Being a Successful Entrepreneur Isn’t Only About Having the Best Idea
Successful companies are built on ideas, structure and effort. When a business kicks off, the entrepreneur and the idea are both equally important. During the startup phase, many sleepless nights are spent, ideas are pondered, prototypes are tested, target markets are identified and clients are sought. After initial sales commence and input is received on the product or service provided, the entrepreneur modifies their offering to better meet client needs and expectations, while garnering a deeper understanding of available market opportunities.
As startups grow, markets expand and revenues increase, the obstacles entrepreneurs face change form. The single, creative, hardworking entrepreneur must now be supported by a competent team capable of grasping the details and nuances of the products and services at hand, as well as the requirements and challenges of the marketplace.
The more the company succeeds and the more markets it serves, the greater the need for institutionalization. To advance sustainably, the company must morph into a robust and well-staffed institution – one with a defined organizational structure; specialized departments (i.e. business development, product development, marketing, finance, etc.); specified duties, responsibilities and authorities; set policies and procedures; extended relationships with banks; and so much more.
In summary, the more successful the company, the more critical institution building becomes for not only maintaining, but also for enhancing this success.
As startups begin to seek capital from the market, the entrepreneur must determine what stage of development they fall under. For example, seed stage companies should not seek funding from Series B or Series C funds. Individual funds, on the other hand, seek different things, so if the entrepreneur has not shaped the company characteristics the funds look for, they will either be unsuccessful in attracting investment or the funds will ask for a large discount in order to invest. Agreeing to a large discount means that entrepreneurs are unable to maximize their gains. Over time, if this happens frequently, they will end up owning only a small percentage of the company they are building.
So, even though the success of a startup may begin with a great idea, its long-term success depends primarily on the effective institution building of the entrepreneur.