How Entrepreneurs can avoid outsmarting themselves

How Entrepreneurs can avoid  outsmarting themselves

None of us wants to defeat oneself unintentionally by outsmarting yourself, yet a lack of self-awareness and our brain’s strategies for navigating the world may produce strategies which sometimes help…and sometimes do not!

As a seasoned business leader with a track record of success in founding, growing, and transforming organizations. I have advised shareholders, board members, and executives on governance, strategic, and corporate finance issues, helping them to navigate the challenges of founding, growing, buying, and selling businesses.

My experience comes from my time as a founding member of eight start-ups and leading the growth of several business-to-business organizations through mergers, acquisitions, and strategic alliances as well as overseeing the successful turnaround of three Canadian and European organizations, raising a total of $965 million in capital in the process.

In 2017, I pivoted my focus to helping other entrepreneurs and founders achieve their own dreams. For the past several years, I’ve coached clients looking to scale and exit their businesses; served on boards, written articles, been interviewed, spoken on panels and at workshops, for business owners, founders, executives, MBA candidates and more.

I shared this, so you know I’m not exaggerating when I say I’ve met and worked with many entrepreneurs and business leaders. They come from every industry, every size of business and every situation you can imagine. What they all have in common—with one another and, I suspect, with you—is their drive and deep commitment to founding, growing, and eventually desiring to exit their business.

They are also prone to falling victim to what I refer to as “outsmarting themselves”. And, again, I suspect that as a businessperson, you might share this trait. To be clear, this isn’t a bad thing. Building a successful business—reaching that first milestone in revenue, and seeing your business thrive, beating all the odds—is an undeniable testament to your determination, resourcefulness, creativity, street smarts expertise, and business savvy. You are an expert, and it’s completely reasonable to regard yourself as such. Left unchecked, though, this mindset can also have a downside.

I see it every single day with the entrepreneurs and business leaders I meet, talk with, and coach: Their business success makes them believe they can lead and do everything. That is a dangerous trap to fall into. No matter how good you are as an individual contributor, and at running your own business, chances are you aren’t an expert in each functional area of your business, managing the money it makes you, understanding the nuances of business law, or even solving the unexpected challenges that will inevitably come as the business prospers.

WE NEED A VILLAGE TO RAISE A CHILD, AND A TEAM FOR AN ENTREPRENEUR 

So, what is the best way to avoid falling victim to this all-too-real danger? In my experience, it comes down to one thing: understanding your strengths which gives you confidence, but do not ignore your blind spots/weakness, and demonstrate your authenticity by surrounding yourself with others who compliment and fill in the gaps. I recommend having trusted experts on your team: an accountant; a tax advisor; an investment banker (if you are planning to acquire, seek additional financing or selling your business); a lawyer; a wealth manager; and a mentor or, peer group.

PROTECT AND GROW YOUR WEALTH

The tax, accountant and wealth professionals are key to helping you maximize and manage the money the business makes you. This is especially true when you are looking to sell the incredible business you worked so hard to build. Think about it: When you exit, do you know how to keep the largest amount of money in your own pocket?

My guess is no. You have been spending all your time growing and scaling your business. When would you have had time to learn the ins and outs of investing, estate planning and tax? That is why I recommend having professionals to maximize your business and personal value and or net worth, as well as a to help make sure you have a solid strategy in place to keep as much of your wealth as possible.

MINIMIZE YOUR RISK

The same is true when it comes to legal counsel. It is important to have competent attorneys to represent you for each specific business and personal matter, and if you are selling your business, I recommend collaborating with a legal expert who specializes in Mergers and Acquisitions, much like a Legal expert in estate planning or any other specific legal area.

Hiring a separate attorney to stand for you throughout the sales process might seem like overkill, but to me it is not. In my experience, when you sell your business, the people on the other side of the table are always experts at buying companies. They know when someone and their legal counsel are inexperienced, and they will exploit those weaknesses to their advantage. Having a Mergers and Acquisitions attorney at your side can help reduce the chance you will be taken advantage of.

Along with working with financial and legal experts, it’s also important as a business leader to prioritize learning and growing. Do not get lulled into a false sense of security by the success you have already achieved. Instead, stay focused on improving your skills and learning from people who have achieved what you aspire to do next.

There are lots of ways to do that. Peer groups are excellent options. Collaborating with a mentor in your chosen industry is another terrific way to keep learning. You can also hire former senior executives who you respect to form an advisory board of your business, who in turn will coach you to identify and guide you through the steps you should take to achieve your specific goals and overcome your unique challenges.

BE AUTHENTIC

I was taught the expression “to thine own self be true, and it must follow, as the night the day, thou canst not then be false to any man”.

There is no question that entrepreneurs and business leaders, overall, are incredibly smart and competent people. If you have built a successful business, celebrate that fact, but do not outsmart yourself by thinking that your success qualifies you to be all things to all issues and all problems.

Instead, recognize that your area of expertise is the founding, growing, value creation, and working of your specific business. In everything next to that, get competent help. From my view, if you surround yourself with trusted experienced professionals, the results you achieve will be far greater than if you try to go it alone.

Most have heard stories about celebrities, lottery winners, athletes and heirs to an estate who lose their money. It does not have to be that way, though. I believe a key, for all of us, is to collaborate with experts who can help you recognize what you know and do not know.

Surround yourself with experts who can help you grow, protect your wealth, offer sage advice, and help you continue to learn.

ABOUT THE SHAUGHNESSY GROUP

Established in 2017, the Shaughnessy Group helps business owners sell or divest their lower middle-market, privately held businesses. In addition to this, the Shaughnessy Group also assists clients in growing their businesses through acquisitions and securing debt funding for those acquisitions. With a focus on providing expert guidance and support, the Shaughnessy Group helps business owners navigate the complexities of selling or acquiring a business. To learn more, visit www.shaughnessy.group.

ABOUT THE AUTHOR

Karl Sigerist is a business advisor who helps shareholders, board members, owners, entrepreneurs, and executives navigate issues related to governance, strategic planning, and corporate finance throughout the life cycle of their business. He has experience in starting up eight organizations in the public and private sectors, as well as leading three turnarounds of Canadian and European private and public organizations. Karl has successfully led the growth of several business-to-business technology, specialty finance, warranty, and creditor insurance companies through mergers, acquisitions, strategic alliances, and capital raises, resulting in the development of leading national brands and platforms. He has also fostered cultures and teams that have achieved Growth 500 status for five consecutive years and been recognized as a Top 100 Small & Medium Enterprise Employer for two consecutive years. In addition to his professional work, Karl serves as a mentor to business school students and newly immigrated Canadians, and volunteers on not-for-profit boards. You can find out more about Karl on his LinkedIn profile at https://www.linkedin.com/in/karlsigeristjr/.