Littlebanc Blog

In the video above, Littlebanc CEO Michael Margolies likens entrepreneurs’ limitations to dragging rafts: you built a raft that successfully took you across the start-up company river. But, now that you’re on land and need to move forward, you’re still dragging the raft with you. It slows you down. It’s heavy. Your attachment to your raft keeps you from getting where you need to be. You become your company’s worst enemy.

These attachments are mental limits on a CEO’s capabilities, and they can hinder even the most adept entrepreneurs during not only the capital-raising process, but also the day-to-day operations of running a company. Mr. Margolies explains that the most important thing about building a small business is understanding your limitations, emphasizing that this is also the hardest thing for a CEO to do.

The Only Person That Can Beat You is Yourself

The first step for entrepreneurs is to understand that they do not know what they do not know; they must accept that they can and should seek advice from an outside perspective—a trusted mentor, a colleague, a friend, a passerby on the street. Entrepreneurs generally excel at one or two things—whether it’s product development, marketing, or an infinite number of other skills—which drives them to start a business in the first place. But to excel at running a business, entrepreneurs must recognize their weak areas, those skills or applications they just don’t get. Seeking advice from or bringing in people who do know what you don’t will not only be necessary for the survival of your business, but also a much-deserved reality check.

The Spoon Doesn’t Taste The Soup

When a founder builds a company from scratch, he spends time trying to get people to understand his business, to love it and to use it. The same idea holds true for human nature—particularly CEOs—in general: we want people to approve of us, to like us and understand us. In the video, Mr. Margolies cites a Buddhist proverb: “The spoon doesn’t taste the soup.” Entrepreneurs can waste a lot of time trying to get people to “taste” his “soup”—his business, his credibility, his personality—but the tough lesson to learn is that some people just won’t get it. The key is to not take it personally. Don’t judge it. Recognizing that not everyone will understand or even like your business is one way entrepreneurs can free themselves of one limitation.

This is particularly true of approaching investors and venture capitalists. Having a realistic vision of your business will push you in the right direction. Having a realistic view of your own strengths and limitations will make you a better entrepreneur and leader. Understanding your limitations and your business will give you a better perspective when approaching the capital-raising process.

Check back later for part 2, a look at how a CEO can free himself of limitations to better understand how a venture capitalist approaches the valuation process.

Working on your first start-up is exhilarating: everything is new, everything is a challenge, and, because start-ups are small, you can see your impact on the business on a daily basis. But occasionally, as entrepreneurs become more entrenched in the day-to-day trials of running a start-up, they might lose sight of a few business basics they picked up at the very beginning—the basics that propelled early successes.

“The hardest thing for an early stage entrepreneur to do is to step back and allow time to work on the business instead of in the business,” says Jim Bowie, associate director and site manager of the St. Cloud campus of University of Central Florida’s Incubation Program. “Working on the business is laying the foundation so the business can grow.”

When you find the details looming larger than the big picture, take a cue from Mr. Bowie’s lessons learned from not only mentoring 9 start-ups every day, but also successfully heading up two start-up companies, one of which he took public on NASDAQ before selling to Johnson & Johnson.

• Engage outside eyes. Whether it’s a trusted mentor or an honest-to-a-fault friend, an external opinion can snap you back to the real world. It’s easy to see your business as the end-all, be-all of start-ups, but an outside voice can point out limitations and weaknesses you might not see otherwise. Constantly seek advice from people who are smarter than you.
• Educate and train. Work is never done in a start-up. Pushing forward means looking for learning opportunities. Struggling with customer relationships? Investigate CRM solutions. Hit an inspiration wall? Attend business showcases or keynote speeches. Want to raise capital? Learn from those who’ve been through the process.
• Connect with your team. In new start-ups, there might be just two of you, but Mr. Bowie recommends consistent weekly meetings to review issues and set priorities. Plus, connecting with team members gives you time to make sure you understand your staff and what makes them stick with your company. Listen to their ideas and problems. They’re moving your company forward.
• Review your strategy and business plan. Consistent review of your business strategy keeps you focused on your short-term and long-term goals. Business plans might be outdated the moment they leave the printer, but they are a roadmap of sorts. At the very least, getting your thoughts on paper forces you to think through tough business questions and gives you a way to hold yourself accountable for your business goals.
• Take a breather. With all the frenzy that comes with managing a start-up—the decisions that need to be made right now, the 80-hour work weeks, bootstrapping like crazy—take a second to remind yourself why you do this in the first place. The excitement and passion that drove you to become an entrepreneur in the first place will carry you through each stage of the business lifecycle.