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The Ghosts of Entrepreneurs Past

You can learn from their mistakes

Photo by Patrick Tomasso on Unsplash

Okay, it IS the season, and, of course, you must know Charles Dickens’ A Christmas Carol. The novella tells the story of Ebenezer Scrooge, the miser, who gets a visit from his former (now dead) partner, Jacob Marley (who is weighed down with heavy chains and money boxes formed by his life of greed; he warns Scrooge that he must change his ways or suffer an even worse fate).

Marley tells Scrooge to expect visits from three ghosts: the ghosts of Christmas Past, Christmas Present, and Christmas Yet to Come. The “Ghost of Christmas Past” takes Scrooge back on a journey through his childhood and young adult Christmas experiences. And … well, if you don’t know, read it yourself or at least watch the movie (the George C. Scott one is the best). I’m not here to tell you fictional stories.

The story is relevant, however, because I often invoke the “Ghosts of Entrepreneurs Past” when advising current entrepreneurs. I’ve been in the incubation business for a while (let’s leave it at that), and I’ve seen my share of failures, successes and puzzling behaviors.

I’ve had many potential entrepreneurs come to see me (with their Ph.D./M.D./F.A.C.O.G./P.D.Q./etc. initials after their name) and tell me they already knew EVERYTHING. I mean, how hard can it be to start a business? This isn’t rocket science. Isn’t it “just business”? (I quote accurately.)

That’s when I bring on the ghosts.

The Ghost of Investors Past

Consider this sordid tale of the “Ghost of Investors Past.” An entrepreneur didn’t manage his cash flow, got desperate for money, and sold 15 percent of his company to each of 4 different investors (for a fairly small amount).

What this entrepreneur didn’t know is that these 4 investors knew each other — and they got together, realized they owned 60 percent of the company, exercised their rights as a majority, and fired the original owner/founder, who was devastated (and became a “former” entrepreneur).

It would have been much better — and smarter — to have pursued a bridge loan from a bank until the crisis was over, pay off the loan, and kept 100 percent of the company.

The Ghost of Hiring Mistakes

Consider the “Ghost of Hiring Mistakes.” A founder/CEO rejected our incubator’s offer of Human Resources assistance, and, thus, she hired people who “interviewed well but just didn’t work out,” and she hired people who were unqualified but were her friends.

In short order, she hired someone who was older and experienced, but their personalities clashed. So she fired that employee — and was promptly sued for lost wages and opportunities by the angry ex-employee. It was a long, complex case, and it took nearly every bit of capital she had.

As a result, the business closed. It could have been easier if she had used our screening tools, personality profiles, and our experience in evaluating potential employees.

The Ghost of Bad Bookkeeping

Let’s not forget the “Ghost of Bad Bookkeeping.” (Can’t you just picture a ghost holding a ledger with a quill pen?). This particular specter seems to show up often. I remember a particular appearance where an entrepreneur continually failed to turn in financial reports (as required, quarterly!) to me.

I finally went to his office and noticed literally hundreds of yellow and green “sticky notes” on his whiteboard on the wall. When I asked about them, he told me, “Oh, that’s my system: the yellow ones are accounts payable, and the green ones are accounts receivables!”

I pointed out the “blank spots,” and he was very concerned.

“I must have lost some, I guess?” After nearly closing the business down, a quick accounting software class (provided by one of our sponsors) saved the day — and the company!

The moral of the story

Let’s face it. Dickens’ Scrooge had three ghosts to face that Christmas Eve — and learning from the ghosts BEFORE he became one was what saved him.

When it comes to entrepreneurship, there are many “ghosts in the machine.” I’ve shared but a few. The moral of these short stories is this: Listen to the voice of experience!

Our incubator has mentors and advisors who have backgrounds in banking, in accounting, in law, in entrepreneurship, in corporate management, in personnel screening, and more.

If you’re in an incubator program, make use of these valuable resources and listen to what they have to say. It just might help you avoid a visit from a ghost of your very own. (And, if they’re anything like the ghosts in these stories, the visit will be too late.)

Avoid the “Boo!” and you’ll avoid the boohoo.

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 incubatorblogger.wordpress.com on December 11, 2018.



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UF Innovate

UF Innovate

Tech Licensing, Ventures, Pathways, and Accelerate, which includes two business incubators, The Hub and Sid Martin Biotech. We build business on innovation.