The Giant Pivot
I started a children’s play and activity center in Nigeria a couple of years ago and it’s been an exciting adventure for me as an entrepreneur. The adventure has been fascinating given that my professional background is in investment banking.
I took the bold step having worked for 15 years, fine-tuning my credentials in the tough world of Wall Street from New York to London, and opened a delightful children’s haven in my home country.
Let’s be clear: I was petrified and the decision was extremely hard.
It took a while for me to find the courage to leave the comfort of paid employment to face something so untested. I had these brilliant waves of creativity that would keep me awake at night. These were nights when I should have been reviewing the PowerPoint presentations for my large-cap clients but instead I sat up working on my business plan. I’m one of those typical MBAs, once I get an idea in my head, I’ve got to analyze it to death. My conclusion was that I should stop thinking solely about security and a professional title and think more about being able to create something unique that would not only be gratifying personally but also professionally.
So I made a giant pivot, although it felt more like jumping off a cliff. I can tell you that I have no regrets leaving the world of finance (I still miss those paychecks and bonuses though) and each day I become more and more excited about the prospects for my business. With that, here are my tips For those of you pivoting out of paid employment into unpaid/barely paid entrepreneurship:
1. Get comfortable with failure.
When I look back at the months of angst I endured before deciding to focus on my business full time, I was filled with a mortal fear of failure. I had done a great job of succeeding over the years doing what I knew how to do and was considering taking a good chunk of my savings and plunging it into something that I had never done before. It took a while for me to get comfortable with the risk. But the more I thought about it and analyzed the opportunity, I knew that my fears were unfounded. I did as much preparation as humanly possible and had to force myself to the point where I knew that if the business didn’t succeed, it wasn’t because I hadn’t done my best. As Sheryl Sandberg asks, “What Would You Do If You Weren’t Afraid?” So I took the plunge. It also helped that I raised capital from a few friends who I knew could serve as my board of advisors. If these smart people were willing to invest thousands of dollars of their money in me, I would not only work harder because of the fiduciary responsibility but they would be compelled to give me their sage advice for free! My investors are investment bankers, private equity investors, experienced entrepreneurs, and distressed investors. I chose wisely.
2. Write a fantastic business plan. Then, be prepared to never look at it again.
Okay, perhaps you will look at it at some point but you’ll be too busy under a deluge of things to do with your new venture for a while. When you do finally get around to looking at your projections you might find that they need some serious reworking. Some of your projected line items were figments of your imagination turned into dreams that will never amount to actual revenue. Some of those pesky cost buckets that you thought could be kept to a minimum are actually gargantuan monsters that require serious focus. Some of the things that you thought you’d never do, because you’re just not that sort of business, are the things that will make you the most money. So now you’re just that sort of business. Uh-huh. Projections, Schmejections. You need them to raise money. You need them to plan what you will do with the business. But when you start your business, which is akin to drinking water out of a fire hose, you will learn what your customer actually needs and wants. So listen carefully. Don’t let your projections keep you in such a narrow space that you can’t move. Be adaptable.
3. Be prepared to pivot throughout the day as a startup requires various skills.
My two years at Harvard Business School (HBS) were some of the best years of my pre-children life! I had a blast but I never thought that I learned anything in particular. Apart from the fact that I was too young and inexperienced professionally to have much context into general management issues, I was a finance professional who learns everything on the job. So I reconciled my time at HBS as an investment in building networks with my classmates and an opportunity to tap into a pool of global talent. However, once I started my company, it was like every single class started to make sense. Business Marketing, Power and Influence, Entrepreneurship in Emerging Markets! This is actually the time to go back and get an MBA, even though I just celebrated my tenth anniversary. I am using every single thing that I learned at HBS now. I find myself going back to my old cases and asking, “How did he/she deal with this situation?” I have grown immensely since I started my business in that I am now a well-rounded professional as opposed to a mono-focused finance jock. I pivot constantly from dealing with HR issues, to customer service issues, to physical space design issues, to ensuring that we remain innovative in our program design, etc. etc. Ranging from small to large, I face various issues each day and I have to constantly rise to the challenge in order to keep my dynamic business growing.
4. Cash is Reality.
I’m a recovering banker. Need I say more? I have all sorts of swanky spreadsheets that spit out all sorts of interesting customer, profitability and asset utilization data. I create these spreadsheets because they make me happy and there are tons of them. I confess. I haven’t completely let go of my iBanking leanings and old habits die hard. However, the single most important metric to track is CASH. Do whatever you want, buy whatever accounting software you like, but always know what affects your cash position. Cash is definitely not revenue and it’s most certainly not net income either. I read recently that, “Sales […] are vanity, profits are sanity, and cash is reality.” So if you don’t know how to track pure, unencumbered, free cash flow, you better ask somebody.