This article is from Chapter 5 of Uncle Ralph's, "Don’t Do It the Hard Way”. Read the book.
That was easy, let’s do it again!
We all tried hard to arrive early for the e2eForum meetings because it gave us time to chat informally with the other members and exchange comments on our businesses and other issues that were not on the day’s agenda.
Unfortunately, an accident on the expressway this morning had kept me from arriving early enough to review the agenda with Stan, who was chairing the meeting this week.
The discussion had already started and this was on the flipchart.
Discussion points: Serial Entrepreneurship
- Another Start-up?
- Or the next Screw- up?
What I heard was Paul was talking about the gourmet hamburger franchise he was considering investing in, “It looks like a safe investment and my son has some experience in the restaurant business. I’ve got the initial $60,000 and bank financing is easy because they love franchises.”
“Sorry, Paul,” said Dave, “but experience flipping burgers doesn’t mean your son knows how to run a burger joint. Even if the franchisor delivers all the management tools and support, do you really want to manage minimum wage staff and deal with unhappy customers complaining that your burgers suck? Your experience is all about managing highly qualified machinists and selling precision parts to multinational manufacturing businesses.”
“Yes, but I built a successful business in that industry, and this should be much easier. I have the time and the money and I need a new challenge to keep me interested. I don’t want to spend every day in retirement watching my money ride the stock market roller coaster.”
“It sounds like your entrepreneurial juices are percolating, Paul,” I said, “Maybe you should go back to the start-up criteria we talked about a few months ago. Look for an opportunity that really leverages your unique skills, knowledge, experience and contacts. Isn’t that what worked for you the first time?”
“True enough. All I bring to this business is a long history of eating hamburgers!” Paul was laughing at himself and it looked like he would leave his money in the bank, for now.
I was remembering what I have said to other successful businessmen: Making money doesn’t make you smart.What I said out loud was, “Before you throw your energy and money into a new venture, ask yourself a few important questions.”
“I hear another checklist coming!” chirped Larry.
“Thanks Larry, now I’ll have to give it a name. Let’s call it the Encore Performance Checklist. If you are determined to boast that you are a serial entrepreneur, not just a successful entrepreneur; then ask yourself these questions before you get started on your next venture:
- What was it that made you succeed in your first business?
- Did you build your business on your unique management ability, a new product idea, a preferred customer or supplier relationship? Which of these will apply to the new business?
- What mistakes have you avoided in the past? Are you about to make them now? What new risks are you encountering for the first time?
- Is now a good time to start something new? Are there no challenges left in your current business?
- How much will a new initiative impact your current business and the demands on your time and resources?
- Is your past success really transferable to the new business?”
“Many successful entrepreneurs have made the mistake of jumping into a new venture – merger, acquisition, restaurant franchise or real estate investment – and blown away the equity value they built in their original business. It’s another costly mistake to avoid.”
Brian shared his conclusion with us, “I’m now convinced that the next venture is something to set aside until I’m at the exit stage like Paul. When my current business is running itself and I have the time and money to very carefully select the next opportunity. I just don’t want to wait until I’m that old, sorry Paul. I’m thinking I’ll be ready for the next one at age 35.”
Stan added, “Too late for me, I’m already 39, but I’d like to accelerate the plan to get to that stage soon too. Then I can start the next one before I get bored and screw up the one I’ve got.”
I said, “I have seen that happen. Entrepreneurs who started to dabble in something more exciting, thinking their business was on cruise control and it headed into a crash landing instead.”
“So let’s avoid the unhappy ending of exit by default. Put it on the agenda for a future meeting – Preparing for Exit.”
We all agreed that was a good topic for a future meeting and concluded the e2eForum with our regular Roundtable update from each of the members before heading out for the day.
Your Uncle Ralph, Del Chatterson
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