Business growing difficulties of a start-up, Part 2
Q: Last Friday, we had a reader who said: “The books we’ve read on managing innovations and entrepreneurship all talked about the life cycle stages of an entrepreneurial venture company. Of course, they also cover problems and difficulties in growing a start-up business. But which one problem and difficulty are the hardest during these first 5-10 years?”
We ended the column with this promise: “The third stage of adolescence is even riskier because it has a different and harder to handle most serious problem. But our space does not allow us to tackle how you should manage business growing at this stage. We will do that in next Friday’s column.”
A: We’d like to start this continuation of last Friday’s column with an important clarification. Last Friday, we said that the hardest problem of the innovating entrepreneur for business growing in the first stage of “early childhood” is getting the right target market segment. In Stage 2 of “late childhood” when the venture reaches 10-11 years old, it’s the money problem. These are in general true.
But there are exceptions. Consider, for example, the Junior MRx-er’s Salt & Light Ventures (SLV) Inc. which became after just three short years the country’s leading learning event organization. That won for the Junior MRx-er’s the entrepreneur of the year award from Entrepreneur Magazine.
At the very start, SLV knew its correct target market segment. They were executives who wanted to hear from acknowledged gurus in “leadership” and “marketing” but without having to go to the US. The Junior MRx-er succeeded in getting John Maxwell and Tom Peters for leadership, and Al Ries and Jay Levinson for marketing. This immediately brought SLV to the growth stage.
As we know, growth is hungry for the growing venture’s scarcest resource. And that’s money, cash. Fortunately, SLV’s co-founder, the Junior MRx-er’s wife was a good cash flow manager. She effectively managed the money crisis.
Then other major problems also traveled along the growth curve. They were already there before and came with growth. With their own growth pattern, they started demanding more attention. Two of these were the rise of price competitors and the essentially freelance speakers who run learning events of their own.
Price competitors were quick to eat into SLV’s market share in the learning event industry. That was because it was then that the global recession started. The poor and worsening economic environment did not help the market segments of learning event attendees remain separated. Before companies sending their executives to “premium priced” public seminars such as what SLV was offering, stayed in that segment. But when recession came, many started sending to the “economy price” learning event offerings.
As to the speakers, when they saw the slow but steady drying up of the public seminar market, they decided to shift to where regular company senders were into for their executives’ continuing education. These were in-house seminars and executive mentoring and coaching. Even the Senior MRx-er who was one of SLV’s lead speakers also joined the shift into in-house seminars and mentoring but gave much more of his time freed by the cancelled public seminars to consulting engagements.
At this stage of the venture’s life, the key problem was how to get more of the needed entrepreneuring managers. One such manager is needed who will creatively manage the price competitors. We say entrepreneuring manager because the problem solution is not just a matter of pricing. It’s a matter of innovating in answer to some unknown unserved or underserved executive learning need. This need is from among those shifting to the price competitors as well as those shifting to in-house seminars and executive mentoring and coaching. One such executive learning event innovation was what Bo Sanchez was able to develop in with his TRC (Truly Rich Club). We will get into TRC in a later column because it deserves a separate analysis considering that it’s in innovating with amazing results in the much larger and gigantic market of what we like to call the “market of religious devotees.”
The other needed entrepreneuring manager is one who will just as creatively manage the freelance speakers. These speakers are themselves entrepreneurs. They are educational entrepreneurs. To say you have to have an entrepreneuring manager who will creatively manage those educational entrepreneurs is in effect to say one needs an “entrepreneur of entrepreneurs.” How can you get this kind of manager? And if you can’t source him from head hunters, how can you develop one? Is there a model source you can benchmark and learn from?
The one source we know are business schools who are ranked annually as “leading innovating MBA schools.” A British company, Quacquarelli Symonds Inc., specializes in “study abroad information” and publishes “annual guides” for post graduates across 35 countries. At the top of its list for 2012 is MIT’s Sloan School of Management. The professors of this MBA school are all educational entrepreneurs and their Dean is the entrepreneur of these entrepreneurs. How is this Dean able to keep his academic entrepreneur professors in the school? That’s essentially the question we’re asking about SLV’s speakers.
We’ve reached our column’s space limits. So please visit QSI’s website and read its ranking and the details of each ranked innovating MBA schools. It’s fascinating read.
Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless!
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