By Michael Mirski W’14
Graduation is a time for reflection. After four years of Wharton classes and three years at the Wharton Small Business Development Center working with dozens of businesses, I’ve thought back on my time in business school to try to articulate a few fundamental lessons about “business” that I’ve experienced through the years. I hope they might be useful to both current and aspiring entrepreneurs:
1) Develop the infrastructure to collect data. Not only does this make you more disciplined about how you organize your business, it is nearly impossible to consistently make good decisions without data. At the SBDC, our clients frequently take a few weeks to arrange their finances into a shareable form. With the correct infrastructure in place, this should be automatic. Track everything that you might want to improve—data driven decision-making has a better track record than the gut. In particular, be able to easily identify revenue and profit growth over time by customer segment and business segment.
2) Remove ego from your business. Entrepreneurs have the habit of treating their companies as their babies. Although this personal bias tends to keep entrepreneurs perennially optimistic despite major obstacles, it also tends to make them close-minded to other’s feedback and advice. Receiving constructive feedback from a third party can help you question some assumptions and better interpret your company’s situation.
3) Define success and develop yardsticks to measure it. Is success making your business profitable, growing your margins, or even spending less time at the office and more with your family? Consultants usually define success in terms of meeting or beating some industry benchmark, but success is mostly self-defined. What is more difficult is choosing metrics to determine progress towards success. As Warren Buffett noted, “When results deteriorate, most managers favor disposition of the yardstick rather than disposition of the manager.” With added infrastructure, the removal of ego, and a tangible definition of success, this entire process becomes easier, and decision-making is simplified.
4) Do a competitive analysis. One of the most common refrains we hear from our clients is “We’re the first mover,” or “We don’t have any real competitors.” However, this has only very rarely been true! The best competitive analysis will identify the most important metrics (ranging from product price to number of employees to amount of venture funding) that define your business and apply these to all potential competitors to understand to your positioning. However, a good start is just knowing whom your potential customers are buying from instead of you and why.
5) The best CEOs are usually salesmen. Salesmanship is not a class explicitly taught at Wharton. It’s not taught as a first year consulting, banking, or marketing analyst. To some people, it’s a dirty word that reminds them of telemarketers. Nonetheless, for small companies the best CEOs tend to be salesmen. The ability to convince a venture capitalist to invest with you is the exact same one that helps clients sign bigger sales contracts – it requires being able to communicate a vision and understand incentives. Practice your sales ability as much as you can – be it through cold calling new leads or talking your way out of a speeding ticket.
6) Consider your place in the value chain. There are approximately 1,000 boutique wineries in Napa Valley, and most are hobbyists and/or financed by their families. If you want to be in the wine industry, why not provide the corks? Or coordinate shipping? In a gold rush, the best way to make money is to sell pickaxes. Sometimes, the most exciting thing is usually the least profitable, which brings me to my final point.
7) Opportunity is everywhere. I’ve seen more dollars made from the buying and selling of industrial “waste” than from advertising in mobile apps. Our clients have identified untapped opportunities in lobster bait, coffee bag packaging, and student test score analytics, just to name a few. Talk to people and think creatively, and you will find that opportunity is everywhere.
Bio: Michael Mirski is a recent graduate of the Wharton School. During his time at Wharton, he worked for over three years as a Practice Leader at the Wharton Small Business Development Center, where he provided strategic advice to over 25 businesses ranging from pre-revenue start-ups to lower-middle-market companies with millions in revenue. He is a finalist of the USA Memory Championship and is working in New York.