Entrepreneurial Principles from Institutional Investors Perspective


Entrepreneurial Principles
1. It’s important to have a credible business plan and model.
2. Who you are is more important than your business idea. The substance and integrity of the promoters is critical because investors invest in people and not business plans.
3. Be prepared to lose control in order to grow the business. 30% of a bigger pie is better than 100% of a miniature pie. Promoters are sometimes shortsighted and once successful become greedy and want institutional investors to exit. They forget that these supported them when no one else would.
4. Give the investor a level of comfort so that he believes that he has a competent and capable steward over his investment. Investors take calculated risks.
5. Your past matters. Where have you been? What have you accomplished or done? How faithful and successful where you, wherever you have been? How did you relate to others? Can you be trusted? These character issues are more important than competence. The Bible teaches that faithfulness in another’s business qualifies you for your own.
6. Investors are comfortable in the credibility of a pool of resources and competences in a team of promoters rather than risking their money on one person’s skills. Whenever there is a team the robustness of the internal relationships among promoters is critical. Compare the Unibank and Century scenarios to solid teams like Trust, NMB,
Kingdom, ReNaissance, Royal etc.
7. Demonstrate to investors that you are also putting your own resources at risk for the business idea.
8. To build transgenerational businesses one needs stability of shareholder base. However depending completely on institutional investors may be unwise as these tend to quickly change their positions and offload their equity. Most institutional investors think short term. It follows that once a business is established efforts should be made to replace short term investors with some stable long term friendly investors e.g. Econet Wireless Capital and Meikles in Kingdom Financial Holdings.
9. Entrepreneurs in the banking sector coming from a poverty mentality failed to convert to an abundance mindset. Consequently some focused more on personal success than the success of the business that would create transgenerational legacies.
10. Have a clear perspective of the purpose for wealth creation agenda. Why are you creating wealth and for whose benefit?
11. You can not build a structure without solid foundations. Success is about principles and values rather than gifting.
12. Do not be a copycat. Understand the business and the rules of the game you want to play.
13. Refrain from being greedy and selfish. As you share the cake, your piece grows.
14. Be transparent with, and communicate with clarity to investors and customers.
15. When faced with challenges persist. Persistence pays. There is need to sacrifice in order to create long term wealth. Immediate gratification and consumptive patterns rob the future.

“The one thing people and nations must understand is that in order to prosper they must be willing to sacrifice. I am willing to sacrifice now – knowing that the benefits will manifest in the future.” Founder of Daewoo.

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