What’s the difference between a manager and an entrepreneur? Cameron Cooper takes notes from high flyers, and finds strange contradictions in stats ranking Australia’s place in the entrepreneurial world.
As a confessed "serial entrepreneur", Liesl Capper knows what it takes to succeed in business. Oomph. "Your energy as an entrepreneur is the most precious thing you have. You’ve got to invest it," she says. "It’s more important than money."
The South African-born businesswoman launched her most recent venture, MyCyberTwin, in April and has already signed up 13,000 subscribers to the ‘chat-bot’ site, which allows people to create an online clone who can chat through social networks such as MySpace, blogs, dating sites and instant messaging. It follows her previous businesses such as TopTots, a 38-branch education franchise, and Mooter, a publicly listed consumer search engine.
As someone always looking for new business concepts, Capper believes an entrepreneur has to be a "futurologist" and a "social architect". The ability to predict trends is critical, she says. For example, investing in a bricks-and-mortar video rental store makes little long-term sense given the rise of movie downloads over the internet.
"There are broad trends that happen in society and with a bit of thinking you can pick them," Capper says. "You may not be right, but if you don’t think about it you may find yourself investing a lot of time and energy in the wrong place."
Practising what she preaches, Capper diarises time out from day-to-day office routines to avoid getting caught in the minutiae of a business. Most Monday mornings she allows five to six hours to simply think: to read, to contemplate, to talk or to listen. "It seems like a waste because you’ve got a million things to do as an entrepreneur, but if you don’t do that no one else is going to."
Capper does not go into new ventures lightly. She typically spends four to six months researching ideas and meeting high-level industry figures before making a commitment. "I actively seek out people who’ve made vast amounts of money or who’ve grown large businesses, and I beg, borrow, and steal time from them."
Mixing in the upper echelons of international business has given Alex Maritz, now program director of the Master of Entrepreneurship & Innovation course at Swinburne University of Technology in Melbourne, significant exposure to entrepreneurs.
The distinguishing factor, he says, between true entrepreneurs and everyday business people is that the former habitually create and innovate to build something of value. "They do it time and time again," says Maritz, who has held senior executive roles at multinationals such as Sony and Glaxo SmithKline.
Risks are part of the game. "Entrepreneurs make it big or lose it big because of that risk element," he says. "They make it, they lose it, they bounce back."
Maritz identifies 10 traits that encapsulate full-blooded entrepreneurs:
As a confessed "serial entrepreneur", Liesl Capper knows what it takes to succeed in business. Oomph. "Your energy as an entrepreneur is the most precious thing you have. You’ve got to invest it," she says. "It’s more important than money."
The South African-born businesswoman launched her most recent venture, MyCyberTwin, in April and has already signed up 13,000 subscribers to the ‘chat-bot’ site, which allows people to create an online clone who can chat through social networks such as MySpace, blogs, dating sites and instant messaging. It follows her previous businesses such as TopTots, a 38-branch education franchise, and Mooter, a publicly listed consumer search engine.
As someone always looking for new business concepts, Capper believes an entrepreneur has to be a "futurologist" and a "social architect". The ability to predict trends is critical, she says. For example, investing in a bricks-and-mortar video rental store makes little long-term sense given the rise of movie downloads over the internet.
"There are broad trends that happen in society and with a bit of thinking you can pick them," Capper says. "You may not be right, but if you don’t think about it you may find yourself investing a lot of time and energy in the wrong place."
Practising what she preaches, Capper diarises time out from day-to-day office routines to avoid getting caught in the minutiae of a business. Most Monday mornings she allows five to six hours to simply think: to read, to contemplate, to talk or to listen. "It seems like a waste because you’ve got a million things to do as an entrepreneur, but if you don’t do that no one else is going to."
Capper does not go into new ventures lightly. She typically spends four to six months researching ideas and meeting high-level industry figures before making a commitment. "I actively seek out people who’ve made vast amounts of money or who’ve grown large businesses, and I beg, borrow, and steal time from them."
Mixing in the upper echelons of international business has given Alex Maritz, now program director of the Master of Entrepreneurship & Innovation course at Swinburne University of Technology in Melbourne, significant exposure to entrepreneurs.
The distinguishing factor, he says, between true entrepreneurs and everyday business people is that the former habitually create and innovate to build something of value. "They do it time and time again," says Maritz, who has held senior executive roles at multinationals such as Sony and Glaxo SmithKline.
Risks are part of the game. "Entrepreneurs make it big or lose it big because of that risk element," he says. "They make it, they lose it, they bounce back."
• Maritz identifies 10 traits that encapsulate full-blooded entrepreneurs:
• They make a significant difference
• They are creative and innovative
• They spot and exploit opportunities
• They find resources and competencies to exploit opportunities
• They are good team-builders and networkers
• They are determined in the face of adversity and competition
• They manage change and risk
• They control a business
• They put customers first
• The create capital.
While Australia is an entrepreneurial country, Maritz suggests the nation’s tall poppy syndrome means that in many cases "our entrepreneurs don’t wish to do too well".
Many "cloak their wealth" and success, which in turn inhibits their ability to pass on knowledge and inspire a new generation of business leaders.
Maritz cites the Global Entrepreneurship Monitor, a joint research initiative by Babson College in the US and the London Business School that studies the relationship between entrepreneurship and economic growth. GEM surveys indicate Australia is one of the most entrepreneurial nations in the developed world based on a participation rate of 13 percent among the adult population in entrepreneurial activities or business startups.
In the 2007 Global Report on High-Growth Entrepreneurship, GEM indicates that for highly developed economies the top rates of entrepreneurial activity occur in Australia and New Zealand, followed by North America. GEM reveals an odd contradiction, though: Australian business owners tend to be poor innovators and their businesses tend not to go on to achieve the high-growth success of many foreign counterparts. "So, while they are opening up their new ventures and growing those ventures, as they grow those businesses they become less and less innovative," Maritz says.
He puts this down to the rising number of "lifestyle entrepreneurs" who set up a business to attain career flexibility and escape the
drudgery of an office environment. Too often, however, they quickly slip into cruise mode. "Usually with entrepreneurs their first motivation for going into business is wealth creation, to make money," Maritz explains. "What we are finding more and more with Australian entrepreneurs is that independence motive. They don’t want to work for a boss—they want to come and go as they wish. They want a weekend off."
While this may be seen as a positive as people seek work-life balance, Maritz says it is against the principles of "full-blooded" entrepreneurialism. "It’s not the best thing because wealth creation is what gross domestic product is about – growing the economy."
Listen & Learn
Planning for growth and controlling cash flow are crucial to building a successful business, according to a new survey of businesses turning over at least $10 million annually.
The Westpac Business Owners and Financial Attitudes Survey also reveals that diligent staff and strong banking relationships contribute to an entrepreneur’s long-term success. Research findings include:
when entrepreneurs choose a bank, 61 percent believe a dedicated relationship manager is the most important factor
growing too fast and a lack of business planning are among the main mistakes businesses make
managing cash flow, staff issues, management, and keeping customers happy are the key challenges for business.
David Gilbert, a senior lecturer in entrepreneurship and small business at RMIT, says the best entrepreneurs are passionate risk-takers who have an ability to network. They also listen. "They are willing to listen and learn, even when the news is not so good," he says.
Another vital ability is being able to woo investors and business angels. They tread a narrow line: enthusiasm and passion are important when pitching a product or service, but those qualities are often at odds with the disciplined and persistent nature of most venture capitalists.
Gilbert argues that the fallout from the infamous business collapses of Christopher Skase and Alan Bond in the 1980s is still having an impact on today’s entrepreneurs in Australia. First, it has convinced most modern business leaders to embrace business plans, risk mitigation, and market analysis. Second, and worryingly, it has cast a pall over the venture capital market in Australia.
"Guys like Skase and Bond really put a dampener on that industry," Gilbert says. "The legacy is still there."
At MyCyberTwin, Liesl Capper is well versed in raising capital. She says successful entrepreneurs who become business angels are often the toughest negotiators. "They are actually harder than professional investors because they know that it takes enormous energy and passion but also discipline and persistence to succeed."
Angels usually demand proof of rigorous systems to demonstrate that issues such as corporate governance and cash flow management have been factored in.
Capper’s principle advice is to keep chasing customers and cash flow while you are in the market for capital. It will strengthen your bargaining power. "[Otherwise] they are going to squeeze you down to nothing, and you’re going to have to give away enormous amounts of your company," she says.
While Australia’s baby boomers have entrepreneurial credibility, some analysts fear the supposedly lazy, self-centred Generation Y will harm this reputation.
Not so, according to Patrick Winter, managing partner of Ernst & Young’s strategic growth markets practice. Far from lacking motivation, Winter says the entrants in his firm’s highly regarded business awards programs highlight the quality of younger entrepreneurs coming through the ranks.
"That’s just a thought process that often suits baby boomers and Gen Xers," he says.
Ernst & Young’s Entrepreneur of the Year initiative is one of the leading international business awards programs.
Winter notes that Mike Cannon-Brookes and Scott Farquhar, the brains behind Australian software group Atlassian, are the first business owners under the age of 30 to reach the world final of the Ernst & Young awards.
Atlassian is one of Australia’s largest software exporters with 5000 clients in 65 countries. It sells two main products: JIRA, a workflow and project management tool; and Confluence, a knowledge-sharing tool used by the likes of Cisco and Citigroup. (See our 50 Favourites for more on Atlassian.)
Through his long association with the awards program, Winter lists some characteristics of entrepreneurs: self-belief, ego, passion, energy and drive. And while they can indulge in the detail of a project, they also have the capacity to take a "helicopter view" of what they are doing.
A detailed knowledge of the history of the industry in which they operate is another must, providing reference points when forecasting what may happen in future.
RMIT’s David Gilbert agrees there is an "astounding" crop of young entrepreneurs on the way up in Australia. "I think they’ll not only pick up the baton but run with it very well," he says.
Gilbert adds that this new generation has the capacity to be better than their predecessors. "They are going to learn from the past and expand the future. By doing that their potential is unlimited."
As an outsider looking in at her adopted country, Liesl Capper issues a word of warning. She fears that many Australian entrepreneurs have become too product obsessed. From her experience running TopTots in South Africa, she has learnt that while products and services are important, it is the connection that they create between people that is the key. For example, with TopTots her instinct told her to keep refining the curriculum for the benefit of students, only to find that the main business driver was the ability to connect like-minded parents.
Capper believes the dynamic between baby boomer and Generation Y entrepreneurs will require some delicate handling. "We don’t get each other," she says, but adds that Generation Y will be the key to markets because of their buyer power. "So we are the ones that have to adjust."
Capper also argues that Australia—being on Asia’s doorstep and with many Asian immigrants—should be doing more to take advantage of its ties to the region. Americans and Europeans would die for our links, she says. "Getting a beachhead in Asia is easier for us than it is for Americans and will make us valuable to American and European partners."
For Capper, Asia, Australia and the world is her oyster as she develops MyCyberTwin. Regardless of its success, however, she will continue to pursue new ideas, all the while pouring her passion and energy into the project. "People can smell it a mile away if you don’t have that."
Leaders v Managers
Speak to most entrepreneurs and they’ll be at pains to stress that they are not managers. They are leaders. So, what’s the difference?
RMIT’s David Gilbert believes the distinction is important. Leaders can "galvanise" diverse ideas and capabilities and take them in one direction, while managers "operationalise" visions.
"They do the ‘concept’ instead of ‘conceptualising’ things," he says. "There is a difference, but I believe you can still be a good leader and a manager. A lot of SME operators need to be both."
Entrepreneur Liesl Capper says managers typically marshal resources such as people, time, energy and money. They take a plan and make it a reality.
Leaders, on the other hand, "infect" people with a vision. They may also have to recreate a company if it starts to struggle or market conditions change.
Capper tri
es to surround herself with other leaders because they challenge her thought processes. Ultimately, however, a good leader has to be decisive. "The best decision is one made," she says.
