How entrepreneurs can succeed in dual roles

Ken Cook, Contributing Writer

Entrepreneurs are investors, both in terms of time and money.

An entrepreneur sees an opportunity. Ideally, the opportunity manifests itself in terms of customers who have a need which the entrepreneur can fulfill. And most importantly, fulfilling the need results in profitable revenue for goods and services.

Getting to this outcome is the challenge. To reach this goal, the entrepreneur has to operate in a dual role.

The first role is as a business operator. The second role is as an asset manager. Usually the stage of growth of the business dictates which role dominates the entrepreneur’s time and focus. Evolving from operator to asset manager is an essential shift to ensure long-term success.

The entrepreneur as a business operator is a sleeves-rolled-up, get-the-job-done role. This role dominates in the early stages of a business. At this juncture of business growth, finding customers and growing revenue are the top priorities. On a practical level, it’s all about validation. Customers validate the product or service. Profits validate the business model.

Once the initial validation solidifies, the entrepreneur evolves to a builder and delegator. Building the company is a function of increasing revenue and profits to fuel the growth of assets. Building the company is also the growth stage where the entrepreneur shifts from business operator to asset manager.

As a builder, the operating side of the entrepreneur improves the products, the services, the value delivered. The person streamlines operations and strengthens channels of distribution.

The asset-manager side of the entrepreneur identifies the best customers, hires the best people, builds a strong management team, improves facilities and capabilities and finds solid strategic and operational partners. In other words, the asset manager builds and strengthens the company’s assets.

Shifting from operational management to asset management is a critical juncture for the business. It entails the big step of delegating and letting go. That is a hard thing to do because it means letting go of the day-to-day activities that drive revenue.

As operating managers, entrepreneurs ask essential questions that are revenue and profit focused, such as:

• How much revenue are we bringing in? Where/how can I get more customers?What do we spend money on? Are there profits? Is the cash flow positive? 

Asset managers shift the focus to building wealth. Factors asset managers take into consideration include:

• Financials: Recasting company financials; focusing on EBIDTA as a primary financial measure of strength and success; and managing and investing company cash so the company makes money on its money.Personnel: To borrow from Jim Collins, are the right people in the right seats?Customers: Having strong relationships with customers; dominating markets you serve; and having customers tell you they value what you deliver.Technology/processes/systems: Operations run smoothly; waste is minimized; and expenditures are well thought out.

An entrepreneur as asset manager is more decision-maker than doer. They lead the people, the management team, the customer relationships, the money and the marketing and market position. 

Most importantly, asset managers realize that a business is the sum of all of the internal and outside relationships and how these relationships interconnect and build upon each other. It is this web of relationships, when leveraged effectively, that builds wealth.