Triangle Business Journal

David Chapman

Elements of Start-up Success

The National Commission on Entrepreneurship (NCOE) 2000 report entitled Building Companies, Building Communities presents the findings of 18 focus groups – one in the Triangle – held with more than 250 entrepreneurs across the country.

One of the goals was to find out what factors, other than their own business acumen, helped them succeed.

All the companies were “Entrepreneurial Growth Companies” (EGC), meaning they were funded by outside investors at the early or “seed” stage and/or the accelerated growth stage.

There were many important findings, including the following:

• Right from the start, most successful entrepreneurs aim to create a large, national or multinational company and intend to do whatever is required to achieve that objective.
• In addition, a certain number of small businesses “morph” into entrepreneurial growth companies.
• Early-stage companies are just as likely to be started by relative amateurs with little background in the field. Forty percent of the Fortune 500 founders had no prior experience in the field.
• The highest levels of risk to the founders of the EGC – financially and professionally – come later in the development of the company as they take on outside investors and not at the start, as is commonly thought.
• The quest for outside funding reinforces the need for a sound business plan with set metrics and timetables, and it accelerates the acquisition of highly qualified employees and outside resources whose skills fit the needs and direction of the company.
• One of the more striking findings is the critical importance of networks for the entrepreneurial community.

Networks are essential because they link entrepreneurs to a solid core of service providers, such as lawyers, accountants, bankers investors, office space companies, insurance providers and consultants, who know how to work with entrepreneurs and who understand the differences between these firms and traditional small businesses.

These service providers understand the unique conditions facing entrepreneurial firms and can make a crucial difference for new, fast-growing companies.

Increasingly, the catalyst is a well-connected law firm. Not only can it get you on track regarding the correct corporate structure, craft legal agreements with suppliers and employees, and protect intellectual property, it can shave weeks, if not months, off the process of building an experienced, cohesive network of trusted business advisors.

According to Merrill Mason, partner with Raleigh-based Hutchison and Mason, “The right law firm can help early-stage companies hit the ground running and quickly transition to the next level by linking clients to potential sources of capital, human resources, strategic alliance partners and service providers.”

Don Reynolds, partner with Raleigh’s Wyrick Robbins Yates & Ponton says law firms can “take the guesswork out for entrepreneurial companies in many ways from helping . . . select (the) board of directors and advisory board, accessing local and regional angel and VC communities, M&A work, etc.”

The CPA community works in tandem with lawyers to help companies avoid the pitfalls they have seen others make.

Brooks Malone, partner with Hughes Pittman and Gupton, says, ”Most entrepreneurs have a great business concept. What they don’t need to do is to lose momentum sorting out the right group of business advisors, or even worse, pick the wrong ones and lose momentum and focus making it right.”

Chapman is president of 919 Marketing, a Triangle-based marketing and public relations consulting firm. He can be reached at (919) 557-7890.