I realize the term sounds somewhat silly, as if it came stright from the annals of a stuffy Harvard or Yale lecture hall but let’s ignore that for a moment. The following list contains the competencies I believe make up your EQ. This may be helpful to private equiteers as they appraise potential investments and associated founders and managers.
You really need to understand how money flows through a business, from its income statement, through its balance sheet and out via the cash flow statement; plus there are all of those concepts aside from the standard statements, such as cash flow management, working capital management, inventory management, capex, capital structure, etc.
You need to be able to sell to gain customers and you need customers to have a real business; grass roots experience with sales gives you the perspective needed to understand why people may or may not buy your product of service, which is paramount to being successful as an entrepreneur.
As your business grows, the business needs someone with the organization nous to direct efforts into the most efficient, effective and profitable activities; being organized is key to keeping focused.
Deals and Transactions
Deal experience gives you clout with external investors; it also helps you appraise opportunities and prepare for capital raisings, exists, acquisitions etc.
I personally believe we’re of an age in which people are overly besotted with the idea of corporate strategy. With that said, a business still needs a strategy to pave a path to its objectives and goals; strategic experience is necessary if you plan to work on your business and not just in it.
This sounds simple, but when it comes time to build one, it can be quite difficult to compete with others who’ve already spent thousands of hours looking for new ways to make money. It really is an art, and sometimes, copying is a legitimate strategy.
Most of us are tempted to lump marketing with sales, but it really is in a different kettle. Marketing is less direct and requires an in-depth understanding of your target market. You should gain experience in learning from your customers as practice will lead to more targeted products and services.