A friend of mine married a flooring guy. He’s a smart entrepreneur and a master carpenter. He is no average Joe and you’d know it if you met him. In his business, he sells and specs jobs managing a small team. After two years in business, he doesn’t have traction, despite having a respectable track record.
My other friend left a global investment bank with a small team to start a hedge fund—again, no average Joe. At his fund, he sells, lands clients, manages their funds, opens some separate accounts but still does not have traction, even with a respectable track record.
I can elaborate on these examples further, but I think you get the point. Both are businesses, not personal service companies. Both men have real expertise, but running a business and marketing are not among their core skill sets. They are both limited by their size, time in business, and lack of training in how to scale.
These men thought that because they are good at their professions, their businesses would evolve into successful ones, albeit, each with its own yardstick. As a betting man, I place my bet on my flooring friend. He has few fixed expenses, can 1099 his team and go from project to project. It only takes one or two interior designers or architects to like his work in order for him to scale his business. The hedge fund manager, on the other hand, has several fixed costs, Bloomberg or Thomson, data, employees who must be W-2, national marketing and sales, rent and pressure to hire more people to be “real” in most allocators’ eyes.
One of my favorite basic business books is The eMyth (link to the audio version https://www.amazon.com/E-Myth-Revisited-CD-Small-Businesses/dp/0060755598/ref=tmm_abk_swatch_0?_encoding=UTF8&qid=&sr=). The premise of the book is that all businesses that want to grow require strategic planning, real management and systematic marketing.
For management help, there are many solid firms.
For modern marketing and asset gathering (shameless self-promtion alert!!) http://e5aintegratedmarketing.com/lp5/ you can speak with us.
Strong managers with real businesses can launch, grow, thrive and achieve mega success.
That is assuming the manager is talented, knows how to run a business and embraces modern marketing, or is pre-seeded at a profitable level.
Otherwise, good luck.
About the author
Andrew Corn is a former long/short portfolio manager at E5A Funds, Beacon Trust and Clear Asset Management. Today he runs E5A Integrated Marketing, a systematic and programmatic marketing agency focused on assisting asset gathering and capital raising across investment strategies, structures and investor segments.