8 Critical Decisions Entrepreneurs Have to Make
Singapore has a vibrant start up economy: there are government policies and programmes fiercely facilitating the rise of start ups and supporting their growth. H
As The Global Start Up Community Continues To Go Wild, These Are 8 Critical Decisions For An Entrepreneur To Be Mindful Of:
1. How To Form A Winning Team?
People are the first key to a successful start up. Without the people, the best idea can be rendered useless.
Having a cohesive team of the right people - people with different skills and a common vision - is of the most important. Hence it is crucial to not fall into the trap of common misconceptions.
One of such that can break up the team is: the most competent one in the team will bring in the most revenue. This is not always true.
2. How Big Is The Idea?
Next is the purpose - the common vision or the business idea.
A big business idea does not need to be very innovative.
For example, the Grab app. It is not entirely innovative; its concept was timely when the people in Singapore are ready for online booking and cabbing services.
Hence it is critical to not fall too soon in love with an idea but think deep, build conviction and ensure a competitive advantage for a winning product or service.
3. How To Manage Personal Finances?
It is important to manage personal finance separately from the business finances. This can easily become a major dilemma for most up-and-coming entrepreneurs as both can be mutually interchangeable during operations.
Successful entrepreneurs will draw the line clearly.
4. When To Raise The Growth Capital?
When business expands, naturally, the entrepreneur will start managing both the business and the investors.
With the established Proof Of Concept (POC), the entrepreneur can start identifying the right investors for the first round of funding. These investors would be like-minded - they strongly believe in the business idea and will lend their support until the business makes its win.
It is advisable not to accept cheques from the first person who agrees to invest or the one who offers the largest sum of money.
5. When To Scale Up?
Time is the key to business growth - too slow, and another person would take the business idea, run with it and make billions from it; too soon, and the entrepreneur may face huge capital requirements and implementing challenges.
The major dilemma with scaling up lies in choosing between building to sell or building to last. The first one focuses a lot on the business valuation and hence the ways to not damage the business. The second allows a single focus on the business, which will then lead to a good business valuation.
Businesses like Zomato, foodpanda and Tiny Owl are good examples here - they have tasted different levels of success despite coming from the same business idea.
6. When To Institutionalise The Company?
Here it means to recognise the company as an independent entity with a life of its own, outside of the management team.
Again, institutionalising a company too soon will face the risk of killing the passion and drive; too late may hamper business growth.
It is also advisable to pay attention to governance here as it forms the core of a company culture - the right one will help drive the right culture that promotes business growth and development.
7. When To Dilute The Owner’s Stake?
The timing and the amount of diluting the owner’s stake is a tricky one to deal with.
When the entrepreneur is driven by higher business valuations, such greed will lead to a reluctance in diluting, which can kill the business. Hence the usual difficult question: a smaller share of the larger plate or a larger share of the smaller plate.
Generally, the belief is: it is better to be early than late in diluting the owner’s stake.
8. When To Call It Quits?
Being caught in a business idea for too long can make one become blind and numb to reality - a huge risk for all entrepreneurs. Hence knowing when to quit is important.
This may be painful and excruciating but it allows the entrepreneur a great opportunity to start afresh.
Speak with our certified management accountants today, we can prepare your business to acquire more funding or for a clean exit.