From David to Goliath

Credit Suisse, an MSCI affiliate member, provided this look at how successful entrepreneurs of all sizes handle the challenges that come with growth.  The odds are staggering and the reality is that starting, sustaining and growing a business is difficult.  Read on for a look at the four challenges that high growth entrepreneurs face and how they handle them.  For the full white paper, click the button above.

When entrepreneurs get together, they inevitably start trading war stories—the times they did not think they would make it, and the times they kept going when everyone told them to give up. While it is incredibly difficult to start, sustain, and grow a business, there is a narrow set of superstars within these new companies that will not only survive but thrive.

Credit Suisse conducted in-depth interviews with 13 exceptionally successful entrepreneurs in the United States and across Latin America, representing a wide range of industries from software and consumer electronics to frozen yogurt franchises and beer. While each entrepreneur’s story and each company’s growth trajectory is unique, the case studies uncovered four overarching themes in the types of challenges that high-growth entrepreneurs face and how the entrepreneurs approach these challenges:

1. People: Successful entrepreneurs point to their “people choices” as more important than any other factor in their success. This is the “There is No ‘I’ in Team” Principle. Despite the stereotype of the cowboy entrepreneur who rides alone, these business leaders make it a priority to surround themselves with smart people, listen to their input, and build high-performing teams.

2. Financial Resources: While every entrepreneur must overcome the initial hurdle of raising capital to start a business, high-growth entrepreneurs also face the unique challenges of funding periods of rapid expansion. The “Bird in Hand” Principle of financial resources is that high-growth entrepreneurs are extremely creative and resourceful at fundraising, as well as very skilled at running lean, efficient operations.

3. Business Networks: Successful entrepreneurs maintain vibrant personal and professional networks that support their company’s growth. The “It Takes a Village” Principle is that expert entrepreneurs view customers, suppliers, and sometimes even competitors as co-creators of their market, vital to achieving and keeping their place in the market.

4. Environmental Jolts: The “Lemonade” Principle refers to the way high-growth entrepreneurs recover from major outside shocks that threaten their business. High-growth entrepreneurs do not focus on predicting or preventing shocks; rather, they take setbacks as par for the course, continually reacting, adjusting, re-tooling, and moving forward.

The case studies show how founders of fast-growth companies must continually balance and adjust as their companies grow and change.