The False-Start Entrepreneur

By: Allon Raiz, an EO South Africa – Johannesburg member, a Special to Overdrive

As a consultant, I’ve had the privilege of helping countless entrepreneurs achieve growth and greatness over the years. Along the way, I’ve seen many instances of what I call “The False Start”— companies that seem to be getting off the ground and taking their competitors by storm, only to quickly fall short.

It happens more often than you’d think. Entrepreneurs hit it big by landing a great contract, but instead of using their success as a launching pad for bigger and better things, they wind up losing direction. They start making poor judgment calls because they think that their hard work is done. They lose sight of the strategies they need to implement to ensure that these big contracts come rolling in regularly, rather than just being one-off deals. The decisions that “False-Start” entrepreneurs make become based on ego instead of being driven by sound business objectives. And the company that a short while ago looked so promising ends up in the dust heap instead.

Over the years, I’ve identified 10 warning signs to check whether an entrepreneur is experiencing a False Start, rather than the beginnings of sustainable growth. In my experience, the danger of falling victim to a False Start is greatest when a company lands a deal that gets it noticed— a deal normally worth more than three months’ average turnover. So when a new company is brought to my attention, and people are saying that the company is ready to take off, I check to see if three or more of the following apply:

  1. The entrepreneur recently bought a new car.
  2. The entrepreneur is doing what I call “victory laps,” telling everyone, “Look how great I am!”
  3. Thinking that their old clients are “too small” now, the entrepreneur has taken his or her foot off of the sales pedal.
  4. The entrepreneur has started to spend more time on self-image and grooming, or is buying expensive new clothes.
  5. The company is looking for bigger, better, more expensive business premises.
  6. New employees are being hired too quickly, resulting in more capacity than there is demand for work.
  7. The entrepreneur has received a big bonus or a salary raise prematurely.
  8. Decisions have been made to expand too quickly (which I like to call “planning world domination!”).
  9. The entrepreneur has started to spend a lot more time on the image of their company; i.e., repainting the offices or buying new furniture.
  10. It seems that the entrepreneur is starting to think that they’ve made it, and will never have to struggle again, leading them to stop planning diligently.

If the entrepreneur is undertaking three or more of these activities, it’s more than likely that the company will become another False-Start victim. While it’s completely natural to want to make a big deal out of a big deal, the decisions that lead to the actions listed above are all ego-based, rather than focused on finding ways to capitalise on the success already achieved.

If you’ve recently landed an unusually big contract and are feeling untouchable, now is the time to re-evaluate any decisions you may have made recently. Are they solidly based in a carefully developed growth strategy for your company? Or are they simply a form of instant gratification that won’t contribute meaningfully to your company’s long-term growth— a warning sign of a False Start?

Allon Raiz is the CEO of Raizcorp, the only privately owned small business “prosperator” in South Africa. Fun fact: In 2011, Allon was appointed as a member of the Global Agenda Council on Fostering Entrepreneurship, making him one of the 15 world experts in the field.

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