There are a lot of things an entrepreneurial business needs to do right to succeed. The ability to grow and manage sales, finance, marketing, and operations. There also needs to be a competitive advantage to lead a consumer to choose the company’s good or service over another’s.
In a past life, I built a growth company from scratch. While building all of the competencies wasn’t easy, it was doable. The one skill I wish I would have spent more time focused on is “Managing Up”.
What is Managing Up?
Scaling a company costs money. Some companies can grow through existing cash flow or independent wealth. Many others need to raise capital from friends, family, angels, venture, and/or private equity (the “Managed Up”). The Managed Up generally a significant amount of capital at their disposal, and they either earned the capital or the privilege of investing the capital.
While each type of Managed Up may have different needs and expectations, they are not expecting their sails to be thrown to the wind. Accordingly, an entrepreneur needs to build trust and manage that relationship just as much as any other seminal relationship. In large enterprises, this is done through entire departments or shops focused on investor relations. For the entrepreneurial organization, this is done by Managing Up.
How to Manage Up
A) Be Humble, Knowledgeable and Passionate
The Managed Up typically know they are investing in management’s ability to execute to assure an ROI, not on the schmooze. Many of the most successful entrepreneurs are charismatic, inquisitive, but also very much emphasize communication on the importance of the brand or the business as opposed to themselves. Generally, no one (including even attorneys) like dealing with arrogance, especially with someone they just wrote a check to.
B) Be Deliberate, Build a Relationship and Communicate
There is more to do than hours in the day. Most of the Managed Up know that and are not looking for face time (and it is generally a bad idea to work with those who have unreasonable needs). However, it is very reasonable for the Managed Up to expect updates on the business plan, the current financials, and any changes of vision without even inquiring. It is much easier when you have spent deliberate time building the relationship but if you don’t know them or cannot, make reporting part of your schedule.
C) Stop Being the Salesperson
The Managed Up have already invested and the investor sales gig is over. Again, either the company is going to perform to their expectations, or it will not. So, the dynamic of the relationship should be focused on managing that expectation honestly, not blowing smoke up the Managed Up’s keester.
D) Avoid Vulnerability
Entrepreneurs get tired, as entrepreneurism is really hard. It is so easy to become vulnerable through e.g., undervaluation or giving up majority control. Many of the Managed Up are far from Shark Tank-ish (although some make Shark Tank look like a swim in the kiddy pool). So at the end of the day, my advice is to look at whatever vulnerability the Managed Up’s investment may be exposed to, and at a minimum discuss that with the Managed Up before they invest. Also, it is super important to talk to a third party (like me) who can assess the risk and provide guidance based on a host of factors that you may not have contemplated.
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