Our Entrepreneurship Model for Small Business Owners

Starting and building a small business is entrepreneurship. The definition of entrepreneurship (the activity of setting up a business or businesses, taking on financial risks in the hope of profit) has no distinction between size or type of business. However, the world likes to think startups, technology/software companies, or Silicon Valley is the only form of entrepreneurial pursuit. We at Endurance Eagle know that entrepreneurship is more expansive. In fact, around 700,000 small businesses are started each year (Bureau of Labor Statistics) and only 9,000 of those are angel/seed/early stage startups (National Venture Capital Association). That means venture-backed startups created each year are only 1.3% of the entrepreneurial landscape. Even if you were to argue that there are a large number of “hidden” startups that aren’t venture funded (i.e., they are bootstrapping or using the founder’s money) and that the true number was double NVCA’s number, you’d still only be looking at startups representing 2.7% of the entrepreneurial landscape. Although we’d also argue that if a startup is bootstrapping it to profitability then it is much more like an entrepreneurial small business than a startup. But that’s a different topic.

For us, this thinking on startups vs. small business entrepreneurship started with reading on the principles of Entrepreneurial Effectuation, created by UVA Darden’s Professor Saras Sarasvathy, and the Lean Startup method, created by Eric Ries. Both models are based on research and experience of real-world entrepreneurs and are fine entrepreneurship templates. The issue is that these templates only get shared with the startup entrepreneurship community. After spending years in startups, we’ve absolutely heard of these methods and applied some of them. Re-reading these writers, set us on exploring how we could refine these methods for small businesses, based on our experiences. Could we create something that applied to the other 98.7% of entrepreneurial pursuits and share it here?

Our model might be an oversimplification of other, better ideas, but we believe that in the model’s simplicity lies its power. Here are the steps of the Endurance Eagle Entrepreneurship Model:

Apply what you know – This step is borrowed from Dr. Sarasvathy’s Effectuation model. She calls this principle, “Bird-In Hand,” (Effectuation’s other steps) and it is a different way to start than most would suggest. Instead of starting with the “classic” business strategy (look for market opportunities), “apply what you know” starts with what/who you know as a vector for finding problems worth solving with a new venture. What problems have you experienced in your life? What problems do you see in your network of friends and family? What problems has your education/training/job exposed you to? Using this as a basis for forming a thesis grounds the business in real-world problems and puts it on stronger footing than the “potential” problems that might exist when employing a more typical business development strategy.
Build a Minimum Viable Product (MVP) – This step is borrowed from the Lean Startup model (more can be learned here). An MVP is a product or service that meets the bare minimum requirements of the customers (you might even call it a prototype) such that data can be collected on usage. At this step, you shouldn’t make the “perfect” product or even a “good” product, but instead make a “adequate” product that will get some adoption and give you data on how it’s used. The faster you can execute, the sooner you can get data back and make revisions (if needed). Thus, it is important to get something done quickly (which aligns well with our CEO Leadership Principles) and ignore all the “bells and whistles” features that typically slow a process down and add expense. Often this means “hacking” product creation and doing many processes or services very manually to start. That’s OK since it won’t be the final product. Scaling a final product only begins after the MVP proves product market fit with step three.
Check for Adoption – Here we consider the near-term adoption data from the MVP deployment to customers (e.g., are customers using the product or service now? How are they using it?). Based on the data, we can then then extrapolate on how our product/service would scale beyond an MVP version. If the adoption metrics don’t align with our goal metrics, we must return to the MVP step to make revisions and test again. If the MVP is working, then investing more to scale the product/service is warranted. It’s worth noting that investing in an MVP to scale could be treated as a mini-MVP for each new feature. These smaller loops keep you and the team true to the goals as development/scale and cost increase.

We believe that successful small business entrepreneurs have instinctively or deliberately used a model like what we define above. But we also believe that creating and sharing our model, adapted from the startup entrepreneurial ecosystem, and refined for another the small businesses ecosystem only benefits the entire community of entrepreneurs by helping to provide a repeatable framework for success. Said differently, we’re not creating a new road, just repainting the lines so they’re easier to see.

If you’re looking to sell your small business and feel that your entrepreneurial model align with the Endurance Eagle model, contact us today.

Our Three Small Business CEO Leadership Principles (2020 Edition)

Countless research papers, books, posts have been written on what makes a great CEO. If you were to try to read all the content published in just one year, you’d probably never get through it in a lifetime. Considering that, it can seem narcissistic or at least obtuse for us to throw our hat into the ring and try to say something differentiated about leadership and sitting in the CEO chair. But we have a core set of beliefs at Endurance Eagle and we believe that sharing those beliefs says much about how we like to run small businesses. As a small business owner, examining our beliefs helps you to understand how your small business will be run by Endurance Eagle and to know if we are a good fit to carry your legacy on after your transition. Each year we reflect on what we value and examine if that’s changed (hasn’t so far). This is our set of leadership principles for 2020.

Lead from Behind

We don’t mean to say that a CEO’s job is not to be the head of the company and set the goals and strategic vision for the organization, but it does mean that part of a great small business CEO’s job is to work hard at pushing his/her people to the front by understanding, empathizing, training, and empowering them to make decisions. This is where a small business can find true power and leverage from managers, including the CEO.

In practice, this means removing yourself as a decision-making bottleneck. For example, if an employee comes to you with a problem, ask: “What do you think? How do you want to solve this?” Instead of just giving them the answer. Empowering an employee to solve the problem and giving them the psychological and career safety to execute (i.e., you can’t fire them for the failure of the execution if it was done in earnest) creates a stronger commitment from the employee on the project and a greater desire for success for the project and company

Measure for Alignment & Growth

Peter Drucker’s is often credited with the quote, “If you can’t measure it, you can’t improve it.” We believe that he was right, but there is so much more value in measurement than that quote states. Measuring the inputs to a process from sales to manufacturing will improve the outputs, that much is true and there’s countless examples that we don’t need to cover. Additionally, measurement also improves the interpersonal interactions of a team, leading to stronger alignment (and execution) across the company.

When people work together, subjective measures of success (e.g., who likes whose idea, what does the boss thing, etc.) start to become prevailing norms as an organization grows (these are shortcuts to success that employees adopt in the absence of data/fact-based measurement). These norms can be destructive to performance of the organization and morale since employees will be chasing goals that are misaligned with their peers and you, the CEO. We believe that establishing a universal set of metrics (a benchmark for teams and the company as a whole), that are broadly and repeatedly communicated, reduces bureaucracies within/across teams, and moves an organization towards growth and alignment. It also has the bonus of reducing employee stress, which can improve employee retention.

Create a Culture of Done

The mantra of many startup companies is, “done is better than perfect.” While we like the underlying message of this mantra, we believe that it leaves a lot on the table. Startups are actually trying to say something along of the lines of, “Don’t endlessly optimize a project. Just launch it because 80% of the value is already created and the last 20% won’t generate a return relative to time.” We agree with that philosophy, but we believe it is more nuanced. The CEO needs to create a culture of done. A culture of done encapsulates the above mantra, but also adds agency. Specifically, it tells the CEO that he or she must create a culture of done – he or she must lead by example and get things done. We believe that this has a number of benefits: 1) employees see what an example of “getting things done” looks like, 2) employees see the CEO making mistakes and the psychological safety of making mistakes (that are corrected), and 3) the CEO stays closer to the team through getting projects done. A culture of done is extremely hard to implement, especially for CEOs, but is critical for the growth of any organization.

There is so much great reading to be done on leadership and what it means to be a small business CEO. We can say that some of our favorites have been: HBR’s Must Reads on Leadership, The CEO Next Door, and Good to Great. if you’re looking to sell your business and feel that your leadership principles align with the Endurance Eagle principles, contact us today