Yes, entrepreneurs will have more control over their destiny but as the firm gets bigger, and the stakes get higher, the number of “bosses” involved actually increases.
The first boss – in a long line of bosses – is the bank. They could pull the plug on everything if they wanted. Just ask Blacks Leisure. Imagine if your boss came in one day and sacked you. No verbal or written warning. That’s a real scenario for many entrepreneurs if a bank decides to change its terms. On the flip side, so long as robust monthly board packs keep coming and covenant tests are passed, the bank can be the best friend you’ve ever had.
Shareholders can also have a massive influence, as the top brass at Easyjet can testify. Cable and Wireless shareholders managed to turf out its chief executive, John Pluthero, after they didn’t agree with his decision to dish out £220m of rewards to directors.
Other investors – private equity and venture capital investors – will also have a degree of control over a firm. Obviously, the level of involvement from each will vary depending on the deals cut. But for David Richards, the entrepreneur behind Sheffield software firm WANdisco, he quickly realised the VC investors in his earlier company were not completely on his side and actually had more control of the business than he did.
Of course the flipside of having investors is being able to ask them for advice – the same as with any line manager at work. According to YFM Equity Partners, 46 per cent of small businesses directors received greater strategic and operational support from their equity backers during the credit crisis. Tapping into such expertise is why many entrepreneurs are currently beefing up their board to guide them through the tough times.
But by far and away the most influential “boss” is one that can make or break any firm – the customer.
The most successful businesses are those so tuned into their customers’ needs, they know what they want before they even do. Apple is a great example of this. But some firms even resort to ripping up their business models just to keep customers happy.
Take Coca-Cola, for instance. In 1985, the company introduced “New Coke” but the American public’s reaction to the change was so negative that the company had to do a complete u-turn, bring back Coke’s original formula and re-brand it as “Coca-Cola Classic”. Ot take Virgin. It started out as a record shop, but now meets customers’ demands for wine, mobile phones and intergalactic space travel.
In my own experience, ditching my boss in 2003 was the best career decision I ever made. I have more flexibility now than I ever had working for someone else. Yet I quickly learned that you’ll never truly be your own boss. But that’s fine – each “boss” will provide invaluable support and feedback along the way. That’s why governments across the world should be telling budding entrepreneurs to ditch their boss and get eight new ones instead.
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