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| About Lisa Shepherd |
| Grew from $335,000 to $1.1 million in revenues in 2 years (242% growth) ----- Lisa Shepherd is a respected entrepreneur with 2 successful business start-ups and sought-after expertise in market opportunities and innovative business structures. She has over six years of consulting experience in addition to five years in direct industry roles with global corporations and entrepreneurial ventures. In the last 5 years Lisa has consulted to clients in over a dozen industries, including healthcare, technology, financial services, education, consumer packaged goods, manufacturing and numerous others. Lisa’s current role involves working with clients to identify their objectives, designing projects that fulfill those goals, ensuring Mezzanine leverages its intellectual capital and planning the strategic direction of the company. |
Recent Article:
Manage Your Cash Flow And Share Business Success Benefits
- For more on Lisa Shepherd visit www.mezzanineconsulting.com
How Mezzanine Was Started - 6 years ago I was doing my MBA at the Richard Ivey School of Business at the University of Western Ontario. I was hired in the summer to join their student consulting group. It consisted of 5 students who would market themselves and provide consulting services to small businesses in the London, Ontario area. The 5 students would change every year so I worked with them for one summer then went back to school in the fall. That summer I loved the business. Consulting was really enjoyable and a great career option. It gives you the opportunity to work with interesting, smart people. You get to work on challenging problems as people don’t typically hire consultants for mundane, easy to do projects, and the work is always changing. The other part of the business that I loved was that it was entrepreneurial. It was a tiny little business that was struggling to survive. I loved the consulting and entrepreneurship combination.
Since it was only a summer business, I would soon need to get a full time job. I pitched the school on making the consulting business a division of the university. We had a great brand, vast resources, and a huge market to sell to – Canadian businesses who want to grow. But we needed to change our business model, because as students we were perceived to have limited expertise. As well, a summer consulting business does not work because you need continuity around the business. You need someone who was permanently involved.
The school said that they had no financial resources to give me. They loved the idea but couldn’t pay me. They said I could operate from the school, use professors as mentors, and leverage the name but I would only make money if I could sell some work. It was 2002 and I decided to go for it.
I hired students into the business and a permanent full time consultant to work with me – a fellow Ivey grad. We kept growing the business and each time were able to go after slightly bigger contracts. By September of 2003 we had enough of a base to open an office in Toronto. We hired more people in 2004 and from there it has grown exponentially.
We attracted our first clients because of the Ivey brand. People would call the school – from there we had to convince them that we could help them solve their problems. Price was a key issue for clients in the early years, so we were aggressive with our pricing. My challenges were that I was young and didn’t have industry expertise. Most consultants start after 20 years in the industry and a big rolodex of contacts. I didn’t have either so I had to use price. I also have the ability to sell. As they say, “until you sell something, nothing happens.” You have to lead with selling. If you have an invention, find the sales person. I’ve seen lots of people with ideas, and they’re great ideas, but they can’t sell them so they don’t go anywhere. I have a good ability to connect with clients and figure out what they are looking for.
Starting in late 2004, we came up against a road block with the name Ivey Business Consulting. The market still thought we were students and didn’t take us seriously. We decided to rebrand ourselves as Mezzanine. The names comes from the fact that when you stand on a mezzanine you can see the situation around you very clearly. And that’s what we do – we give our clients a better perspective on their landscape. One of my colleagues came up with the name, and it’s a great one because it colorfully describes what we do.
Advice For Startups - Manage your cash flow. You can’t spend a lot at the beginning. I was under a mountain of MBA debt coming out of school. I didn’t have the money to pay people top dollar so I used an innovative compensation structure. We had small salaries and large pay-for-performance incentives. If we didn’t sell any work, we didn’t get paid. That was a model that helped the business get off the ground. We offered much lower salaries with a lot of upside potential. With this mode we attracted people who were entrepreneurial. We’re constantly looking to innovate and be entrepreneurs – so this compensation model fits our culture perfectly.
Share the benefits of the business success. At the start of the company, I gave up some equity in order to attract talent to the business. That’s unusual – the typical mentality is ‘don’t ever give away equity’. But at the start, I needed talented people to fulfill the vision I had for the company. I didn’t have huge salaries to offer them, so equity was a reasonable offer at the time.
Give people an opportunity. Talented people are attracted by an opportunity. Money is important, but young people want to be developed and want the opportunity to take on new roles. In so many companies, young people are put in a box and aren’t able to reach their potential. With a startup the world is your oyster. You can do anything. Whatever you see as the opportunity, you have the flexibility to make it happen. The right people are attracted to that opportunity. I’ve hired 50-60 people on various programs and we now have 15 people here. We’ll interview10 people for ever 1 person we hire.
Recruit from business schools. We go to all the business schools to find top talent. A business degree is the most important core skill that our employees need. We need people with a strong understanding of business structure and processes. We used to do traditional recruiting, screen their resumes, interview first round and a second round on cultural fit. We are looking for passion, entrepreneurship, emotional intelligence, and analytical skills. Now, again through one of my colleague’s vision, we’re pioneering a “scouting combine” model to pursue a thought leadership position. He guest lectures at business schools and offers events that deliver value to candidates, thereby placing Mezzanine on the map for students, encouraging them to learn more. We need people who are initiators so we like it when they initiate contact with us.
Find the right partners to work in the business with you. I offered equity in my company but never give it away before having worked with someone for at least a year. All of my contracts were contingent on one year and the candidate having achieved their goals. Some of the goals are quantitative and some are qualitative. I have to determine is this the right person for the business or not? The very first person I hired was not the right person. He was a great guy, had lots of skills and abilities but had different ideas of what he wanted to achieve. You need to have different skills and the same vision. We worked together for 8 months before parting ways.
Don’t go it alone. You will achieve and grow your business but your growth will be limited. If my partners weren’t here, the business would not be where it is today. But be very careful who you bring on as a partner. It is a marriage. Choose your business partners just as carefully as you would choose your spouse. I’m looking for people with that core business knowledge. I hired all my partners out of Ivey. They are prescreened, they responded to my posting, which was very entrepreneurial, they had an entrepreneurial bent, and were looking for an opportunity. The business schools are full of talented ambitious people all in one place. When you’re finding a business partner you need like-mindedness. I’m from a business school and found others from a business school. Look to your community, whatever it is. If you’re a creative type, look to your art college, look to your networking communities, and industry associations. You need to have that core of like-mindedness - different skills, but like-mindedness.
Stay the course. Entrepreneurs are very risk tolerant, have a vision, a passion, and are stubborn as hell. It always takes longer than you think it will but you have to stick with it because the alternative is not that appealing – go work for someone else. I needed to put in 2.5 years before I attracted the partners that I now have. So many people around me questioned what I was doing in the first 3 years. I graduated from my MBA program with lots of debt, I was making very little money in the early days, my classmates questioned what I was doing. But I was convinced that in 3-5 years I could be master of my own domain and making money. Having the courage to believe in your convictions is hard when your bank account is bleeding red. Be strong, stubborn and persistent. Year 1 is hard, but not the hardest. At that stage you’re excited and don’t have many ‘knocks’. Year 2 is when it’s really hard. You’re still not making money and the luster wears off. The ‘dark night of the entrepreneur’ is year 2 or year 3.
Create a board of advisors. In the early days my board of advisors was from Ivey. I typically ask advice of everyone, and then take advice from a select few. If I’m thinking about a major decision, I will ask the opinions of people I respect. I ask many, many, many people and get diverse opinions. I can then start to distill which advice made sense to me, for the vision I have for Mezzanine, and eventually I’ll choose my course. The value of getting the advice is you get to hear all the different perspectives.
Know how much you need to survive. In the professional services world, in the early days you need money. Somebody offered me a quarter of a million dollars and wanted to be a silent partner for a certain percentage of the profits. I asked advice from a number of people. The former head of AT Kearney Canada counseled me that in professional services, very talented people are needed at the top to drive business forward and get clients. Those people need to be paid well. So if you take 15% right off the top to pay your VC partner, you have a lot less money to pay your talented people. We’ve seen it with a lot of consulting companies that have gone public – their culture is suffering. I took his advice, grew more slowly and hired and maintained exceptionally talented people. The VC that wanted to give me money disagreed – they said I needed to grow quickly. In the end I doubt there’s a ‘right answer’, but I’m happy with the course I chose and the results we’ve had.
Take baby steps. We wanted to be up in the sun doing $100,000 contracts for big customers, but the reality was we needed to start lower. You have to build stepping stones to get to where you want to go. Find a way to get up to the first step and then go to the second and then the third, etc. This is the organic approach and one that works in professional services.
Earn – Learn – Equity. This was my motto in the early days. A lot of the clients we started with were little entrepreneurs in London. We would do projects for $1,500 because we wanted to learn. I needed to earn enough to stay alive, service debt and put food on the table. Learning was the most important thing to me. I needed to learn how to be a good consultant and about different industries. Equity was the final component. I wanted to be building something, building a brand, building an asset, building a portfolio of clients and expertise.
Mistakes To Avoid - Don’t stay with partners that aren’t right for you. My first partner had both different skills and a different attitude / philosophy from myself. I initially thought those differences would be healthy. The different skills were great but the different attitude hurt. I’m the entrepreneur who wanted to grow quickly. He was more fiscally conservative and wanted to grow very slowly. We ended up going in different directions because of those differences. He thankfully didn’t own any of the business, and we parted ways within a year. I learned from that experience that I needed to be very clear with any partner what the deal was so their job offer included making them a partner only if they met certain goals. We both signed the job offers and it was very tangible. With the first guy I didn’t have that clearly written down. Luckily, it didn’t end up being a problem. It was very clear to him that it wasn’t the right fit. I wish I had articulated it out on paper beforehand though Entrepreneurs should be very clear with prospective partners - what you expect of them and what they have to do in order to become a partner. Never make them a partner without working with them before. And once you’re partners, have a shareholders agreement with a shotgun clause that is fair to all partners.
Be honest with yourself. You need to be honest with yourself at what you’re good at and what you’re not. I’m terrible at managing people. Entrepreneurs typically are not great at managing other people. They are very good with ideas. As an example, I was in with a CEO yesterday. He is head of a startup that is going to be very big. He is a visionary, with huge ideas. But he knows he’s way out on a limb in many cases, so he had a VP with him who is the execution guy who keeps the agenda on track. You need people to balance you out. Know what you’re good at and hire around you for the things that you are bad at.
Evolve. What matters in year 1 is different from what matters in year 3 versus year 6. For an entrepreneur it is important to figure out when your skills are the right ones for the job at hand, and when they are not. You either need to change or leave for the good of the company. We often see founders leave businesses after they’ve started it up. It can be really healthy for founders to know when it’s time to go and give up the reigns.
Advice for business school students. 2/3 of what you learn in bus school is very good stuff and applies to start-ups, or being an entrepreneur. About 1/6 is questionable when it comes to start ups. And 1/6 is dangerous. It is just plain wrong for a startup situation. For business school grads who are entrepreneurs at heart, the methodologies are good but you need to be smart about what you apply and what you ignore. How to run a business is entirely different from how to start up a business. Take, for example, spending money. You want to build an office that is wonderful, is comfortable but if you do that you’re not going to survive. The reality of the entrepreneur is to pick your battles.
If I Were To Start A New Business… - There are so many opportunities in the world! I don’t have any one specific idea but the way I would go about identifying an opportunity is to start with what you know. Start businesses with what you are an expert in. Don’t dream up an idea because you think there’s a business but you don’t know anything about it. You personally have to be passionate about it because those first few years are so difficult. Why do it? It’s not worth it unless you’re passionate about it.
We’re exposed to many ideas and there is a lot out there. It’s just a question of how you look at the opportunities. A business professor said to me that a lot of entrepreneurs develop a product and try to sell it. A better way is to find a group of people with a problem and then find a solution to the problem. We innovate backwards. There are so many problems in the world you don’t have to look very far to find a need. Do your research!
It was so hard to startup the first time because I was so broke. The debt that I had and the timeline that I had made it very difficult. The next time around I’ll be a little more experienced and have more resources. A lot of entrepreneurs who can startup businesses on the side while having an income from a day job or spouse / partner can alleviate part of the pressure. If you’re organically funded and you quit a job to start up your company, you better have a big piggy bank. It took until year 3 to break even and make money. There was a period of time where I slept 5 hours a night and it took that commitment and work to get my company from the baby to the toddler stage. I look back on it and can’t believe how much work it was but you do what you have to do. You do what you have to do, for as long as you have to do it, until you don’t have to do it anymore.
Manage Your Cash Flow And Share Business Success Benefits - To learn more about this author, visit Lisa Shepherd's Website.
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very informative site full with interesting information.... Think I'll be bookmarking this one!
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