Good Entrepreneurs Make Bad Investors – A Call for Change
Keywords – Entrepreneurial Diversification – Lucy Warwick Ching
According to Lucy Warwick-Ching of Financial Times, when entrepreneurs arrive for investment advice, more often than not their portfolios are too thin.
And, this is not surprising.
Most entrepreneurs have spent too much time in developing a single business. And, as a result, when they turn into investors, their understanding is limited to a single sector. (In worse cases, they never invest beyond their own business).
In other words, entrepreneurs end up confining their abilities and drive to such a degree that their investments are too risky from a diversification perspective.
A single business could have made you all your money. But, the same mentality should not be applied while investing.
An Alternative Strategy
As an entrepreneur, I don’t believe in only operating a single business. For me, entrepreneurship comes down to the ability to build partnerships in the short term, and communities in the long term.
But, I understand that this is not the mentality among most entrepreneurs. Most entrepreneurs focus on a single business.
In any case, we need to understand a basic difference.
There is a huge difference between looking at your abilities as a way to develop a business or a translatable skill.
A simple example here is good coders. With the ability to code well, you can be anything from a software developer in a local business to a scientist that will send humans to Mars and beyond. But, in reality, very few people start with a Mars job before doing bigger things.
In my case, I am a business strategist and I look at businesses from a customer behaviour perspective. In retrospect, I can go and work in any sector, as long as I am provided with a chance to read my target audience. At this stage, it is also beneficial to learn about the sector I am working in, in order to make a connection between the product or service and the target audience.
And, this is how you should look at your skills and resources. You can start from a single source. But, you should elevate as you go along.
Starting in the Marketing sector, Marketing Voice has now expanded its investment to Accounting, and Immersive Experiences from an HR Perspective. And, we intend to keep investing further in startups, as long as we match with the right personalities.
The problem is not what you do when you have attained a greater sum of money. The problem is how your mentality was shaped and if you are too attached to it.
Most entrepreneurs are willing to accept change, as long as it is put in the right words.
So, once you have acquired a greater sum of money, e.g. through selling a business of yours, a good financial advisor should set you straight. (Let me plug our financial advice department here, under MV Chartered Accountants).
But, at a personal level, you should be able to apply your learnings to different sectors.
And, if you are unable to acquire the right knowledge, set out to build connections with the right people. You may end up finding people with the skills that you lack.
(This is in fact the story of Marketing Voice. Learn more here).
To learn more, get in touch today.
And, if you would like to read further blogs surrounding investment, here are 3 options: