Mistake #1: Failure to Gain Outside Perspectives

The Most Common Founder Mistakes

Did you know that more than 300,000 new businesses are created every single year in America and only 1% make it to year ten?   

 

Did you also know that only 1% of the 1% makes it to $10M in annual revenues within ten years?

 

While the logic and benefits of seeking outsider perspectives should be self-explanatory, why do so few get help?

Think about when you have hired outsiders for your business; it is typically on functional matters:  financial or legal expertise for example as opposed to seeking outsiders that bring different perspectives and experiences.  Sadly, most founder’s only seek outside counsel out of fear with the purpose of mitigating risk. 

 

Outside perspectives should be used to challenge internal thinking, refine processes and implement best practices as well as leveraged for ideas to spark innovation, and perhaps most importantly to mitigate uncertainty.   

 

Additionally, using outside perspectives benefits firms by providing:

1. Access to highly valuable expertise and insights unavailable and unaffordable as full-time hires (for example Chief Strategy Officer, Corporate Governance, outsourced corporate development).
   
2. Acquisition of additional revenues, businesses, employees, capabilities, etc..
   
3. Alternatives and recommendations to complex problems as part of the decision making process.
   
4. Analytical support relating the results from operations to the financial statements and explains the variances to budget and the prior year.
   
5. Answers to the hard questions; tells management what they need to hear, not what they want to hear.
   
6. Evaluation of brand and key initiatives.
   
7. Intelligence about changes, trends, pricing, employees, competitors, etc..
   
8. Management Science: Delivers results-driven, professional counsel and solutions for complex situations (avoid decisions made via by trial and error).
9. Management the ability to think and act like entrepreneurs, focusing on business growth and customers.
   
10. Operational plans for all employees which ensure daily performance is aligned with the strategy developed in the business plan.
    
11. Partnerships and/or alliances with unforeseen allies.
    
12. Risk mitigation.  
13. Structure and improvement to the “Organizational DNA”, i.e. the workplace culture and environment adds value to the business.
    
14. Treasury and capital market support to secure funding alternatives and interfaces with the lenders regarding the performance of the business. 
    

Certainly a unique business model and compelling value-proposition is needed to grow and scale a company quickly and efficiently, but because industries and business practices are always evolving and changing relying solely on internal and historical knowledge is a recipe for disaster.

There are a number of different ways to utilize outside perspectives including hiring or implementing a:

1. Chief Strategy Officer – An advisor with defined outcomes to be realized
   
2. Customer Advisory Panel -  For a thorough overview on the “business case” and “how-to” description read David G. Thompson’s “BluePrint to a Billion.”
   
3. Partnership Board  - Create an advisory group of partners.
   
4. Outsource a function of the business for a period of time to gain access to the latest tools and practices while internalizing that knowledge and then applying across the business 
   
5. Wealth Advisor  - Seasoned veterans with a track-record of creating wealth.

Fact: Ephor Group has 3X return on value for our portfolio companies since 2003.   

 

Best Practice: Continuously test and update the core assumptions of your business model, value–proposition, and market landscape through intelligence gathering. 

 

Role Model: When turning around a legacy time and attendance software provider Garry faced a highly competitive landscape, daunting task of redefining the company, and a impractical and distrustful legacy culture.  Garry used outside perspectives to transform a $5M book of business into a Workforce Management platform leader using all of the following:

1. Outsourced components of the company to facilitate and foster change
2. Appointed Useful Capital board members that had industry knowledge and whom were willing to take lead point on several initiatives for the company such as developing channels and partners.

 

 

 

Read more: Mistake #2.  Choosing Lifestyle Advisors or Trusted Advisors over Wealth Advisors