©2004 The Caring Enterprise Coach
This article is a summary of what everyone should know before starting their own business. It assumes that you’ve done the following groundwork:
If you talk to your local accountant or small business advisory office, they’ll probably tell you about the importance of doing a business plan to raise financing, the need to incorporate and register your business name, how to advertise your product and service, and the importance of administrivia like business cards and letterhead. They’ll also probably tell you that entrepreneurship takes courage, patience, an ability to handle enormous stress, and a willingness to take risks and work long, hard hours. And they’ll tell you that growth is paramount.
Most of this is nonsense, and all of it is putting the cart before the horse. Why do they tell you this? Because it’s what they’ve been taught, and because of the frightening failure rate of small enterprise. But most entrepreneurial businesses don’t fail because of bad advertising, cowardice, owner laziness or inability to handle stress. They fail because they are poorly thought out, poorly researched, set up wrong, marketed wrong, badly managed, and given terrible business advice. I base this immoderate assessment on my experience working with over a hundred entrepreneurs, listening to their stories, and seeing what works (and what doesn’t) in small enterprise, and why.
Let’s take a step back and consider what an entrepreneurial business is. It is a (usually small) number of people with a shared idea and a willingness to work together to make that idea commercially viable. That means, according to what they teach you in business school, finding capital, developing your product and then going out looking for customers for it.
This is a recipe for failure. The money you borrow (which in an entrepreneurial business is always horrifically expensive) compromises your control and immediately presents the possibility of the loan being called, and the personal assets securing it being forfeited. And there are a million possible reasons why there could be few, or no, customers for your product. The #1 reason entrepreneurial businesses fold is because they simply run out of cash. The #2 reason is because the owners make one or more fatal decisions, and the most common fatal decision is to produce a product that nobody wants to buy.
Here’s an alternative model, based on what Charles Handy calls Existential Enterprise, and which I have called New Collaborative Enterprise. Its first two principles turn the business school formula upside down:
This isn’t rocket science. The first rule simply says do your research before you start, do it thoroughly, and do it with potential customers. That way you have sales before you have costs. Then rule number two becomes easy — your customers finance your business, and the debt is quickly extinguished when the product is delivered. This is an oversimplification, of course. You can’t always finance operations this way. But if you have to borrow, the principle is the same — pay it off fast, as part of the same transaction that gave rise to the debt in the first place, and never give up equity — it’s like selling your soul. Most women can confirm the insanity of spending cash you don’t have — which is one reason women entrepreneurs tend to start their businesses more slowly, and keep them going much longer.
Time for some more heresy. MBA graduates will tell you to select a management team with a balance of skills — operational, financial, sales, management etc. But they don’t know what your particular business needs — if the business is an R&D outsourcer it needs people with deep knowledge about research, not accountants and sales executives. An Existential Enterprise will follow these principles instead:
This may sound idealistic, but it works. Partnerships are a very common form of business organization, and those formed with family members and others where there is a bond of love and trust are especially durable. And many large businesses are learning the benefits of flat organizational structure, decentralized decision-making, and the abolition of titles.
Next, the business school grad will tell you you need systems that provide each person with compensation and reward that is ‘commensurate with performance’. That means your partner who’s independently wealthy and who self-promotes like crazy will get money he doesn’t need, and the young, modest partner with a big mortgage will get less money than he needs, and so will probably leave to get more. And the partner who values and needs her spare time but who has critical and scarce skills will be bribed to work long hours and so will probably leave to get less. Here’s a more sensible approach:
Now everyone in your enterprise knows what you’re trying to accomplish, what it will take to achieve it, what’s in it for them, and what their individual role is. If each member has the key attributes and basic skills listed at the start of this article, you have all the ingredients in place for a successful (on your own terms) enterprise. All you need to do now is communicate well and avoid the landmines.
Think of it as a jazz combo versus a traditional symphony orchestra. In the jazz combo, everyone knows their role, takes their cues from each other, and communicates network-style with the other band members and with the audience (customers). If the audience gets restless (customers are dissatisfied or their needs change) you can improvise quickly. You don’t need hierarchy. By contrast, the symphony orchestra, like the traditional business, is hierarchical, communicates only through the guy at the top, and is totally stuck to the rehearsed script (the business plan). If the audience is unhappy, the symphony just ignores them and plays on. Which business model makes more sense to you?
Once you’re up and running, here are three final principles to keep things going smoothly:
Most of the problems in traditional entrepreneurial business — the ones that lead to the stress, long hours, divorce, sacrifice, unhappiness, and, often, failure — are created by the MBA mythology of how to start, build and operate a business — a mythology that often defies intuition and common sense. And that’s all these ten principles are: Common sense, that I’ve seen work in dozens of small, successful enterprises, and the ignorance of which has been the undoing of dozens of others I have worked with. That’s why people with no formal business training are sometimes the best entrepreneurs: They don’t have to unlearn all the nonsense, and guided by common sense they instinctively build something closer to the Existential Enterprise model than the Business School model.
I’m not saying that this is easy. Adhering to these ten principles (especially the first two) requires a lot of time and energy, and considerable intelligence. But they are relatively fool-proof and stress-free. After all, what could be more joyful than creating a successful enterprise with people you love and trust, on your own terms — a true labour of love?
Other Writers About CollapseAlbert Bates (US)
Andrew Nikiforuk (CA)
Carolyn Baker (US)*
Catherine Ingram (US)
Chris Hedges (US)
Dahr Jamail (US)
David Petraitis (US)
David Wallace-Wells (US)
Dean Spillane-Walker (US)*
Derrick Jensen (US)
Dmitry Orlov (US)
Doing It Ourselves (AU)
Dougald & Paul (UK)*
Gail Tverberg (US)
Guy McPherson (US)
Ilargi & Nicole (CA)*
Jan Wyllie (UK)
Janaia & Robin (US)*
Jem Bendell (US)
Jim Kunstler (US)
John Michael Greer (US)
Jonathan Franzen (US)
Kari McGregor (AU)
Keith Farnish (UK)
NTHE Love (UK)
Paul Chefurka (CA)
Paul Heft (US)*
Post Carbon Inst. (US)
Richard Heinberg (US)
Robert Jensen (US)
Roy Scranton (US)
Sam Mitchell (US)
Sam Rose (US)*
Tim Bennett (US)
Tim Garrett (US)
Umair Haque (US)
William Rees (CA)
Archive by Category
My Bio, Contact Info, Signature PostsAbout the Author (2016)
--- My Best 100 Posts --
Preparing for Civilization's End:
What Would Net-Zero Emissions Look Like?
Why Economic Collapse Will Precede Climate Collapse
Being Adaptable: A Reminder List
A Culture of Fear
What Will It Take?
A Future Without Us
Dean Walker Interview (video)
The Mushroom at the End of the World
What Would It Take To Live Sustainably?
The New Political Map (Poster)
Complexity and Collapse
Save the World Reading List
What a Desolated Earth Looks Like
Giving Up on Environmentalism
The Dark & Gathering Sameness of the World
The End of Philosophy
The Boiling Frog
What to Believe Now?
Conversation & Silence
The Language of Our Eyes
Cultural Acedia: When We Can No Longer Care
Several Short Sentences About Learning
Why I Don't Want to Hear Your Story
A Harvest of Myths
The Qualities of a Great Story
The Trouble With Stories
A Model of Identity & Community
Not Ready to Do What's Needed
A Culture of Dependence
So What's Next
Ten Things to Do When You're Feeling Hopeless
No Use to the World Broken
Living in Another World
Does Language Restrict What We Can Think?
The Value of Conversation Manifesto Nobody Knows Anything
If I Only Had 37 Days
The Only Life We Know
A Long Way Down
No Noble Savages
Figments of Reality
Too Far Ahead
The Rogue Animal
How the World Really Works:
If You Wanted to Sabotage the Elections
Collective Intelligence & Complexity
Ten Things I Wish I'd Learned Earlier
The Problem With Systems
Against Hope (Video)
The Admission of Necessary Ignorance
Several Short Sentences About Jellyfish
A Synopsis of 'Finding the Sweet Spot'
Learning from Indigenous Cultures
The Gift Economy
The Job of the Media
The Wal-Mart Dilemma
The Illusion of the Separate Self:
Did Early Humans Have Selves?
Nothing On Offer Here
Even Simpler and More Hopeless Than That
What Happens in Vagus
We Have No Choice
Never Comfortable in the Skin of Self
Letting Go of the Story of Me
All There Is, Is This
A Theory of No Mind
The Ever-Stranger (Poem)
The Fortune Teller (Short Story)
Non-Duality Dude (Play)
Your Self: An Owner's Manual (Satire)
All the Things I Thought I Knew (Short Story)
On the Shoulders of Giants (Short Story)
Calling the Cage Freedom (Short Story)
Only This (Poem)
The Other Extinction (Short Story)
Disruption (Short Story)
A Thought-Less Experiment (Poem)
Speaking Grosbeak (Short Story)
The Only Way There (Short Story)
The Wild Man (Short Story)
Flywheel (Short Story)
The Opposite of Presence (Satire)
How to Make Love Last (Poem)
The Horses' Bodies (Poem)
Distracted (Short Story)
Worse, Still (Poem)
A Conversation (Short Story)
Farewell to Albion (Poem)
My Other Sites
This work is licensed under a
Creative Commons License.