IT professionals with strong technical backgrounds can drum up some great ideas for start-up companies, but they often lack the business acumen to keep those companies afloat. To help these would-be captains of industry, Computerworld recently spoke with Ken Blanchard, the best-selling co-author of The One Minute Entrepreneur and The One Minute Manager to gain insight on the steps that technology entrepreneurs should take -- and avoid. Step one: Remember the basics.
Excerpts from the interview follow:
Why do so many small businesses fail?
There's two reasons. The first one is bad financial management. [Entrepreneurs] forget that sales have to exceed expenses -- the common stuff -- and they end up spending too much money on research and not enough on marketing and other areas. Cash is key. Second, they often don't know how to manage people. They're seagull managers -- they fly in and fly out -- and it's tough to get people to buy into loyalty. They're really passionate about what they're good at, but they often forget about people and money.
For technologists who have entrepreneurial ideas but lack practical start-up experience, what should they focus on first?
They should be focused first on finding some mentors. In The One Minute Entrepreneur, we list the 20 attributes of successful entrepreneurs. They should find the people to fill the strengths they don't have.
We're going to be celebrating the 30th anniversary of our organization [The Ken Blanchard Cos., a management consultancy]. My wife, Margie, and I couldn't even spell the word entrepreneur, and now we are ones. They should surround themselves with mentors and advisers.
What types of skill gaps did you identify for yourselves that you drew upon early in your own entrepreneurial careers?
We couldn't even balance our own checkbook, so we needed to get good financial advice. When we first met with our financial advisers, we didn't have any goals about profit, and they just laughed at us. So we made sure we got a good CFO and accountant. We've surrounded ourselves with great financial people to make sure we're on the right path.
What are some of the common mistakes made by technology entrepreneurs?
I think Michael Gerber, who wrote the foreword to The One Minute Entrepreneur, stated it well. The techies who are so passionate about their areas of expertise get blinded by the financials. If you're going to work in the business, you need someone to work on it -- you need an operations person.
You mention in The One Minute Entrepreneur that budding industrialists shouldn't quit their day jobs until they've gotten some success under their belts. Many would-be tech entrepreneurs put in long hours at their jobs. Can you offer any advice to them on how to find the time to launch a venture?
If they're working full time on what they're doing, it makes it hard. The perfect job for a potential entrepreneur is one they can do at half speed and do it well. If they have a job that takes up 70 hours a week, it's going to be hard for them to be an entrepreneur. You have to free up time so you can think and get advice and test your ideas.
Business ventures with friends can often turn sour and destroy relationships. What advice can you offer to people who may be considering partnerships with friends or family?
Our company is run by my wife and I, my son and daughter and other family. We have an outside consultant who facilitates a quarterly meeting for the family. You don't want to take a chance with family and relatives, you need a facilitator to help you. You don't want to leave things to chance. You want to structure things.
You talk a lot in the book about the importance for entrepreneurs to nurture relationships with spouses and to achieve a work/life balance. Is this based upon personal experience?
Yes. What happens to entrepreneurs is that they're really passionate about what they're doing and they might forget their priorities. You might win the world but lose your life. They can forget what's really important.