Publications
Partners
Johannesburg - Entrepreneurs need to have a plan in place for when their businesses turn profitable but they should check egos at the door.
That is the message from leading small business guru Allon Raiz of Raizcorp to new graduates of the Entrepreneurship MBA at the Gordon Institute of Business Science (Gibs).
"If there is one thing which will kill a company it is ego," said Raiz, emphasising that at the first taste of success many entrepreneurs buy new cars, office facilities and other personal trappings.
When this happens, its a warning sign for him and other investors to consider divesting.
Raiz cautions that while many entrepreneurs plan for success, they often don't consider the practicalities.
This is especially the case when there's a group involved.He used the example of a business plan formulated around a dinner table or in a bar where a few people agree on an idea and commit time and resources but do not formalise what will happen should the idea take off.
This becomes even more important when there has been an unequal contribution of financial resources.
"He who has the gold makes the rules and you need to plan what the strategic direction is going to be when the business is making money," he said.
Issues which would need to be taken into consideration include who owns the physical and intellectual assets, who is going to drive the business forward and how profits will be distributed.
He said there were three core issues entrepreneurs should focus on: is the business unique and genuinely profitable; is it able to deliver something which is repeatable and is it ultimately scalable.
If an entreprener can focus on these matter rather than on short-term material gains, he will be able to build a successful business and create personal wealth.
"Entrepreneurs have this image of a perfect utopia when they become successful, but they don't realise how much hard work it is to being successful," said Raiz.
- Fin24
