Patrick Burke is a managing partner at both Burke & Schindler PLL and Concentric Wealth Management, a member of two corporate boards, and a lifelong entrepreneur who has, over the course of his career, advised more than 200 startups. His latest book (he has written several), The 10 Biggest Business Mistakes And How to Avoid Them, is an effort to save other entrepreneurs from learning the hard way what he has learned on the ups-and-downs of his decades long business career.
A long standing entrepreneurship cliche is that success require more than a “great” idea, so we asked Patrick Burke what else is required to an entrepreneur to grow a startup to success, what sort of person is likeliest to succeed as an entrepreneur, and that perennial favorite, are sales professionals born that way or can anybody learn to sell (he thinks it’s sort of both). Here is what he has to say.
Grit Daily: It is well documented that most new businesses fail, yet people keep founding businesses. Is there a mental checklist entrepreneurs should work through before launching?
Patrick Burke: Before entrepreneurs take on a new business, or buy an existing business, they have to take both personal and financial stock.
We will cover the financial first. Although entrepreneurs tend to rush in, the best practice is to create a proforma for a new business including not only a profit/loss statement but also a balance sheet. I tell clients, let’s solve for the negative cash that’s going to not be generated by your new business and let’s compare that to the balance sheet at the time the cash is needed and figure out how much a bank may be willing to lend and how much you will need to invest personally or find someone to invest with you. This is when the critical question of “Do I bring in a financial partner or should I tap my family, friends and fools (FFF) first”. It has been my experience that it is much better to borrow money from the three F’s than bring in a financial partner that you will later be sorry you brought aboard.
With respect to the personal questions, I have 10.
Can you live with the uncertainty associated with running your own business? If you are used to that weekly paycheck and you are living week to week, you may want to rethink the whole idea of being a business owner. How would rate your tolerance for risk? It’s not that you have to eat risk for breakfast but it likely shouldn’t be on your luncheon menu. In addition to the uncertainty of running a business, I put risk in a completely separate category since it is potentially existential. Most business owners, particularly in their first venture, have put 100% of their cash plus net worth on the line. So, although next month’s sales are uncertain the risk you have associated with sales not happening at all is the real deal.
