Posts Tagged ‘producing results’

Entrepreneur’s Equity

Thursday, December 13th, 2018

I am often asked by founders and entrepreneurs in small businesses, “at what point should I consciously start sharing equity in order to attract and retain key people?” My retort, which stuns a lot of them, is “why would you ever consider doing that?”

After all, as the founder or entrepreneur, you have taken all the financial and non-financial risk to this point, you have established the business to maximise your independence and freedom, and you have paid your employees handsome salaries, bonuses and benefits for producing expected or superior results. 

A great many founders and entrepreneurs confuse gifting equity with two issues: (1) “producing results” and (2) “rewarding results”. 

You produce results by hiring qualified people, creating a positive environment, giving them clear objectives, metrics (progress and success),  accountabilities and timelines.

You reward results through a range of financial and non-financial incentives (pay, benefits, bonuses, gratifying work and meaningful career progression).   

My point here is not that you would never offer equity to a key individual but rather you must have absolute clarity about what you are seeking to ideally accomplish, the alternatives, the pros and cons of each and the best solution for your business. Being “frightened of them walking out” is rarely ever a good reason for an entrepreneur or founder to do it without rationally  examining your “fear”.    

Poverty Advice

Wednesday, December 20th, 2017

There is a word for entrepreneurs and small advisory businesses that insist on only rewarding their employees with hard dollars for successful business they can touch, “sharks”. There is a word for employees, who voluntarily accept those terms, “plankton”. You might enjoy, as I do, recreational gambling (horses) for intellectual interest and fun but why would you commit to that bargain when seeking to feed your family? Unless of course, you enjoy living with a constant fear of falling over the cliff edge, are desperate or are merely seeking to find lifestyle work (substantial means). As an entrepreneur, why would you think that is a fast track to building a powerful, sustainable and profitable business? Clueless.

© James Berkeley 2017. All Rights Reserved.

Empty Partnership Offers

Thursday, June 1st, 2017

 

“I am flattered that you would consider partnering with us, here is how it might work…”

 

I have sat with six experienced private investors and bankers talking to entrepreneurs and executives with impressive mid-market and small businesses in the past month. Universally, their entire approach bar one notable exception, is driven by a poverty mindset and fear. “How can we minimise our risk, our upfront investment, our commitment (time, cash, resources and so forth)  and get the other partner to show us their true worth while exerting maximum control?” It is not what you say or the other partner hears that matters, it is how you act.  If you really are a prudent risk taker, act like a peer and let go of the fear. Otherwise stop wasting everyone’s valuable time.

© James Berkeley 2017.