Entrepreneurs rarely lack confidence, but that can often get them into trouble. What is the value of the analysis, advice and investor contacts that a professional can provide? What is your message to those brash entrepreneurs who think they can do it all on their own? How much are they limiting the potential growth of their business?
Being an entrepreneur is a ballsy endeavor, no matter what the specifics of your situation are. Even if the risk you are taking is extremely calculated, it’s still risk. A deep belief in yourself and what you are doing is required for being successful.
There is a point, however, where confidence turns into cockiness and begins to hurt you instead of help you. Nearly all entrepreneurs start their journey on their own. At that time, you’re running every aspect of your business: development, sales, marketing, HR, accounting, etc. It takes a lot of hard work and success to get to the point where you’re expanding your team, bringing in outside investors and building a group of advisers around you.
For the first time, you are sharing this passion — and the work load — with others. Objectively, this seems like it would be an exciting time for an entrepreneur and a relief for you to have less on your plate. But often, this is when overconfidence begins to cause problems. You’ve built the business this far. Why would you trust someone else to be able to do it?
Hopefully, as those moments of doubt begin to happen, you’ve surrounded yourself with the right people to help you counter it. You want to find investors for your business who have done this before. They have seen the impact that adding key people to take over certain roles can have. A great developer or CTO can vastly improve your product; new board members can bring in experience and perspective to guide high-level decisions; or a successful salesperson can accelerate growth past what you may have thought possible. Good investors and advisers will do more than fill the gaps they see. They identify an entrepreneur’s strengths and give them resources to expand those strengths.
We have seen overconfidence in many entrepreneurs and have worked our hardest to fight against it. A great example of this happened very recently with one of our portfolio companies. In years past, the management team’s overconfidence often caused members to become distracted with things that took away from the business without realizing it was costing them. The management team felt it was using its time wisely and the board didn’t help members to focus on the important aspects of the business.
We, however, added several incredibly smart and talented individuals to the board of directors in the past few months. Recently, a firm reached out to the company with an interest in making an acquisition. Not long ago, this would have caused the management team to waste weeks chasing a deal that wasn’t in the best interest of the company. Now that we have the right expertise and alignment on the board, in less than two hours, the board unanimously agreed now wasn’t the right time to pursue the deal. The management team was able to pass and continue to focus on growing the business. It was a far more efficient use of everyone’s time and gave management critical advice and support on how to best run the business.
The most important thing you can do for your business is focus on doing what you do best. The more that you can do that — and the more resources you can find to take care of other areas — the better off you and everyone else will be. There have been many smart, hard-working entrepreneurs who have struggled and ultimately failed because they were determined to do it all on their own. The smartest entrepreneurs we have ever worked with are the ones who can admit their weaknesses and ask for help.
Wayne Wallace is a co-founder of Mutual Capital Partners. He previously worked in investment banking for both McDonald Investments and National City Investments.
Liz Todia is an analyst at Mutual Capital Partners. A graduate of the University of Dayton, she spent two years managing the Flyer Angels Fund, a $1 million seed investment fund investing in early-stage, Ohio-based technology companies.
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