The entrepreneurial experience is a very challenging and rewarding adventure for those that lean in that direction. On the other hand, it is a trip that is fraught with blind alleys and false starts. So my advice is simply, “Buyer Beware”.
If you are inclined toward entrepreneurship, you may find my notes on the comments by Paul Nichols of Trinity Orthopedics, LLC delivered at the Innotech, San Antonio Business and Technology Conference. First, let’s define entrepreneur. If you simply want to be the boss and you do not have any other ambitions, then stay as an employee. You will make more money, have fewer headaches and generally enjoy a higher quality of life. If your goal is to make something special that has sellable value, then go for it!
Setup your company, from the very beginning, to maximize your investment when it time to cash out. Cashing out may take several forms. It may be selling you company for the highest price or may be providing you with a comfortable retirement. Either of these requires creating a company that maximizes its value.
Mr. Nichols suggests four ways to maximize your investment:
1. The value of the organization will be determined by the level of inherent risk and the company’s ability to be innovative.
2. Identify your consumer’s need from within the competitive landscape.
3. You must determine the proper entry points along the product timeline so that you will maximize your return on investment.
4. Create a stepping stone approach to addressing problems.
5. Look bigger than you really are. Make you footprint and presence such that the public believes that you have more horsepower than you have.
If you are looking to build a company that is sellable for maximum value, potential investors are looking for companies with strong internal financial and production controls. Until you have the production issues resolved and the people in place, your company is not ready to sell. The same may be said for financial controls. Investors are also looking for companies that serve target markets that are not currently being served. Finally, investors are attracted to brands. Establish your brand using proper marketing techniques. Stay focused on your product line and do not allow yourself to be diverted.
Remember that the goal of entrepreneurship is to build a company that has determinable value. Entrepreneurs reap the benefits of their efforts at the end of the journey. If your concern is today, then steer clear of this path. Owning your own company is very exciting; but, it is also very difficult and demanding. Good luck on your adventure.
Steve Cook is the managing shareholder of Cook and Associates, PLLC, certified public accountants. The firm has offices in San Antonio and San Marcos, Texas.
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