A Serial Entrepreneur on the Fundamentals of Building a Successful BusinessPublished: December 13, 2007 in Knowledge@Emory
With over 50% of all new businesses failing, there’s got to be a better way. Building a successful business is certainly difficult. It’s fraught with problems over sales, capitalization, and poor management, says Charles F. Goetz, adjunct professor of organization and management and a distinguished lecturer in entrepreneurship at Emory University’s Goizueta Business School. Goetz is a successful serial entrepreneur, and he, along with Michael E. Axelrod, a small business investor and guest lecturer at Goizueta, have penned a new book titled The Great Entrepreneurial Divide: The Winning Tactics of Successful Entrepreneurs & Why Everyone Else Fails.
In their new book, the pair explains to business owners what it is that successful entrepreneurs do that their less successful siblings don’t. In a recent interview with Knowledge@Emory, Goetz discussed the many pitfalls that entrepreneurs face and the ways to spur long-term growth in the midst of the day-to-day chaos inherent in running a business.
Knowledge@Emory: You’ve been an entrepreneur. What industries have you worked in and why? Does the industry stand out or the customer need?
Goetz: I’ve had nine separate ventures—in the technology and service industries, specifically in the financial industry, sports market, employment classifieds, and health care. The one key to all of them was that I identified a significant problem in each of these markets, and then I went about to solve that problem using a combination of market research and creativity.
Knowledge@Emory: Do you think there is a personality that’s better attuned to being an entrepreneur?
Goetz: While there is never a rule about anything, there are certainly people who are better at being “serial entrepreneurs.” Interestingly, every year I bring in a number of successful entrepreneurs into my classes at Goizueta to present to my students, and almost all of them have one thing in common—the ability to do a number of things at one time well. Successful entrepreneurs frequently are not experts in any one thing, but they are capable of being the chief, chef and bottle washer all in one. Interestingly, they frequently are not the ones who got the A’s in all their classes, but as a rule, they’re the most creative ones.
Knowledge@Emory: Your book reminds entrepreneurs to never underestimate the importance emotions play in building a successful business. Can you elaborate?
Goetz: There are many studies and research on this end, certainly. But entrepreneurs don’t always understand how to deal with these things. People simply do not understand that psychology is more important than financial analysis and accounting in building a successful new business. Building and running a successful business requires both business acumen and an in depth understanding of what drives customers, employees, and themselves. It’s about the right combination of forces working together. With employees, for instance, there’s often this “us vs. them” mentality. But your company is only as good as your weakest link, and less successful entrepreneurs don’t understand the importance emotions play in every part of a successful business.
Knowledge@Emory: Today, metrics are an important part of starting a business and understanding the consumer. How do you ferret through all of this data? Can’t it be overwhelming?
Goetz: Most successful entrepreneurs get to a point where they feel comfortable enough with the information they have that they are able to make a decision. That’s usually all it takes. Because big companies usually take two to three times as long, at a minimum, to make the same decision a small business can, the small venture can start their business and make their first sales before even the big business competitor has made up its’ mind to go into the market or not. You certainly have to do the homework though, especially as it relates to generating sales. Contrary to common belief, the number one reason most new businesses fail isn’t because they ran out of money, it’s because they were unable to generate the sales numbers they projected. You have to figure out how to pare down the information to understand what really drives your customers and the market. You can’t know everything. You will have to stop, at some point, all of the analyzing, and just start doing. After all, it’s the doing that makes the money. It amazes me how many entrepreneurs lose track of this. Making things happen is the name of the game for new businesses. That’s why successful entrepreneurs are doers.
Knowledge@Emory: Isn’t there often ego involved for the businesses that fail? You mention the blind spot on buying and selling—when the entrepreneur falls in love with their own product and their customers simply don’t.
Goetz: You have to understand why people buy. I am just amazed by how often I see first time entrepreneurs who have failed, blaming their customers for their failure. “They just didn’t get it. If I only had more money, I am sure I could get them to understand.” It’s a mystery to me why people build businesses and don’t even take the necessary time to make sure that customers are going to buy their product before they build their company and open their doors. Sure, some of it’s ego, but I believe most of it is due to not knowing better in the first place. After all, that’s one of the reasons why we wrote the book.
Knowledge@Emory: So how much does marketing play into all of this? Certainly, marketing is key today.
Goetz: Most entrepreneurs, or what I like to call “serial entrepreneurs,” are often people who happen to have strong marketing and/or sales backgrounds. Consequently, these are people attuned to the marketplace.
Knowledge@Emory: Your book reminds would-be entrepreneurs not to get mired in the day-to-day problems in the office or on the manufacturing floor, in order to grow the business long-term. Why is this often a problem, considering people are taught to develop business plans, vision statements, and long-term initiatives?
Goetz: Yes, it’s commonsense. But there are ways to do things, and there are ways in business to make things work better. It seems so simple, but people start the business and then they simply don’t understand why things aren’t selling. That’s where having an entrepreneur who can move in a number of directions is valuable.
Knowledge@Emory: It seems the figures on business failure remains high. What are the failure rates like these days?
Goetz: The statistics are horrible on failure—higher than 50%. Then there are those people who “sort of go into business”—those people who are working from home and who aren’t counted in that first number, and then we’re talking about an 80% failure rate if you factor in these more informal at-home businesses into the figures.
Knowledge@Emory: So what would you tell business owners to focus on? You bring up core concepts of priority and value. Can you elaborate on those ideas?
Goetz: I would definitely tell entrepreneurs to focus on the concepts that we mention in the book, like priority and value. For example, one of the most important things that we mention is that new businesses are much more likely to be successful with a mediocre product that satisfies a high priority market need than they would be with a top of the line product that only satisfies a mediocre market priority. It’s hard enough to sell to customers. A high priority solution is vital to making this as easy as possible. Also, value is the relationship between a product’s benefits and its price to customers. Usually when there is a high priority need for a product, there is a lot of competition. The way you beat competition out is through value—if your customer perceives your product delivers more value than your competitors do for them, they will buy it, and if not they won’t. If they buy, you’re on your way, and if they don’t, it’s closing time and lights out.
Knowledge@Emory: Some of the examples in the book you mention are successful products that build on this idea—for example, the iPod from Apple. While it’s a lovely invention, you note that it’s a simple little invention at the end of the day, correct?
Goetz: Absolutely! The iPod wasn’t that different from what was already out there. But Apple made incremental changes, making it more user-friendly. You don’t have to change the world to be very successful. Often, you just have to do it a little bit better.