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John Crites, Triangle Technology Executives Council

Editor’s note: This is the eighth "Executive Insight" column, a weekly feature for Local Tech Wire as part of its partnership with the and John Crites is president and CEO of the TTEC.

RESEARCH TRIANGLE PARK, N.C. — An "entrepreneur" is an individual who starts with an idea and overcomes obstacles to make that idea a reality. Entrepreneurs take on risks and commit extensive energies to make dreams come true.

To put this into perspective, our founding fathers were entrepreneurs. France was our "venture capital firm" and needed the validation of our Saratoga victory before they deemed the investment a worthy risk.

This article will speak mostly to the challenges of a startup firm, but one does not need to be in a startup company to be an entrepreneur. Kelly Johnson worked in the bureaucracy of Lockheed, yet recreated the way aircraft are designed and built. His Skunkworks was an entrepreneurial effort that resulted in significant advances in a very short time and produced aircraft that were decades ahead of their time.

Life of an entrepreneur

The upsides to being an entrepreneur in a startup are clear. There is an opportunity to own your own business, be your own boss and reap the financial rewards of your successful efforts. There is also the reward of creating something from your own sweat and ingenuity.

While these benefits sound great, there is a reality often not considered. Entrepreneurs in startup companies typically experience significant financial droughts during the development phases of their companies. Working out of your house for 80-hour weeks is not uncommon. You will experience rejection. Include the stress on your personal relationships, and you can appreciate why entrepreneurs command respect for following their dreams.

Steps in building a company

There are some basic building blocks associated with the initiation of a new business, but these steps are not numbered and may be repeated before the entrepreneur gets it right. Successful entrepreneurs allow their vision to be molded by the realities they discover through the business planning process.

The initial block is your product idea. This should be defined in terms of value to perspective customers and in regard to competition. Determining your market and defining initial and long-term target customers is the next block to put in place. Also identify your competition and know that your unique value will not be diminished while your company gets on its feet. You will need to be an extrovert with thick skin for this phase. You will go through several versions of your business plan before entering into the marketplace.

The next steps are developing detailed financial projections, enlisting an experienced management team and pursuing financing. Your ability to demonstrate a minimal level of risk, realistic financial scenarios and a management team with experience will determine your ability to obtain financing.

After you finish planning and have obtained financing, you begin the most challenging yet most enjoyable aspect of building a business: operations. Do not forget the exhilaration of entrepreneurs seeing their dreams come to fruition.

Entrepreneur pitfalls

  • Owners Syndrome: Smart owners know when it is time to turn control of operations over to experts who can mature and grow the company. Owners who retain absolute control regardless of the needs of the company can run it into the ground. Successful business founders know how and when to use the expertise of others to benefit the health of their companies.
  • Crossing the Chasm: Companies typically start in a bootstrap mode, which is appropriate for early stages. People wear many operational hats on this side of the chasm, and every shortcut possible is taken to save a dollar. However, as the company grows, this mode of operation can run a company into the ground. The change in operations from startup mode to a mature company mode is called crossing the chasm. Knowing when you are at the chasm and how to manage on both sides is essential for long-term success.
  • Lack of Documented Agreements Up Front: Everyone is a friend when a company starts. The lack of documented responsibilities, equity distribution provisions and operational responsibilities can ruin more than companies, however. This lack of written agreements can destroy family and professional relationships. Even if it seems awkward, thoroughly discuss and document these items as early as possible.

To conclude, entrepreneurs have played an essential role in founding our nation, building its wealth and enabling significant contributions to the human condition. The entrepreneurial spirit thrives on innovation and will withstand the hardships and risks we have discussed. From the entrepreneurs who founded this country to the entrepreneurs of today who will play a key role in our financial recovery, these innovative and courageous individuals deserve our respect.

About the author: John Crites is president and CEO of the Triangle Technology Executives Council. He is also the president and CEO of AuctionBlox Inc., an Internet channel marketing firm located in Raleigh. He has served as the CEO of MCNC and as vice president and CIO at RTI International. He holds a master of science degree from California State University.

TTEC is a nonprofit organization for IT executives in the Research Triangle region of North Carolina. Membership is by invitation only and is limited to the senior decision-makers in companies located in the region. The council facilitates executive education, collaboration and social networking. It also provides volunteer resources to local universities and entrepreneurs.

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