By John Mullins, associate professor of management practice at London Business School
If you are in the process of launching a start-up, or if you are just one of the millions of people across the UK who fancy themselves as an entrepreneur, you might stop for a moment and consider the counter-conventional ways entrepreneurial minds work.
As Associate Professor of Management Practice in Marketing and Entrepreneurship at London Business School I have perhaps seen more entrepreneurial minds in action than most. Often the way these people think is at the very heart of their entrepreneurial endeavors, and I have found there are six common behaviours that they often share:
- Beg, steal or borrow
Often there is an assumption that any new product or market initiative should require resources that are not only rare, valuable and inimitable, but should also be owned and controlled, rather than borrowed.
When online hair extension seller Luxy Hair launched, founders Alex and Mimi Ikonn simply “borrowed” virtually every resource they needed. From factory to warehouse to shipper to cash and more, this borrowing approach allowed them to start their business, and they continue to do so as they grow their now thriving business today.
- The “Yes, we can” mindset
There is a famous phrase in conventional managerial wisdom that one should “stick to one’s knitting” – that is, to only pursue those opportunities that you already have necessary competencies for. Saying “Yes, we can” to new opportunities goes against that, yet entrepreneurs like Brazil’s Arnold Correia continue to keep reinventing his business by simply saying “Yes, we can” and then figuring out the how.
- Problem-first logic
Prominent venture capital investor Vinod Khosla famously remarked, “To me, any big problem is a big opportunity. It’s very simple. Nobody will pay you to solve a non-problem.” True entrepreneurs understand this. For example, Simon Cohen grew his company, Henco Logistics, to become one of Mexico’s largest freight forwarders simply by solving importers’ and exporters’ problem of poor service – he spotted the problem, then marketed the solution.
- Think narrow, not broad
If you were to look inside many of the world’s biggest organisations, you would see market opportunities regularly dismissed on the grounds that the market is too narrow – “Too small; won’t move the needle,” they say.
Entrepreneurs, however, may think differently. Look at Airbnb – the company’s initial focus was just on convention-goers in San Francisco. This was of course an incredibly narrow target market at the outset, and while it may not have “moved the needle” for the larger company who today are AirBnB’s competitors, it has certainly served them very well.
- Turning every “No” into a “Yes”
When entrepreneur Thomas Knobel got stiffed by a bankrupt supplier, he began a campaign. Every day, he left a voicemail on every phone at his supplier’s offices. “I would call and leave a message on extension 101, and then I’d call back and dial extension 102, until there were no more extensions to dial. It was a fight for survival,” he recalled. “I’m a student. You’ve taken away my business. I hope your sons and daughters aren’t ever treated in this way.”
After just one week, the lawyer called back and said Knobel would receive his money if he stopped the voicemails. For today’s best entrepreneurs, breaking the rules of ‘how things are normally done’ is part of the landscape and “No” is not an acceptable answer.
- “Ask for the cash and ride the float”
Vancouver-based entrepreneur, Rud Browne, financed his refurbished mobile computing device business by asking for 90 day terms when he bought used no-longer-needed equipment, and by getting his customers to pay him on delivery, even sometimes in advance. Riding the float between when he received his customers’ payment and when he paid his suppliers enabled Ryzex, with no outside investment, to reach $75 million in revenue, with five offices around the world and 360 employees.
Does riding the float by getting paid on delivery (or even in advance) and paying suppliers on generous terms make more sense than giving up a stake in your business to access investment capital? Surely, it does. And it’s vastly cheaper capital, too!
Have you got what it takes?
The good news is that great entrepreneurs are almost always made, not born. Can you do new things and assemble – but not bother to own – the resources you’ll need, and not take “No” for an answer? Are you targeting a narrow target market having a compelling problem that you can solve? Can you ‘ride the float’ and use your customers’ funding to bootstrap the start of your business? Yes, you can!
John Mullins is an associate professor of management practice at London Business School and author of “The New Business Road Test: What Entrepreneurs and Investors Should Do Before Launching a Lean Start-up,” fifth edition 2017.