Business Owner, Anita Brittina shares her story of starting out with an uncle as a mentor. While this worked well in the beginning, her business needs eventually outstripped his business experience.
With Growth Comes Change Match the size of your professional service providers with the size of your company (and also be ready to change if necessary). The same law firm that specializes in small business issues may no longer be right for your large company. It’s an approach that supports the idea that you will get the level of content and care that you most need. See Yourself in Others Recognize yourself in the role models in your community. A panel member speaking at the Center for Women’s Business Research executive roundtable was asked whether she thought role models were effective. She replied that when starting her company she saw the successful women business owners around her as role models. She just didn’t recognize herself in them. Know that these successful women are you. They have, or had, the same kinds of uncertainties and questions that you have every day. Also realize that they are not only role models, but also potential advisors.
Dare to Stretch Your Wings Reject training programs that focus only on the creation of lifestyle businesses. There is certainly nothing wrong with lifestyle businesses, although the name seems somewhat limiting. Learn the full range of opportunities and possibilities before you decide what slice is right for you both professionally and personally.
If your teacher/trainer/speaker consistently speaks in a negative way about equity capital, bail out. It’s certainly true that only a very tiny percentage of people and ventures are appropriate for venture capital, or even angel investments. However, there is much to be learned from the equity model to support building a business that has recognizable value to people outside of the business. Take the lessons and make your informed choice. Women entrepreneurs are growing their businesses at increasing rates in the United States, and in most countries around the world. Women, more so than men, will stop and ask for directions along their journey. Just make sure that the people you ask for directions actually know how to get there.
Patricia G. Greene is the dean of the Undergraduate School at Babson College in Massachusetts, and the former Ewing Marion Kauffman Missouri Chair in Entrepreneurial Leadership at the Henry Bloch School of Business and Public Administration at the University of Missouri-Kansas City. She can be reached at (781) 239-5008 or .
