If you decide to leave a corporate job to head up a new venture, be prepared for a whole new world of challenges
Editor's note: This is the second column of a new series of weekly Q&As in which entrepreneurs featured in the Women Entrepreneurs Special Report answer questions submitted by readers. You can submit a question for consideration by writing to firstname.lastname@example.org.
How do I know I have what it takes to go from a management job at a Fortune 500 company to the top spot at an emerging company? Are my skills transferable?
It's ironic that investors, often via recruiters, seek out top managers from Fortune 500 companies for 50-person companies—as if the skills are directly transferable. The truth is, they're not.
As anyone who has ever held a management position in a corporate job knows, you can easily end up working 18-hour days when you're trying to move the ball forward on a tough project. There are endless moving parts to manage and communication channels to keep oiled. If you can make progress in that environment, you think you can do anything. So you might conclude that since you can handle long hours, lead large teams, and manage complexity and ambiguity, running a 50-person company would be a breeze.
But financing—or raising money—and selling the company's value proposition to external investors is actually the most critical skill a chief executive officer must have. The problem is that you can never begin to learn these skills in a corporate setting. Within a Fortune 500 company, the general manager or profit-and-loss manager must focus on execution—constantly striving to exceed both top- and bottom-line targets, working with both internal and external stakeholders, R&D labs, and customers while preparing budgets, proposals for budget adjustments, managing expenses, and more.
No Room for Error
But the money you need exists within the company—it's in the allocations for your profit-and-loss statement. In that situation, you appeal to your boss for budget increases—or, at worst, an internal committee. You can be certain that as you exceed your milestones, more money to fuel your growth will be forthcoming.
This scenario doesn't transfer to the startup. Money doesn't come from any single source. There's no single boss to whom you make your case. In fact, the money to build the business comes from several external sources—each with slightly different agendas. Perhaps you will have to report to a strategic investor, two or three venture funds, and a series of angel investors. And until you have a product, you have no revenue—so there's no guarantee that you can survive even if you do hit your milestones. In other words, there's no margin for error.
So you may have what it takes to execute on a plan—the vision, drive, ability to attract and retain resources, and good instincts on how and where to place your bets with each move in the market, each incremental product-development decision—but unless you also realize that you have to become a one-person version of your Fortune 500's chief financial officer, investor-relations and PR staffs, and fund-raising machine, you will be ill-prepared for the mission.
On the Market
It's a learning curve like no other—you're learning while your company's life is on the line. At the same time, your team, customers, and vendors are betting on you. None of these risk factors are part of the equation in a Fortune 500 business unit. There's a big umbrella of stability and ability to maintain the relationships. Again, not so with the startup. So you have to really assess your confidence level and be absolutely sure you will take the hill and take no prisoners! Stop, or even hesitate, and you may lose. Miss a cue from a competitor, a critical hiring opportunity, or a major deal, and you may not have time to recover.
And in personal terms, you're no longer a resource in which your Fortune 500 company is investing—there's no program for grooming executives or rotating them through a series of experiences and tests. You're now a resource in the open market, upon which bets will be placed by the investors and every other stakeholder. If you don't give every indication that you will provide the kind of return the investor needs, he or she simply won't put more money in, choosing instead to double-down on the next jockey. It's simply a game of investment returns and rewards.
Understanding that is key. The next step is knowing how to make sure you're well trained to win the race, and that you're on a horse with four good legs, which means doing your due diligence prior to joining.
There are key questions you need to be able to answer: Would you invest your own money in the team you're joining and in the idea behind the company? Is it a turnaround situation or a company ready to ramp up? Do you know about the baggage, if any, that will come with your new role? And if the company fails, what will you do next? Can you get back up, dust yourself off, and start again? How resilient are you? How do you handle failure? What's your emotional IQ like? Are you a good judge of people? Do you use all of your instincts and brain power concurrently? Does the idea of holding the reins to your future and the future of others make you want to sign up?
If you would rather work on your employee recognition plan on Wednesday, a presentation to the next product planning committee on Thursday, attend a tech review committee meeting of your five colleagues on Friday, and enjoy a golf game on Saturday with the boss and your key customers—think twice about entrepreneurship! If not, be warned that entrepreneurship can be an addictive game. You can easily get hooked not on the money, but on the joy of building a business your way—of proving a new technology, a new approach, and a new market.