The Pam Paradox: Many people are just not cut out to be entrepreneurs
Behaviours of unsuccessful entrepreneurs - Part 1
“Success is that old ABC - Ability, Breaks and Courage”
Charles Luckman
He was President of Pepsodent at 30, later becoming the CEO of Lever Brothers
A few summers ago when I was working on the first iteration of training for entrepreneurs, I was sitting on our front deck with a friend of ours. It was perfect weather, the sun was shining, the rose was fine as I was talking about the tragically flawed business model of a local pizza maker. A story that is similar to so many others. One evening when they were entertaining, these would-be proprietors made their famous homemade pizza. Now the booze was flowing and their guests said that they should start their own pizza business. The crust especially was they best they had ever had. It was a sure fire winner.
The idea should have gone out to the garbage with the empty bottles the next morning. Or at least have someone with successful new business experience cast a critical eye. But that didn’t happen. Their crust WAS the best, wasn’t it. So they invested $100,00 into a pizza truck and a new business was borne.
In order to make this incredible crust with their brilliant toppings they could only cook 1 pizza every 15 minutes with the truck they had bought. Now I know the smart ones amongst you have already jumped ahead with a little back of the envelope arithmetic in your head:
“Say they charge $25 per pizza that is a gross revenue of $100 per hour. Then assume the costs of the pizza are 50% of the price that leaves a gross margin of only $50 per hour. Additionally there is paying off the $100,000 investment, plus labour, marketing and other expenses. Hmm this doesn’t seem like a great business without some significant changes”
This is the exact sober next morning examination that should have taken place. It didn’t and they were soon losing money. However, they received no end of excellent suggestions to help them out:
Sell the pizza by the slice
Figure out how to cook the pizzas faster
Do a bunch of pizzas ahead of time
Sell some related pastas like lasagna as well
Sell any hot cooked premade
Sell more types of hot and cold drinks
Sell some Italian style or any sandwiches as well
Sell some desserts as well
Sell some home-made soup as well
They did none of those things as it would take away from the dream best pizza which had to be made to order and served immediately, whole. At this point, my friend Pam who had spent a lifetime in the middle school system, sensed that there was a great teaching moment here somewhere, so she asked, “What should they have done?” I replied, well any of those ideas or any of the many combinations of them. She shook her head. She demanded of me emphatically, “But what was the right thing to have done?”
At this point I had a double epiphany, and I named it The Pam Paradox. I will be forever thankful to her for these important insights.
First, there is no one right way to run any business. That is a foundational error of thinking. In fact, one of the great things about being an entrepreneur is that there are so many different ideas, strategies and tactics you can pursue in order to get a profitable business model with elements that suits who you are. I will return to these concepts again and again.
The second part of the epiphany was this: there was absolutely nothing wrong with the pizza business; it was the people involved that was the problem. That is the theme of this article: many people aren’t cut out to be entrepreneurs.
This is not something you read much elsewhere. The general thrust in legacy and social media is that anyone can become an entrepeneur. In fact, everyone should become an entrepreneurs, even if just part time. In 2021 there was an infamous tweet on Twitter by a local city councillor in England that pushed back hard on “the narrative, especially peddled on social media, that everyone has to be an entrepreneurial hustler with multiple streams of income”. It became notorious because she used a politically incorrect word in talking about 9-to-5 jobs, which many people, including her, enjoy and embrace.
She was right though. Many people don’t have the interest. Or the energy. Or the flexibility. Or the ability or desire to constantly handle challenges. Or the temperament. Or any of many other things that are often required in becoming an entrepreneur.
Let’s look at some of the behavioural types I have seen often in business that cause them to suffer and become unsuccessful.
Big Shot Syndrome: This is very common where a business owner gets carried away with the power that they have to make decisions. It goes to their head. They think that they can do anything because who is to stop them. Here is an example. I was part of an ownership group in a firm where one of the original founders got swept away by our new growth and exit strategies. Fundamental to our strategy was to hire depth and breadth in certain key competencies. This guy just started hiring old work associates, friends of his son, and literally anyone who walked through the door. None of them were part of our target skillsets and our strategy was completely ruined.
The Mad Inventor: This is also very common, where an owner falls totally and fatally in love with their new idea. To them it is the best idea ever and it needs to be exactly as they have conceived it. No changes are permitted. This describes perfectly the pizza owners described above.
Growth At-All-Costs Freaks. These people are in a hurry. They usually are great at sales and business development, and just start selling everything in sight. Usually their primary entrepreneurial motivation is to make lots of money. Sooner or later the cracks start to show with all the rush and hustle. Customer service suffers. Repeat business isn’t what is expected. They take on products or services that they are ill suited for. Talent turnover is high. Cashflow problems can arise. Whatever they are the cracks always emerge and sink you.
Thanks for reading In my next blog I’ll carry on with Part 2 of the behaviour types that usually led to unsuccessful entrepreneurial endeavours.
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