Every Company Needs a Good Map

There is usually a sense of excitement and apprehension around the offices of a new company. There is a lot of potential but also a great deal of fear. For all of the planning and preparation that have been put into the creation and operation of the new entity, no one can be too sure of the actual outcome. Aside from the fact that a market has a mind of its own, a business often has one internal uncertainty that can be more disruptive than any outside force:

The Founder

A business founder has more than money tied up in a business. The founder has pride, ego, emotion, and reputation that affect decisions, plans, and the product. There are many stories of founders that would not listen to well-meaning advice and were still successful. There are many more stories of instances where sound advice was given but not received that lead to disaster.

The 5 most important founder issues for a new company:

1. Control
2. Communication
3. Personal value
4. Short-sightedness
5. Salary

It could be argued that they all exist in most founders, regardless of the level of experience. A founder with prior experience may feel that they know more about business than anyone around them. Such over confidence can lead to errors that amateurs do not make.

• Control - From fear to overconfidence, the range of reasons that a founder is unwilling, or unable, to allow others to be a part of the decision-making process is lengthy. Founders often want to be certain that their creation is not altered or that credit is not distributed during the process that leads to transforming a prototype into a finished product.

• Communication - The ability to have a vision and the ability to communicate that vision to others are separate things. Too often a founder can see where they want to go but they are unable, or unwilling, to communicate the complete vision to others. At times, the issue is one of control. By not sharing the complete vision, the founder believes they will be able to keep more control. Not revealing everything also provides a sense of protection in case someone steals the idea or sees too much and runs off to do "their own thing".

• Personal value - Because the founder is often the inventor, a founder can feel that the company would not exist without them. This is somewhat true, but it does not mean that the company cannot continue without them. Investors, teams, and partners that do not insist that the company controls and owns 100% of the Intellectual Property that forms the basis of that company are asking for trouble. Prima Donna inventors and academics with high rank often feel that business knowledge is trivial and so underestimate the value of the business members of the team. This over inflated sense of worth can lead to mistreatment of investors, improper use of funds, and serious ethics violations as we have seen in the past with the likes of Enron, Adelphia, and many others.

• Short-sightedness - This defect is more prevalent in founders that lack experience. They have no plan, or cannot see a plan, for the company beyond the release of the first product. There is no reality based growth estimate or revenue potential. There is no exit plan, except maybe to be acquired someday. There is no plan for product line expansion or brand building. The typical manifestation is the "If you build it they will come" mentality.

• Salary - In the early days of a company there is usually very little cash. Founders that see the riches of others often feel they deserve the reward now that the company has been formed or launched. This can lead to a less intense focus on developing the business and a greater interest in things away from work. It can also signal to future investors that this founder will not be a good steward of corporate funds.

Most if not all of these issues are not unique to first-time business developers. People with years of operational experience may not have start-up experience. People with start-up experience may not have been founders and so came in after the rough spots were smoothed over. Lastly, the founder that comes from a previous success where these issues were worked around but not solved my repeat them in subsequent venture, much to the dismay of people who thought they were getting a person who knew better.

It takes a special combination of founder, team, and investors to create the fertile soil that a great product, in a terrific market, can take advantage of. There are many ways to counter these issues. Each one has to be tailored to the particular founder. As a person that has started several companies and worked with many others, I can say that these are the hardest things to spot before getting everyone together. Sometimes these issues or troubles are biggest reasons to pull the plug before getting deeply in debt.

Monday July 16th, 2007 is the offical release date for :The Age of Conversation" 

Ordering information and details are available at www.ageofconversation.com