Early on I thought it would be great to own my own business. I worked in retail, summer camps, hospitals and restaurants from high school to graduate school and couldn’t wait to start my own wellness center business after graduation. Business ownership ended and shifted into working in organizational development and new business development for other companies. I have my own business again and focus on working with leaders of entrepreneurial purpose-driven businesses who want to grow their companies and do good with the profits.
Experiences taught me that regardless of the industry and leadership styles, there are 3 common errors made in entrepreneurial companies:
- Not recognizing success and failure
- Focusing on profit as the reason for being
- Establishing a hierarchical structure
These are three suggestions to avoid these pitfalls
1. Create flexible and strong processes
Entrepreneurial companies focus on growth and sales to provide healthy cash flow and eventually healthy profit. While growing, guardrails should be approximately right to encourage calculated risks, so the company members are supported in both their successes and failures. This kind of internal support results in long term sustainability. Being effective comes before being efficient
2. Commit to a purpose-driven culture to produce profits
Purpose defines why the founder, together with the business, is unique. A written description of the unique beliefs and values is vital information to help customers choose the business, create a market niche, support the organization’s members and have them support the company and to know that profits will be used to do good. “Be the best in the world, by doing the best for the world”. The purpose is constant.
3. Share authority where the problems are solved
Authority that is used laterally supports innovation. Authority that is used linearly creates inertia. The founder is always the Ultimate Authority and decides how authority should be shared. She/he can then stay focused on the vision so that the company grows. Sharing authority with the right person, at the right time builds muscle organically through honesty, openness, accountability, and innovation. Successful founders share authority organically.
All businesses navigate through a natural life cycle and need a road map to avoid the predictable pitfalls along this journey. In the early stages of a business, the road map can be approximately right if the main ingredients are shared and understood so that commitment to long term success is realized.