No matter what kind of business you run, chances are you spend most of your time on your business.
If you run a software company, your primary focus is on building products and tools that people will use. If you have an ecommerce website, you probably spend most of your day making sure customers and manufacturers have a seamless experience. These are all great things to do, but it’s easy to understand the operating treadmill and miss the big picture: making sure your business is built on awareness.
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At first glance, this may sound like hippie psychobabble, but it’s actually the single most important factor in determining whether a business will be successful in the long run. There are plenty of people who have created incredible products and services that achieve initial success, but it’s hard to sustain that if the business isn’t built on empathy, trust, and compassion.
Those aren’t generally words you read about in business books, but they are the driving force behind real success rather than short-term profits.
If you’re not convinced, take a look at how many companies have implemented ESG and sustainability programs in the past five years. Ten years ago, companies that talked about awareness and energy were seen as an outlier, but today it is considered essential for companies that want to be profitable, successful and have a meaningful positive impact on the world. And the good news is that these are not abstract concepts at all.
There are concrete steps leaders can take to make this part of their daily work.
This is actually where new businesses have a significant advantage in making awareness part of their internal and external operations. That’s because they don’t have decades of bad habits to break, and they’re still charting their future.
It is much easier to make a big change in the beginning than it is for a big company to change direction.
The financing wall
Virtually every budding entrepreneur I’ve ever met has talked about bringing in outside financing, and venture capital investment is often cited as the best way forward. In fact, the VC model is broken because in many cases, the entrepreneur’s values do not match the investor’s values. And because VC holds all the cards, they can often pressure company founders to do things in ways that don’t align with their core values. That’s a recipe for disaster, because at some point, this disconnect will make the company fall apart.
It’s no coincidence that over 80% of founders are out of the CEO chair by the time their companies get a Series B round of funding.
One of the reasons venture capital investing can be toxic is that it relies on quick exits fueled by unrealistic growth. If you’ve found a company that increases revenue by 15% per year, you’re probably doing pretty well – unless your investor demands that revenue double or triple.
After a few quarters of results that don’t match what the investor wants, things can quickly move to the side. What is the venture capitalists want unicorns, which is not only unrealistic, but also short-sighted. I can name dozens of great startups that have either lost their way or gone out of business because of these types of investor disconnects.
Of course, not all investments are bad. Good companies even earn outside funding to build their business and drive long-term success. But it is important to have the right investors. That means investors who share the same vision and passion as the founder and who invest in a long, sustainable future. Someone who wants their money within 9 to 12 months is buying a lottery ticket, not a partner.
This is where empathy, trust and compassion come into play as the new business drivers. Investors should share the same awareness as the leaders of the companies they invest in. They must believe in them as people and as leaders. They need to align when it comes to what sustainability looks like and what long-term success looks like.
The good news is that these investors are out there and looking for companies to back them up.
This post Why not all investors are the right person?
was original published at “https://www.noobpreneur.com/2022/03/17/energize-your-business-why-not-all-investors-are-the-right-fit/”
