Do's and don'ts for entrepreneurs

By VICKI JAYNE

It is logical when buying a good jacket for a 5-year-old to go for a larger size - you know the child will grow and that way the coat will last a little longer.

But how many entrepreneurs take the same approach when outfitting their fledgling companies?

New Zealand has a good share of entrepreneurs - those human dynamos with the ideas and energy to get a business out of the garage and into world export markets. There are fewer able to lead young companies into the ranks of the top 200.

"The irony of entrepreneurial leadership is that the very behaviours and habit patterns that lead to success at one stage of growth can contribute to failure at the next stage," says Jane Matthews in her forthcoming book, Leading at the Speed of Growth.

The American businesswoman has a long involvement in fostering entrepreneurial talent, both through the Kansas-based Kauffman Centre of Entrepreneurial Leadership and her own company, Boulder Quantum Ventures.

She was in Auckland last week speaking to go-getters about the problems success can bring.

"Entrepreneurial leadership is different from other kinds because the decisions you make are very personal. As the person who started the company, your decisions affect others. But it's very much your own resources and way of life that are on the line."

With all that at stake, it is probably best to do some serious soul searching before making the next growth leap. She suggests three questions for starters:

* Why are you doing it?

* What is your exit strategy?

* Are you willing to share control?

Sorting out these helps to determine whether you want to evolve with the company - whether you see a saleable asset, a lifestyle choice, or an entity that will outlive your involvement.

Some people deliberately choose to be "serial partners" because they enjoy the adrenaline rush of start-ups and the challenge of putting together the front end of the enterprise.

But bouncing tiger-like after whatever is the largest balloon in the air can sap staff energy as the company heads into its next growth phase, says Matthews.

"You have to learn to say 'no' and start making choices in terms of direction."

She has mapped out the evolution of the chief executive role through four phases:

* Start up

* Initial growth

* Rapid growth

* Continuous growth

The doer and decisionmaker needed to lead a start-up must learn to become a delegator and direction setter to successfully shepherd the company through initial growth.

"In start-up, you attract people who want to do it in your way. But as you go into initial growth, you have to start hiring people who are smarter than you, which means recognising and understanding your own weaknesses and delegating to people who have strengths in these areas."

The concept of mentoring becomes important in assessing what skills should be hired in.

"Trying to do it all yourself will just help you hit the wall faster as you won't have time to develop the necessary skill sets."

Moving from the sales-driven phase of initial growth into rapid growth requires yet another skill set - that of planner, coach and communicator.

"Communicating the company vision to new people is an area where entrepreneurs typically fall down. They may also fail to put in the systems necessary to power the next growth phase."

That is where you need to go for the jacket that is a couple of sizes too big - creating an infrastructure that can accommodate a bigger company, hiring people who can grow at least two levels.

The need to run ahead of growth is often not recognised by those who have not been there before, says Matthews. And it is one reason venture capitalists want experienced heads on new ventures.

As rapid growth moves into continuous growth and the company strengthens its market position, its leader must become a strategic innovator, a change catalyst, an organisation builder and chief of company culture. At each phase, it is a matter of adding new skills to the set of classic entrepreneurial strengths.

Having spoken to many entrepreneurs who have gone through the process, she concludes that success rests on three bodies of knowledge.

The first is knowing how to build an organisation that is bigger than you - being able to develop an infrastructure that will enable your vision to become the central vision for company direction.

The second is choosing the right financial resources at the right time.

The third is the ability to manage yourself, through the highs and lows of growth when all you have is riding in the balance.

All this is very much the focus of a book she sees as mapping the territory.