At an Inc. 500 conference a few years ago, I heard a great speech with a message that every entrepreneur should take to heart. The speaker was Jamie Clarke, a mountaineer and former cross-country ski champion who writes books and gives inspirational talks when he's not out on one of his expeditions. He was telling the story of his first climb to the top of Mount Everest. Whenever you embark on a great undertaking like that, he said, it's important to keep your goal--your real goal--in mind. So what was his real goal? You might suppose that it was to reach the summit, but you'd be wrong. The real goal, he said, was to come back alive.
In business, as in life, identifying the real goal is often more of a challenge than you'd expect, even for experienced businesspeople. But first-time entrepreneurs, I've found, have a particularly hard time with this, mainly because they are torn between their dreams and their fears. They start with a grand vision of what they want to do, then make the mistake of thinking they can do it all at once. They set out to raise far more money than a first-time entrepreneur can hope to attract. Meanwhile, they miss the goal they should have had in the first place.
I've been working with two people who fell victim to this syndrome. One is Brian Konopka, a former chef de cuisine at the renowned New York City restaurant Le Cirque. With the blessing of his erstwhile boss, Sirio Maccioni, Brian had decided to strike out on his own. He contacted me, and I invited him to my office. He showed up with an elaborate business plan that he must have put together using a computer program. He gave me his pitch and threw in enough business lingo to suggest he wasn't a total novice. The bottom line was, he said, he needed $1.2 million.
I was skeptical. He might be a great chef, but he'd never run a business. I asked him, "Brian, how are you going to raise that much money?" He said that Sirio had promised to help in any way he could. "Do you have friends or relatives with a lot of money?" I asked.
"No, I'm going around and meeting people like you."
Then I knew for sure he wasn't going to raise $1.2 million. I said, "Brian, tell me something. What's your real goal here?"
He said, "Well, my goal is to open up a restaurant and…"
"Stop there," I said. "Your goal is to open a restaurant, right?"
"Yes," he said, "and I want it to be…" He proceeded to paint a picture for me of what he envisioned: a world-class restaurant in the heart of Brooklyn, with a beautiful kitchen, elegant furnishings, impeccable service, and tons of customers.
Brian painted a picture for me of what he envisioned: a world-class restaurant with elegant furnishings and impeccable service.
"That's fine," I said, "but you're going to have to start with something less ambitious because I don't think you'll be able to raise $1.2 million." Brian's head shot back. "Your goal right now should be to open up a restaurant. Period. That's an achievable goal." He listened, and he thanked me, but I could tell that he didn't believe me. I told him to come back if he wanted to talk further.
By the time Brian returned a few months later, he'd realized that he couldn't raise the $1.2 million. This time, we sat down and figured out how much money he'd really need to open a restaurant. The total turned out to be somewhere between $175,000 and $225,000, assuming he kept the restaurant relatively small, found a place he could move into without having to do a lot of rebuilding, and didn't insist on buying expensive furnishings and tableware. "People are going to come here for the food," I said. "If you have a successful restaurant with a reputation for great food, investors will flock to you with money. You can use this restaurant to put yourself in that position." I also told him that I'd be willing to provide the start-up capital, with my usual conditions--that is, I'd be the majority owner until I recouped my initial investment, at which point Brian would become the majority owner. (See "My Life As an Angel," July 1997.)
Since then, Brian has been looking for the right location. He thought he had a place at one point--an existing restaurant with a good kitchen in a trendy part of Brooklyn. The restaurant's owner was moving to Florida and wanted someone to take over his lease. It had four years remaining on it, and the owner said the landlord would extend it. After weeks of haggling over the price, Brian found out that the landlord would not, in fact, extend it but would instead wait for the lease to expire and then renegotiate. Given the way rents have been rising in that part of Brooklyn, that would have been a very bad deal. Brian walked away and is now searching for another location, perhaps on the Upper West Side of Manhattan.
I ran into a similar situation with Diana Zelvin, who also came to me looking for money. Her dream was to open a health club, and she had a very specific idea of the kind of club she wanted, how it would operate, and where it would be located. Her vision was so defined in her mind that, even before she raised her start-up capital, she signed a lease and was paying $7,500 a month for an empty facility. Diana insisted that the space was perfect and the price was too good to pass up. In any case, she figured she would need $1.4 million to get her club up and running. She'd already taken out a second mortgage on her house and put up $200,000 of her own money. I have a personal rule against becoming a minority investor in a start-up, but I liked her determination and wanted to encourage her. So I agreed that--if she could find the rest of the money--I would invest the last $50,000.
"That's fine," I said, "but I don't think you'll be able to raise $1.2 million."
Diana called me back later and, much to my surprise, reported that she was close to her target. She said she was in the final stages of negotiating with a venture capital group. Between the venture money and my $50,000, she would be over the top. I congratulated her and told her to let me know when the deal was done. Then I didn't hear from her for a couple of months. Finally I decided to give her a call.
When I reached her, she sounded discouraged. The deal with the venture group had fallen through, leaving her $400,000 short. Although she hadn't given up, she hadn't made much progress either. Meanwhile, the empty facility was still costing her $7,500 a month, and she was also paying a consultant, thereby digging an ever deeper hole. I suggested we get together.
Like Brian, I realized, Diana had gotten herself into a bind by becoming so attached to her long-term vision that she'd lost sight of her real goal: to open a health club. She'd become inflexible and closed off various avenues that might have led her closer to her goal. For example, she might have been able to find someone who was already in the business who would be interested in partnering with her. The problem was, her vision didn't include a partner. Or, instead of eating up her capital by paying rent on a space she couldn't actually use at the moment, she could have left open the possibility of opening her club somewhere else, but that didn't fit into her plan either.
I explained to Diana that to be successful in business, you need both focus and flexibility. The trick is to find the right balance. Diana had the focus, all right, but the flexibility eluded her because she had put too many conditions on her goal. When you do that, you run the risk of becoming so discouraged that you eventually give up. Diana, I feared, was dangerously near that point. I suggested that she consider dropping her lease on the empty space and begin thinking about her project in a different way. I said, "You know, this is your first club, not your last. Get the experience and move on from there."
Understand, I'm not saying that you should forget about your long-term vision. On the contrary, it's important to keep the ultimate goal in the back of your mind. Brian, for example, knew a guy who already had three successful restaurants. The guy had offered to put up $25,000 to $50,000 and run the front of the house. I told Brian that would be a no-win situation for him. If the restaurant was successful, the credit would go to the other guy. If it failed, Brian would get the blame. In any case, the arrangement would deprive Brian of the credibility he would need later on when he went out to raise money for the place he really wanted. He turned the guy down.
I have no doubt that Brian will eventually open his own restaurant, and--given his talent as a chef--I think he'll then have a great shot at making his long-term dream come true. I have high hopes for Diana as well. She told me recently that she'd terminated her lease on the empty place. Meanwhile, she had her eye on another location and new ideas about how to raise the money she needed. To me, that says she'll make it this time--because she's focusing on her real goal.
Norm Brodsky (email@example.com) is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.