Combat Entrepreneurial Peer Pressure; Here’s How to Decide If or When to Jump
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Let me ask you a question:
“If everyone jumped off a cliff, would you jump, too?”
You’ve probably heard this question before. Perhaps from your mother or grandfather or guardian or whoever uttered it when you balefully said, “But <insert person here>, EVERYBODY IS DOING IT!”
You sought the generous “Well, go ahead,” but instead you received the ubiquitous response indicating your compliance with “everyone” was an unwise choice.
“If everyone jumped off a cliff, would you jump, too?”
And so? Would you? OF COURSE NOT, you’re thinking to yourself, but this particular request (on your mind when you said, “everybody’s doing it”) IS DIFFERENT! YES! It’s important to you, and no, it’s not just “going along with the crowd.”
Or is it? Classic examples of “peer pressure” involve decisions typically made in our youth. They involve alcohol or drug consumption, clothing and hairstyle choices, social behaviors, or “going with the norm” to be like everyone else.
But what about entrepreneurial peer pressure? Is there such a thing as peer pressure among entrepreneurs?
Certainly, entrepreneurs are under significant pressure — often from family, friends, and coworkers — but also from other entrepreneurs. Consider this scenario:
“Well, I guess I’ll go with convertible debt for my financing, especially since <insert CEO name here> did that,” a startup CEO told me. (Really!)
“What do you know about convertible debenture financing?” I asked.
The blank look he gave me told me “Well, everyone else is doing it!”
Or this statement from (several!) entrepreneurs:
“I’m just not going to take any outside money. The CEO from XYZ company didn’t take any outside funding, and neither did the CEO of ABC company. I’m going to do this like they did, on my own!”
(Of course, they used real names, not XYZ or ABC. Although ABC probably has enough sales that it didn’t have to worry about outside funding.) ;)
“HOW, exactly, did the CEOs of XYZ and ABC do it ‘without any outside investment,’” I asked, not surprised at the blank look accompanied by this response:
“Well, I don’t know, but they all managed to achieve success without it!”
“They all were able to do it? They ALL (yes, I got louder) used convertible debt? They ALL (well, you get the idea)…,” I responded.
Everyone isn’t doing it
It’s the “everyone is doing it” mentality, and, yes, it extends to entrepreneurs. It’s tempting to copy someone else’s successful path and to attempt shortcuts to success, but not everything will work for the wide variety of businesses out there.
It’s normal — and it’s good — to see entrepreneurs turn to more experienced entrepreneurs to gain insights into growing a business. However, entrepreneurship (and startup businesses) are NOT “one size fits all.” Consider the variables in the world of newly founded companies — different markets, different types of startups, different founder personalities, different products/services.
It’s difficult to generalize exactly how to “do financing” or “manage growth” and a lot more. Certainly, some aspects to business can be nearly universal. (“Learn to properly pitch your company,” for instance.) And many “truths” seem to fit each and every entrepreneur. For example, “learn about finances,” “get a good attorney,” and “protect your Intellectual Property” are great pieces of advice for any startup.
You can certainly pick up tips on how to present an awesome pitch (from someone who’s been successful pitching for funding), and you can even copy the general format of someone’s business plan/pitch.
However, you cannot always succeed just by copying others. What got one company funded could have zero effect on a different company. (As I indicated above, different markets, different situations.) What one founder used to her advantage may not work at all for your company.
This is what everyone should do
So what will work? That’s always the million-dollar (or more) question(s). What will be the best route to success? Should I go out and raise capital, or try to bootstrap the company and then let profits drive growth? Should I pursue angel or venture capital, or should I grow the company using debt? Which would be the best VC group to view our company pitch in my effort to secure capital? What percentage of the company should I offer in exchange for a specific amount of investment?
There are many of these types of questions — and plenty more! To truly find out what works, it’s a great idea to ASK. Most incubator programs provide mentors/advisors, and you can avail yourself of several of them at any time. These “advisory board members” can give you outstanding advice from their own depth of experience. Many are serial entrepreneurs, some are attorneys, accountants, C-level executives, investors, and the list goes on.
In addition, many incubation professionals have national networks comprising other individuals who have extensive experience with entrepreneurs and startups. Why not ask the “voice of experience” your questions and get solid, specific advice?
Ask your way down from the cliff
Again, you don’t want to do anything just because “everyone else seems to be doing it,” but, as noted above, some universal concepts are solid. However, it always pays to to confer with those who can give you experiential knowledge. Avoiding a mistake by listening to someone who’s “been there, done that” and who is willing to share with you? That’s priceless.
Just because everyone else is doing something, doesn’t mean it’s good for you or will work for you. The idea is to do your best to make sure something DOES work for you. Yes, I know, there’s no sure way to know, but you can take paths that cut the risk.
The primary way to minimize bad decision-making is to get good advice. So, where do you get that good advice? How can you determine bad direction from good information?
Typically, it’s a comparison scheme. You get advice from a solid source, and then you ask another reliable advisor for the same discernment. In fact, if it’s an important decision, I’ve often consulted several “experts” (and non-experts) to do some “comparison shopping” for the best ideas.
Certainly, those who have suffered the “slings and arrows of outrageous fortune” of “to invest, or not to invest” can help. (My nod to Hamlet’s soliloquy.) You should let those who have suffered help.
And you shouldn’t jump off a cliff just because other entrepreneurs are doing so. (That’s my nod to Grandma — and, probably, your grandma, too. It’s still good advice.)
Mark S Long has long experienced the intricacies of business incubation, acceleration, coworking spaces, makerspaces and other entrepreneurial assistance venues. UF Innovate supports an innovation ecosystem that moves research discoveries from the lab to the market, making the world a better place.
Originally published at https://incubatorblogger.wordpress.com on June 22, 2021.
