Why patience is a virtue for early-stage businesses
I’ve seen big entrepreneurial dreams come crashing down as a result of impatience. Impatience born from all the best motives, but damaging nonetheless. More of that later.
And I should know; I learnt my lesson the hard way when I came up with the concept for a fashion rental app before sustainable fashion was a thing. I allowed my excitement and impatience to get the better of me when a buyer came along and offered to buy full usage rights. In hindsight, I should have researched the market better and landed additional investment to help me grow it. I got tired and bored; I didn’t take time to understand that if someone rocked up early doors keen to take it off my hands, then it had way more potential than I was able to see. Big lesson learnt!
Since then, I’ve played an active role growing large and small businesses; I’m an investor in tech start-ups both personally and as part of a private fund and I hold a number of advisory roles. The point at which I most enjoy working with start-ups is after pre-seed, ahead of a larger investment that allows them to properly launch. However, it can be the hardest part of the start-up journey.
I like to think of it as a transition from “creator” to “entrepreneur” mode. Creators have bravery, energy, dynamism and often a fair dollop of craziness. They can be consumed by their idea and hugely impatient for quick wins. And that’s great when they are at a very early stage, working either alone or in a small team where there’s no one they have to be properly accountable to. The business may be loose on corporate structure with little to no discipline, where developing the idea at all costs is the driving force. Even if they do have some funding, it’s often via wealthy individuals who have a high appetite for risk and share some of the same characteristics as “creators”.
All of this has to change ahead of any serious early-stage investment. No investor is going to give a company leeway to learn the basics of running a business retrospectively – in all honesty they probably wouldn’t have committed in the first place.
This is where the “creator” needs to become an “entrepreneur”, adapting to the rigours and processes of running a business, budget and P&L responsibility, being accountable both to investors and employees with mouths to feed and responsibilities of their own. This new phase is about co-ownership and building future growth together.
The impatient creator who was able to move at their own often breakneck speed has to master a new set of skills. Can every creator make this switch? Not necessarily. They might be suited for part of the job description, but not all of it. And this is where healthy self-awareness and external advice is key, helping define what kind of team and leader(s) can best deliver success in this next results-driven, accountable stage.
Patience is a virtue
Once there’s a core team in place that knows how to run an efficient business, that’s the green light to secure funding. Take time to research the right kind of investor and know what it is you want from them to execute your idea successfully; that definition of success is fundamental as we investors want to know how you plan to spend our money!
Once the funds come through, a calm, patient approach with an eye on the key daily operational data and concentrating on delivering exclusively to KPIs agreed with investors is the right tone for an entrepreneur to set. Too many companies experience the equivalent of a sugar rush – they forget that money is a limited resource and get giddy-headed looking at ways to spend it that don’t always help meet KPIs. Most early-stage businesses don’t need a CFO or other big functional C suite role, but you’d be surprised how many see it as a badge of honour. They sober up when they see the reality of the monthly wage bill and the penny drops that a part time, flexible resource would have done the job.
Entrepreneurs need to keep an eye on the investor term sheet and remember what they agreed to. Bringing in a significant new supplier or spending a large amount of money will probably need approval from your backers in advance.
Two sides of a coin – dynamism and impatience
All of this might sound like a brake on the entrepreneurial spirit. Anything but; there is an important distinction between dynamism and impatience. I think of dynamism as “good impatience”, a desire to make things happen in a planned, controlled, focused way. Bad impatience is an “at all costs” mindset, forgetting that results cannot be hurried along and the wrong spending decisions at the wrong time can be catastrophic.
A creator who’s successfully switched gears to entrepreneur mode will also realise that however hard they push things, if external circumstances change beyond all recognition, then no amount of willpower, dynamism or impatience will make things the way they were. The last few years since Covid have taught all entrepreneurs that circumstances can be bigger than them. With that in mind, they focus on value, not PR.