One of the interesting conversations that keeps coming up revolved around the hyperfocus on technology based start-ups to the exclusion of virtually every category. When I attend networking events, many of the entrepreneurs that I encounter are articulating the value proposition of their high tech start-up. Almost every single one speaks of the next competition they plan to enter to secure financing to fund their idea.
What seems to be missing in these conversations is a focus on executing a business strategy rather then simply a funding strategy. In the hot pursuit of obtaining seed capital, entrepreneurs can become blind to what’s happening around them with the other important facets of the business. From human resources to operations, marketing & sales, there are many other aspects of development besides the capital raise that warrant attention.
In companies that do not claim to have a technology focus, it is a little easier to talk to the entrepreneur about business basics. Professional development, personal finance, market research, proof of concept, branding, feasibility, organizational design, supply chain, & sales are front and center topics in most companies. Instead of intellectual property, securities and like topics du jour, most of the companies that contribute to our way of life and represent the fulfillment of the American Dream struggle with these topics.
I fear that, by giving so much attention and publicity to technology companies who may have the outside chance of selling at a favorable multiple, we are failing to give earnest heed to companies with issues that are easier to address and that have a higher likelihood of making it to the five years in business mark. Simultaneously, we become so enamored with the perfection of code or intellectual property that we fail to talk about business basics with the technology companies, though they need to think through all of these issues in addition to theunique issues they face.
Please do not misunderstand my intentions here. This blog post is not about bashing technology companies. Quite the contrary, it is suggesting that all companies are best served by focusing on fundamentally sound business principles. In the very next breath, however, I would argue that non-tech companies not be relegated to second tier/ugly stepsister status simply because the multiples they usually generate are lower. The upsides of a “mainstreet business” is that it has less inherent risk, requires less capital, and can generate revenues sooner.
How can we, as the American business community, more effectively support mainstreet businesses? (And not fail to challenge tech companies to also execute on key business fundamentals as well?)