In the current economic climate one area that seems to be struggling if you want to believe the information circulating on social media and in the popular press is funding for new businesses.
As early as March 2022, Crunchbase were reporting a reduction in global venture funding of 10 Billion USD month on month. In May 2022 Dr John Mullins of the London Business School, quoting The Times, observed that the UK’s largest investment service for high net worth and experienced investors, the Wealth Club, stated that “investor sentiment is down across the board”. The article went on to report that venture capitalists are also steering clear of start-ups, “questioning valuations of start-up companies, or exerting pressure on the firms they invest in to improve their profits.”
From my experiences in Angel groups, it is certainly true that funds are less freely available. It would also appear that investors are now shying away from simply ‘growth businesses’ that are yet to make a profit. Value investing seems to be the watchword now, and the old values of positive cash flow and profitability are becoming ever more important.
So, what does this mean for the entrepreneur still working in their current job but with an ambition to build their own business and become their own boss?
It certainly doesn’t mean that they should give up, but it does mean that they probably must modify their approach and their ambitions. One thing that is often overlooked by these potential entrepreneurs is that their idea may well be attractive to their current employer. Today’s circumstances may well mean that the entrepreneur must first become the intrapreneur.
For me, an intrapreneur is not simply someone inside a business who has a great idea to change something. For example, the man who suggested to Swan Vesta, the match company to only put sandpaper on one side of the box is not an intrapreneur. He had a great idea that saved the company a great deal of money. I hope he was well rewarded for his insight, but for me that is not intrapreneurship. That’s doing your job well. You may have a great process or cost saving idea for your business which may well get you promoted or rewarded, but I suggest if you want to be an intrapreneur you should look for something new inside or around your business that is saleable. A new product maybe or a new service, not simply a bright idea to change something.
An intrapreneur in my mind is someone who shares the risks associated with their idea with their employer who is funding the venture. They demonstrate they have “skin in the game” just as investors would seek from an entrepreneur. This may be by reducing their salary or benefits, but with a significant upside, based upon the performance of the new venture. The upside could be equity, or bonuses, but there must be an upside. It’s in the interests of both parties in the deal.
So, having challenged the accepted definition of what is an intrapreneur how do you go about becoming one?
Fully use the resources available to you
The answer is clearly it depends. It depends upon your position in the company and what your idea is. The first thing you must do is capture it, write it down, research it to the best of your ability and identify the people inside your company that will either be most affected by the idea or would be the ones who would have to approve it. Probably both. It’s highly likely that you will not have the entire skill set or knowledge to explain or indeed present the idea well. Most intrapreneurs I know have always shared their ideas with people inside their business who can build on them, challenge them, and help to shape them. For example, most intrapreneurs have only a rudimentary knowledge of the finance function, so make sure that your idea has the support of somebody within your finance team. Get them on board, have them help you create a basic business plan, including a rudimentary cash flow analysis and profitability report. If your idea requires capital to set it up inside your existing business, they will know how your business evaluates capital projects.
Sharing your idea helps you develop it.
This may seem strange, that you are speaking to and seeking help from people inside your business that you would normally have no contact with, but this is what entrepreneurs do, they question and seek advice. Behave like an entrepreneur but inside your business.
Entrepreneurs work hard to test their ideas, and what better place to test an idea related to your existing business than with your colleagues? Don’t fear that your secret will leak, that you will lose the initiative, or indeed your leadership position for this idea. Ideas are just that, simply ideas until they meet the real world and that includes colleagues and potential customers.
Be clear about what you want, both for the new business and yourself.
When you are ready to present your idea to those individuals who are able to support them or reject them, or more importantly fund them be very clear in the presentation about what your desires and needs are, especially if your business agrees to your proposal. By this I mean your personal rewards for delivering a successful new business. Because that’s what intrapreneurs do. I said earlier that for you to be an intrapreneur your idea must be saleable. Saleable ideas make new businesses and as an intrapreneur you will be right to demand a suitable reward.
Show you are serious by assuming some of the risk.
You must be prepared to assume some of the risks associated with building the new business. Expect and propose share ownership in exchange for a reduction in your own benefits, show your employer that you have ‘skin in the game’ as well. You cannot reasonably expect your employer to assume all the risk whilst you gain significant benefit.
This is what makes you a true intrapreneur, someone who recognises that in the real world very rarely do you get something for nothing. If you are not willing to make this step, then I would suggest that intrapreneurship is not for you. After all, if you were going it alone as an entrepreneur, trying to raise funding for your new business idea, nobody is paying you a wage.
The rewards can be more than financial.
The benefit of intrapreneurship maybe that you are seen by your business to have a new image, a greater sense of entrepreneurship which every business seeks in its people. It could be your new venture is successful, you may at one stage want to buy it from the company that helped you build it. At that point, with a successful business, well established, funding should be readily available, and you will indeed become an entrepreneur. It could be that you decide, after trying to build this new business as an intrapreneur, to leave your company and set up alone when the economic climate is better. The benefits of this are that you have had a few years learning to be an entrepreneur within the relative comfort of a bigger business.
Intrapreneurship has been out of fashion in the last few years with easy money for investment in start-ups being available, times have changed, you may need to change with them.