He wrong-footed me (and everyone else) as completely as he used to wrong-foot the defenders in the Premier League. And now that his contract is sorted out, there is a good chance that he will start wrong-footing them again for real on the pitch.
So what is this week’s Wayne Rooney-inspired lesson for entrepreneurs? Well, it is about managing expectations. A fortnight ago Rooney was the villain of Old Trafford. Betraying Colleen was one thing, but betraying the club was an infinitely more heinous crime. Now that he has not betrayed the club after all and has signed a new contract, his marital difficulties and his poor form will be as good as forgotten and he will ascend to an even higher level in the fans’ affections.
In my experience, many venture capital backed entrepreneurs do the opposite. Instead of preparing their investors for bad news and producing a result which in contrast is a pleasant surprise, they all too frequently predict good news and deliver disappointment. Budgets tend to be too optimistic, which may make for a warm feeling when they are set at the start of the year, but bring frost into the boardroom when they are not achieved.
It is an inherent characteristic of most entrepreneurs to be optimistic. Without optimism, enthusiasm, and belief in yourself and your product, you would never set up a company in the first place. I am not running down those essential entrepreneurial characteristics - perhaps not so different to the self-belief that Rooney needs to get back into scoring goals - but just advocating careful management of that optimism and its presentation to investors and outside Board members.
The main competitive advantage that small companies have over large corporations is their ability to move quickly. Entrepreneurs do not always understand how long it takes for a decision to be made in a large company. They believe passionately in their product. They know that it will yield enormous benefits for their customers. So they expect the purchasing decision to be taken much more quickly than it normally is. They may be right; the customer may be at fault. Quite possibly it does make sense to take the decision quickly. But that is not necessarily how it happens. Manage expectations accordingly.
In many ways a business which achieves revenue of £10 million against a budget of £9 million is more valuable than a business which gets to £11 million having budgeted £12 million. Success is relative, not absolute. Whether you are raising money, or selling out, or just trying to keep your investors happy, performing ahead of the expectations you set is vital.
So learn the Rooney style of expectation management. Then you will end up being as rich as him…maybe.
About Simon Acland -
He worked as a venture capitalist for over 20 years. He was managing director of Quester, one of the UK's most active technology investors with more than £250 million under management. He was non-executive director of 23 companies in Quester’s portfolio. 7 of these were floated, 2 reaching the FTSE 250, and 8 were successfully sold.
His book ‘Angels, Dragons and Vultures – How to tame your investors…and not lose your company’ is published on 21st October and is available from Amazon
http://www.amazon.co.uk/Angels-Dragons-Vultures-Investors-Entrepreneurs/dp/1857885511/ref=sr_1_1?s=books&ie=UTF8&qid=1285684139&sr=1-1
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