So what do Entrepreneurs need and the universities not providing? I have personally known several graduates who did Entrepreneurship MBA from Babson, a well known Business school for Entrepreneurship and ended up working for large corporations, and many students who seemed to have started their companies during their education and left school to start their businesses. As a person who have worked at Dun and Bradstreet and several large companies in America, and started numerous startups, some which have failed or eventually became not profitable, I noticed that the education provided at these business schools produces good managers, and executives who can run and manage billions of dollars and have clear business processes and that focus on repeatability.
When I reflect on these skills taught by Sloan or Harvard Business school near where I live, I found that these are great skills for CEOs of large corporations, and they are definitely what made such universities and education so highly sought after. However, I wondered does an Entrepreneur even need such skills during the startup phase of a business? Reflecting on my successful startups, I realized that the skill sets needed for an Entrepreneur during startup phase is a much different skill set compared to that of a CEO of a large corporation. For a startup looking for their initial sales, and first repeat sales, the metrics that the CEO of the startup should focus on should not be the same as that of a large corporation.
I have met several Venture Capitals, government agencies and other seed funding organizations, and I find that a lot of them who do not understand the nature of Entrepreneurship and startups get it all wrong.
The metrics a startup should worry about for their business is:
- Customer Acquisition Cost.
- Viral Coefficient
- Customer Lifetime Value
- Average Selling Price / Order Size
- Monthly burn rate.
NOT cash flow, balance sheet and income statement
I have been to many meetings with the board of directors and venture capitals, and when they ask for financial and accounting statements, there is always a depressed feeling as for a startup, the initial sales and revenue is always – ZERO, and cash flow always – NEGATIVE. If a startup has a unique selling point, the "angels" should actually focus on Customer Development. Customer Development is about hypothesis testing, and developing a "minimum feature set" for the product, and discovering early adopters, and what prices and features they are willing to pay for. most of the customers are one off customers, and not repeat customers, and early customer retention is key.
The key skills of the entrepreneur needed is to pivot and have agile development that is able to change and continuously learn and development products and features to satisfy their ever changing customer needs. Most of skills taught on business schools are strategies, planning and processes. Not that they are not useful, but the worries of a startup is much more different from that of a large corporation. An entrepreneur needs to be very agile and manage chaos and use processes to find profit, while a CEO of a large corporation needs repeatability, bureaucracy and management to continue the profitability of the company.
For an entrepreneur, developing a dynamic and ever updating business model – a diagram how a company creates, deliver and captures value, is more important that fine tuning minor practices and replicating success. I believe entrepreneurship is a collective process, and an entrepreneurship has to continuously network, experience and engage customers to get the required skills to run the business. Learning, testing, adopting and teaching others is a new method that has been crowd-sourced and proven successful by several incubators, and entrepreneurs which proves more successful than previous method where there is an author, a textbook and not much more interaction. Today, with social media, learning for entrepreneurs is an iterative process that is interactive and collectively makes us smarter.
What you can not learn on the books, you can experience on article and blogs, and by interacting with others online and learn from their experience. Web 2.0 allows 2 way communication, the more natural way of learning and developing skills required to run a business. Managerial accounting, modeling for optimization, and global value chain strategies can be learnt in a business school, but what an entrepreneur really need to know is technology entrepreneurship, patent laws, entrepreneurial finance and management.
Lastly, I feel that creativity and innovation can not be taught in schools, but it can be influenced by hands on experience and learning from other successful entrepreneurs. Entrepreneurship is an art and not just a balanced spreadsheet.
Source by Robin B Low