Passion, communication and equity sharing are keys to business success

Editor’s note: Michelle Stockman works with Little Rock-based Arkansas Capital Corp. to promote entrepreneurship development around the state. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

Bill Gross, founder and CEO of Idealab, recently spoke to Open Forum by American Express. Gross is a highly successful entrepreneur who has started multiple businesses over time. Through his experience, he shared three points to help other entrepreneurs find success in their endeavors.

The first point Gross pointed out was that the entrepreneur must be passionate about the product or service the business will be providing. Given how difficult starting a business is, if the entrepreneur does not have passion for the product or service, the entrepreneur will burn out before the business has succeeded.

“Every emerging business will have a near-death experience, and to get through them you need more than a financial incentive,” Gross said.

To get through the hard days, passion is what will carry the entrepreneur through.

The second point is the entrepreneur needs to be open and straight forward with everyone he or she is dealing with. From investors, vendors, employees and (yes) customers. The entrepreneur needs to set the stage for what each person involved in the business should expect. If there is not clear communication between the entrepreneur and the people engaged in the business, there is a high chance bad communication can derail the efforts of the business working toward stability.

The last point noted by Gross is employees need to be given a significant piece of the action.

“Many entrepreneurs worry too much about hanging on to every last share of equity … they underestimate how much a meaningful equity stake will motivate the rest of the team,” Gross explained.

Some businesses may not be in the situation of being able to offer equity to the company. Therefore, the entrepreneur should find creative ways to engage employees into becoming a solution to the business finding stability. In so doing, the entrepreneur can avoid a lot of drama with their start-up employees.

While there are many moving pieces to each new start-up business, there are common steps to success as well as common mistakes that can quickly lead to troubles. One of the best tools to success is reading about or following other entrepreneurs who have been successful. Learning from others often guides the business away from making big mistakes.

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Stockman can be reached at [email protected]