access_EN: Dealing with Failure. The case of a failing relationship between a business advisor and a (potential) entrepreneur

Dealing with Failure. The case of a failing relationship between a business advisor and a (potential) entrepreneur

"Advice is a dangerous gift, even from the wise to the wise, and all courses may run ill."
The Fellowship of the Ring, Tolkien

Definitions

The European Commission defines entrepreneurship as ‘the mindset and process to create and develop economic activity by blending risk-taking, creativity and/or innovation with sound management, within a new or an existing organisation’ (European Commission, 2003). Eurostat makes a distinction between two different types of entrepreneurs: ‘self-employed persons’ who do not employ anyone, and ‘employers’ who have at least one employee. In the context of this study, entrepreneurship is understood broadly as ranging from single projects (that might only involve the entrepreneur on a part-time basis) to major undertakings creating many job opportunities.

Guidance in the context of entrepreneurship can be provided by three groups of individuals:

formal guidance is provided by trained career guidance counsellors and other guidance professionals. Such professionals can work at: education and training institutions; business support bodies; private organisations; public authorities, such as the public employment services (PES); chambers of commerce; and associations representing entrepreneurs;
non-formal guidance refers to information, advice and support provided by individuals with significant support in business formation. This includes: business coaches; mentors; senior managers of companies and other experienced business professionals; experienced and successful entrepreneurs; and former (i.e. retired) entrepreneurs;
informal guidance covers guidance and other support given by family members, colleagues and peers.

Source: CEDEFOP, 2011. “Guidance Supporting Europe’s aspiring entrepreneurs: Policy and
Practice to harness future potential”, European Centre for the Development
of Vocational Training. Luxemburg: Publications Office of the European Union.

What is a “Failing Relationship”?

No matter how talented or ambitious an entrepreneur might be, when facing certain obstacles or hard realities, all entrepreneurs need some advice and in order to get it they must engage the right advisors along the way.

However, this promising relationship may end up into a failure when entrepreneurs are not clear from the beginning of how they can make the most out of this relationship and when advisors do not have a clear sense of responsibility.

An “advisorship” is much more than a mentorship; it is a relationship between a business and a third party that has a specific value to add. There is an implied sense of expectations and reward. Just as a business advisor must invest his or her time to serve the business, the entrepreneur must invest time into the relationship. Effective communication is the key, both written and verbal, since the plan can’t exist just in both partners head. Everyone needs to know what they are responsible for.

In addition, failure may take place if tactical and problem solving challenges take priority over strategic planning. Most entrepreneurs are mostly interested in finding solutions to upcoming problems whereas business advisors are most interested in making the right strategic moves that will prevent problems.

Furthermore, entrepreneurs focus on their creativity in order to increase their output whereas advisors tend to concentrate in building a solution design in order to meet certain outputs. Advisors tend to set objectives and create feedback mechanisms in order to ensure continuous improvement. Potential entrepreneurs tend to focus on it like there is an end in sight forgetting focusing therefore more on results and failing to maintain a focus of how to maintain a more balanced perspective.

Overall, a promising productive relationship may end up into a failure if advisorship is not managed wisely in order to meet both the entrepreneurs and business advisors ends. Entrepreneurs fail if they don’t engage advisors for the right reasons and manage them unpurposefully and inconsistently. Business advisors fail if they become a burden to the initial enthusiasm of potential entrepreneurs and respect their expectations.

Factors that can lead to a failing relationship between a business advisor and a potential entrepreneur

1. A lack of experience

Sometimes an advisor’s lack of knowledge, inability to provide proper advice and reluctance to link the potential entrepreneur to others that can fill these gaps result to a failing relationship.

2. Poor communication

When there is a lack of communication and inability to express the expectations of advisors and the entrepreneurs as well as the inability to listen carefully to the aspirations of both sides, the possibility of achieving good outcomes from this relationship is very low.

3. Personality differences

If the personality types of the both sides are very different and the advisor and the potential entrepreneur look at the world from a totally different perspective then there is no value that can be derived from this relationship.

4. Lack of commitment

The inability to engage and the superficial involvement of both the advisor and the potential entrepreneur lead towards a failed relationship.

5. Conflicts of interest

Overlapping interests may lead to competition and this in turn can poison the relationship since the potential entrepreneur might not be sure whether the advice they take is trustworthy.

What are the key characteristics of an effective business advisor?

Experience: since without experience, advice can be useless and outright dangerous.
Justified opinion: it's important that opinions are drawn from knowledge and make sense.
Willingness to listen: good advisors will always listen to anyone, using that information to form, adjust, enhance, and ratify their own opinions.
Willingness to disagree: after listening to everyone else's views an effective advisor will stand by their point of view and, if necessary agree to disagree.
Accurate predictability: the best advisors are open-minded and aware of one's own shortcomings are important traits of a successful entrepreneur.
Credibility: advisors need to inspire the trust of entrepreneurs through action meaning that they are ready to do exactly what they said they were going to do and when they said they were going to do it.
Eagerness to focus on the personal development of entrepreneurs: effective help entrepreneurs to find solutions and answers within themselves that will help them to organize their time management, decision making and getting into action.

What are the key qualities of a business advisor?

When starting a new venture as a potential entrepreneur it is essential to pinpoint the key qualities of the business advisor that will be able to meet their needs.

Have a coaching mentality meaning approaching the relationship from a coaching standpoint with the end goal of ensuring that the potential entrepreneur gets the skills necessary to move one once the advisor is gone.
Have a small business background meaning having the ability to understand how difficult it is to operate with little funding and restricted internal support.
Have long term mentality meaning creating a base upon which the entrepreneurs can build the idea of where they want to be in the coming years.

What are the key characteristics of an effective entrepreneur?

Strong foundation: young entrepreneurs spend a few years working elsewhere before.
Continuous learning: passionate potential entrepreneurs can get better through endless reading, experimentation, and flexibility in adjusting their business model until they find the right product-market fit.
Wearing many hats: entrepreneurship is about taking risks, solving new business problems, working directly with customers, selling, marketing a solution, dealing with financial reports and legal cases, building a product that ends up being maintained by a small team turned into a company which keeps growing steadily
Gaining and learning exceptional skills: skills about sales, marketing, legal details around starting and running a business, managing finances, sorting out your branding identity, running a software toolset or a web platform for marketing and automation.
Maintaining and nurturing an entrepreneurial spirit: either having in mind growth and innovation or excess cash flow, effective entrepreneurs genuinely interested in saving the entrepreneurial spirit, keep the core element of the right equation, nurture it, grow it, maintain it in order to meet their goals.
Seeking advisors to help in guiding their growth: entrepreneurs need to open to the knowledge and experience of business advisors and to build relationships that will serve them through their entire career.
Dealing with lack of faith and fear of failure: potential effective entrepreneurs do not verbalize their doubts and fears but communicate effectively their problems and possible burdens in order to receive support.

What do potential entrepreneurs need from a business advisor?

The most important things that potential entrepreneurs expect to receive from a business advisor are support and the building of trust through their interest in the entrepreneur’s ideas. In particular potential entrepreneurs expect:

To be listened
To be introduced to new ideas and new ways of achieving things
To engage into a nurtured relationship by sharing experiences
To be supported when harvesting their business ideas
To maintain a regular contact and helped when taking decisions
To acquire the following skills:

Analytical skills in order to analyze and solve problems
Strategical skills in order to provide viable solutions to a problems and effectively take care of all constrictions and compromises
Networking skills in order to identify customers and understand what motivates them and what constraints them
Prioritizing skills in order to identify the high priority customers and serve them in an adequate way
Learning skills in order to ask questions and seek clarifications
Presentation skills in order to communicate efficiently

What are the characteristics of a successful relationship between a business advisor and a potential entrepreneur?

Reciprocity: it is a two-way relationship where both the advisor and the entrepreneur gain valuable experiences

Mutual respect: both partners ought to respect the qualifications as well as the needs of the other and work towards a common goal

Clear Expectations: both the advisor and the entrepreneur need to set up sort of the guidelines of their relationship and be mutually accountable to the expectations of each other

Personal Connection: apart from similar interests advisors and entrepreneurs should have the “same chemistry” meaning that they actually care about the outcomes of this relationship

Availability: availability means being there when scheduled but also being there when needed, for example both parts might agree that apart from scheduled physical contact, messaging or emails are also accepted as means of communication.

Good Fit: both parts must feel positive once they meet and enjoy each other’s company

Shared Values: relationships work when both sides are on a fairly common ground, have similar ideas, interests and values as well as a similar approach to life

Tactics that can optimize the relationship between a business advisor and a potential entrepreneur

1. Agreement for the time and venue

Since usually the advisor decides where the meetings will take place it is essential to take into consideration also the time and place that makes the potential entrepreneur feel both safe and comfortable

2. Establishment of a common communication framework

The use of explicit terminology by the business advisors must be in alignment with the things that potential entrepreneurs understand otherwise there the relationship is put in jeopardy if entrepreneurs need constant clarification about the meaning of business terms. When a business advisor fails to explain or clarify the guidance they give, it makes them seem more like a boss instead of a concerned and willing advisor.

3. Provision of a clear list that will guide the relationship and frame the discussions

Potential entrepreneurs need to determine what it is needed from them and how they will establish a list of goals to achieve. Failing to set up a map for the relationship and creating a clear structure of a plan leaves often the expectations for the partnership to go unspoken. A better approach is to establish a month plan outlining meeting frequency and outcomes, communication preferences and goals for the work together.

4. Creation of different strategies for enhancing the organization of meetings and work

Communication can be organized through other several ways apart from face to face meetings. In order to overcome the time limits and other difficulties in the organization of meetings other means like the email, the text messaging or telephone can help to keep the action going.

5. Investment into the human connection

Since entrepreneurship is all about chasing numbers, profit, revenue etc the relationship between the business advisor and the potential entrepreneur functions in a mechanical manner and misses out the humane side. It is important to make a personal bond at every level of the relationship in order to achieve a growth trajectory. Business advisors should provide emotional support to the potential entrepreneurs, including sharing their own feelings honestly and encouraging them to do the same.

6. Responsible management of the relationship

Usually business advisors mismanage the relationship with potential entrepreneurs by focusing their time and effort on helping the entrepreneurs becoming more like the business advisors rather than strengthening the entrepreneurs potential. The biggest mistake that an advisor can make is to develop a mindset that a potential entrepreneur needs to proceed with their career the exact same way they proceeded. Business advising is helping those that entrust you with their concerns, problems and insecurities to succeed and advance.

7. Acceptance of failure

When business advisors see that entrepreneurs fail to work to their potential, they tend to become more directive. However, they must allow failure otherwise the entrepreneurs will not be able to create a path for themselves that falls in line with their own strengths and values.