National Business Incubation Association; Your source for knowledge and networks in business incubation

One on one: Coaches and mentors offer strategies to help start-up companies score.

by Bridget McCrea

April 2001

We've all been through the drill of getting a new job. After a hiring process that probes your every accomplishment and foible, you launch into on-the-job training. That involves some general introduction to the company and job, but individuals teach you most of what you really need to know. From your boss to the casual colleague in the lunch room, each person fills you in on the particulars, whether it is how to execute a procedure or how not to get executed in a staff meeting.

The process of incubating companies should not be all that different. You're working with young companies to develop their key employees – in this case, the ones responsible for the very infrastructure of the business. Some general training and networking will be helpful, no doubt. To get them fully up to speed and put the fine points on their operations, though, you have to incorporate more personalized mentoring and coaching into their itineraries. It's work intensive, yes. It means added discipline for your companies, yes. But it can mean the difference between success and failure.

Coaching and mentoring can be viewed as two discrete processes. Coaching has to do with building an individual's personal skills, from communication to management style to problem-solving. Coaches can get right down to discussions on family relationships, stress management, even setting up an office space just right. They draw upon a client's inner knowledge and creativity to help him or her be more effective.

Mentoring, on the other hand, is the passing along of one person's knowledge to another. It is person-to-person teaching that is much more job-specific – the mentor has experience in the same field or discipline as the client and can fast-track the learning curve. Whether it is market development, sales strategies, operations, business planning or insider industry knowledge, the information comes from people who have been there and done it.

Paul Ismail, president and CEO of TrueShopping in Norcross, Ga., drew upon the coaching expertise of Intelligent Systems Incubator Vice President Bonnie Herron for help tweaking his presentation skills. The company, which develops enabling technologies for on-line stores and other markets, was selected to present at an investment conference in late 2000. Accustomed to the one-on-one presentations he'd been customizing for individual venture capitalists, Ismail quickly found out that speaking to a group would require a new focus and strategy.

"One-on-one presentations allow for adaptation of the presentation for each venture capitalist," says Ismail. "And they allow for interaction, while this conference required a simple 'speaking to them' approach." Herron coached Ismail on how to structure the presentation in a way that would get TrueShopping's message across to a broader audience. The pair planned the presentation, Ismail practiced it and Herron provided feedback and helped Ismail mold and tweak his approach.

Ismail says his original presentation was very technically oriented, and designed to hit a venture capitalist's buttons – but that would be too narrow in focus for the new venue, which included business professionals in addition to investors. His presentation skills also needed polishing because being comfortable in a one-on-one environment doesn't necessarily translate to a larger audience.

"The coaching helped me learn how to better present myself and just be more prepared in general," recalls Ismail, adding that for previous presentations, he would use his PowerPoint slide presentation as an outline, thus allowing for interaction and discussion between himself and the investors. "Bonnie explained how that wasn't going to work at this venue because the audience was being hit with a lot of presentations one after another," says Ismail, "so the slides had to correspond to exactly what I was saying." Although the conference didn't net TrueShopping any investors, Ismail says the experience was positive – more so than it would have been if he hadn't received coaching.

Mentoring can be just as effective. For instance, at the Slater Center for Environmental Biotechnology in Narragansett, R.I., a client was developing a genetic advancement that would lead to dramatic muscle development in fish. Initially, the client wanted to do proof of principle using a species native to New England, but the breed and the size of its eggs made it difficult to perform the task. Thanks to an effective mentoring relationship with a university scientist who was an expert in the field, the company worked through the problem and came up with a better solution – using trout and salmon instead. "Mentoring by the [university scientist], who is on our scientific advisory board, helped the company tremendously," says incubator Executive Director Thomas E. Vrabel.

In the business incubation setting, coaching and mentoring meld into one process more often than not. Entrepreneurs developing a company from scratch have to learn business functions they've never done before and apply themselves personally in new ways.

Two things are central to effective coaching and mentoring: securing the right individuals to provide the help and establishing a process to carry it out. Although incubation programs take different approaches, the main goals are to identify the companies' needs, help them set goals, put necessary training and coaching in place and provide adequate follow-up. Here are some tips and examples to ratchet up your one-on-one business assistance.

Scouting and getting the team together

Not everyone can be a coach or a mentor. The former requires a give and take approach to learning – and a lot of listening. The latter requires deep knowledge or expertise in one or more areas where entrepreneurs are typically lacking. The question is — where do you find such people?

At the New Century Venture Center in Roanoke, Va., President Lisa Ison says the incubator's coaching and mentoring teams are made up of three advisors selected on the basis of specific needs of the entrepreneur. The incubator then handpicks mentors based on experience and personalities. "If we do not have an area of expertise represented by an advisor, then we go out to the community and find one," says Ison. "Right now we have a pool of about 70, each of whom serves on one team at a time." Board members all serve on a team at some point during their tenures, Ison says.

To find community members willing to mentor, New Century initially placed a "call for mentors" announcement in the local newspaper. "We included a time and date for orientation and more than 30 people showed up," recalls Ison. "Another 20 were interested, but couldn't make the meeting." After that initial meeting, Ison contacted the prospects to request resumes. "This is how we find and maintain quality mentors," says Ison.

When he ran the Dingman Center for Entrepreneurship in College Park, Md., Charles Heller jump-started the center's list by calling on several friends and business contacts for help. During his tenure, the program boasted more than 140 mentors, most of whom were successful entrepreneurs with outstanding reputations. He says that by selecting professionals like accountants and lawyers as a base, other high-quality mentors were enticed to "give back" by sharing their experience with budding entrepreneurs.

"Once it got momentum," says Heller, "It was pretty easy to get mentors. We had a few success stories that also helped attract mentors because, certainly, there's an amount of ego trip to it. But it's also a giving thing."

Tyler Orion, director of San Diego-based Orion Enterprise Development and former incubator manager, provides coaching and mentoring services for entrepreneurs and incubation programs. She says that although incubator managers or directors may be tempted to handle the mentoring and coaching duties themselves, bringing in others to handle such tasks is important (see “Recruiting a Coach” below). The incubator manager may be a generalist – well suited to providing coaching in support of the company accomplishing its own milestones. However, Orion says the manager should be ready to provide outside resources for direct hands-on assistance, particularly in marketing and finance.

Mentors, for example, can provide particularly valuable insights and perspectives. "They're very frequently outside experts who are knowledgeable in the technology or product domain of the company," says Orion, "and who know the predictable pitfalls, have access to higher level resources and professional services, and in general have a more sophisticated perspective to offer the entrepreneur or founding team."

Setting the game plan

Setting a particular procedure for one-on-one assistance to clients is important so that the client knows what to expect and incubator staff can have the right people in place.

First, you have to establish an effective method of finding out what a client actually needs (not simply what they ask for, assuming they ask at all). Some of this you might already have accomplished at your initial intake screening. But the needs of a growing company are a moving target. Terry Collison spent more than a decade as a venture consultant to promising young companies prior to co-founding Wilmington, Del.-based Blue Rock Capital, a seed and early-stage venture fund. He notes that many incubator managers find it helpful to create evaluation forms or worksheets to help identify which issues are critical requirements – or perhaps critical impediments – to the next stage of a young company's development.

"One technique that I've found especially helpful is to give one of these worksheets to the company and invite them to fill out the worksheet for themselves at the same time I am filling out my own copy," says Collison. "Then we exchange evaluation forms. It can be fascinating to recognize issues where the company's self-assessment lines up with the view of an outsider."

Collison adds that it's equally helpful to see where the insider and outsider views are totally different from one another. "That's when truly useful conversation about issues, options, requirements and alternative strategies can really begin," he says.

The next step involves establishing an overall procedure. Orion, for example, sets mandatory, quarterly coaching meetings with clients. At those meetings, she and the client review the last three months of progress and plan for the next quarter.

Establishing key objectives is important, says Orion, and should be based on what the client expects to achieve on a quarter-by-quarter basis. If an urgent matter surfaces between meetings (e.g., "I didn't get the loan," "My supplier sent the wrong parts and I have to ship tomorrow," or "I just found out that a certain company is planning to launch a certain product that will compete with ours big time"), Orion is available to help solve the problem.

At Tri-Cities Enterprise Centers (TEC) in Richland and Kennewick, Wash., one-on-one assistance is such an important part of client services that the centers have developed four distinct approaches: mentoring, counseling, tutoring and confronting. Each of the four components plays an important role during different stages of the start-up process, helping clients make behavioral changes by influencing rather than applying power. A three-person team, made up of either General Manager Bill Henderson or the incubator manager, a board member and a volunteer from the community who is an expert in a particular field, handles the four one-on-one approaches. Not infrequently, client needs cross all four areas.

Henderson describes a specialized tool-and-die manufacturer run by two brothers who had mechanical and technical knowledge but no business experience. "We had to coach them in digestible chunks on everything from setting up their books to managing their business to handling the sales and marketing of their products," says Henderson. That included mentoring on how to do business in a new community, counseling on expanding their product offerings, tutoring on how to manage cash flow and confronting when they repeatedly missed goal deadlines. After a year in the incubator, Henderson says the company is doing well and soon will graduate into its own facility.

Another TEC client, an electronics design firm, came into the incubator with a good idea for a business but needed help bringing it to fruition. The coaching and mentoring team helped the company set clear-cut goals for success and produce action plans that could be followed step by step. That included the creation of an electronics development plan and a marketing plan. The process was successful, and eventually led to a merger with another company – a move that doubled the design firm's business.

Henderson considers the confronting leg of his four-part strategy particularly important. "Confronting is about holding clients responsible for the promises they make to the coach and the team," he says. For example, Henderson might say: if a client comes into the incubator with a good idea and appears to be a good fit for the program, then begins resisting the program or refuses to participate in coaching sessions, confrontation becomes necessary.

After repeated failure to execute action steps that the clients themselves have selected, says Henderson, then it's time for the coach to have a "cards-on-the-table" conversation with the client. For example, Henderson might say: "Look Jim, you've told us that this task is the most important thing you need to do this year and yet, time after time, you procrastinate and come up with all kinds of reasons why it didn't get done. Now, either this is worth doing or it isn't. What will it be: yes or no?"

"Most of our companies have been in the [coaching and mentoring] loop for about a year," says Henderson, "and like the electronics design firm, all are making progress much faster than they would be if they didn't have a [coaching] team to be accountable to. Even after the clients graduate, they meet new entrepreneurs and refer them to us with the recommendation that it was the coaching program that made the difference," he says. "It's those testimonials that are proof that coaching works."

Bad sports

Not every client buys into the philosophy that coaching is beneficial. The best time to find that out, says Orion, is during the selection process rather than after the client is inside the incubator. She looks for two red flags. "When you make suggestions on ways to improve [a] business plan so that a company can be accepted into the incubator, then the applicant tells you why those aren't good ideas, or gives lip service to your suggestions but doesn't follow them," Orion says, "you may have an uncoachable client on your hands."

Or, if you express serious doubts about a client's market assertions and ask for research to back it up, only to find the client acting "squirrelly" or trying to give you more anecdotal evidence, the client may not be willing to learn.

At the San Diego Technology Incubator, where Orion was principal developer and incubator manager from 1994 to 1996, "coachability" ranked higher on the admissions screening than any other component.

For example, if Orion found shortcomings in an applicant's business plan and gave suggestions for shoring it up, she sat back and watched the reactions. Whether the entrepreneur embraced the idea, suggested alternative approaches or ignored it altogether gave her insight into just how he or she would respond to coaching.

With eight years of coaching experience under his belt, Michael Mount, COO and chairman of the advisory board for BizPlanit in Scottsdale, Ariz., needs a lot of convincing before he views a client as uncoachable. He says coaches and mentors must take personal stock of their own interpersonal style. "I throw the responsibility right back on the coach's shoulders," says Mount. Sometimes the coach has to adjust the dynamics of the relationship or communication. "Depending on the situation I may ask them, 'can we take a time out on the content of our discussion because I am feeling a bit unsettled about how we are conducting our discussion?'"

It can simply take time to make the connection between advisor and client. At Expert Eyes, a Ghent, Belgium-based company that helps U.S. firms make their way into European markets, Steve Lawler, partner/strategy architect, advises the client in market expansion, leadership and management issues. "Because [the process] is both technical and interpersonal, the level of trust must be [deep] for this to be effective." Especially where coaching on personal characteristics of leadership and management are concerned, Lawler waits until the trust level is deep enough.

If you are expecting your clients to put all your suggestions into play, you are expecting too much, according to Collison, who says much of the coaching process is tied to experiencing things for oneself.

"There is a limit to formal mentoring because you are telling somebody about your own experience, or what you know to be true," says Collison. "But by definition, it isn't 'true' for them in the same sense yet, namely because they haven't gone through or lived through that kind of process."

Growing a new company requires flexibility. "If coaches don't understand that, then they will go down the same path of [parents] who think they can control an adult child," says Mount. "Like a parent, the coach's job is not managing or leading or delegating, it's that of advising, persuading and counseling."

The road best taken: From entrepreneur to CEO

A few years back, Jana Matthews, former senior research and teaching fellow and director of learning programs for high growth entrepreneurs at the Kansas City, Mo.-based Kauffman Center for Entrepreneurial Leadership, set out to randomly sample 600 companies, looking for information about the longevity of high-growth companies' leadership teams.

Matthews selected the companies from a database of firms posting $1 million to $25 million in annual sales, and growing at rates of 30 percent or higher each year. The results revealed that for 93 percent of those companies, the founding entrepreneur was either on the board of directors, in the top management position or somehow still affiliated with the company in an influential manner. And, for a full 78 percent of the companies, that person was still at the company's helm.

According to Matthews, there is a clear correlation between a company in which the founding entrepreneur remains involved and that company's success.

"Very few people who start companies are actually able to stay the whole way through," says Matthews, whose new book, Leading at the Speed of Growth: Journey From Entrepreneur to CEO (IDG Books), comes out this month. "They don't become successful CEOs because they don't know what the transitions are," Matthews says. "Clearly, some entrepreneurs have figured out how to make those transitions."

Unfortunately, many more have not – probably because moving from sole proprietor to high-powered CEO is no easy task.

That's where an incubator can help, by anticipating transitions and coaching clients through them. Because business incubation is all about setting benchmarks and expecting clients to meet them, coaching is a valuable tool to help entrepreneurs move into new roles as their companies grow. The incubator manager, who serves as a combination of coach, teacher and growth facilitator, helps set those benchmarks. If the company can't meet them, then it's time to ask the entrepreneur to bring in someone else to run the company or risk not making it at all.

Matthews says that high-growth companies in particular have difficulty with the following transitional hurdles:

Stepping back. Founding entrepreneurs often have trouble stepping away and letting others run with the ball. However, according to Matthews, if the founding entrepreneur continues as the doer and the sole decision maker, he or she "will be the bottleneck and the limiting factor in the company." To avoid that, an entrepreneur must have a vision and a set of values and be able to articulate them to other people. The entrepreneur also needs to bring on multitalented staff to handle what one person can no longer accomplish alone. Central to bringing on the right high-level help, according to Matthews, is having a strong enough ego to bring on people who are better at certain things than the founding entrepreneur. "You have to work with the client to examine [his or her] strengths and weaknesses. [Self-assessment] is one of the hardest things for an entrepreneur to do," Matthews says.

Staying on track. Often faced with more opportunities than time, a CEO of a high-growth firm can easily lose sight of the company's goals and action plan. An incubator manager can help clients look at opportunities and identify those that warrant precious time. "Being willing to say 'no' and chart [a] course is one of the very most important things that is related to high growth and related to successful entrepreneurship," Matthews says. By acting as a sounding board for an entrepreneur who is analyzing an opportunity, an incubator manager can help the entrepreneur decide, "That's an interesting opportunity. In my next life, I'd love to do that. [But] I'm not sailing to that island … I'm sailing to this island, and [that one] is off course."

Taking difficult steps. "The hard people decisions that entrepreneurs have to make will be important for [incubator managers] to coach them on," Matthews says. A founder of a company isn't necessarily a human resource whiz, but inevitably must handle issues such as hiring, firing and evaluation. Complicating matters further, entrepreneurial ventures often start while discussing a good idea over lunch with a couple of buddies. Although the people who are with a company from its earliest beginnings may be great friends and skilled in their areas of expertise, when high growth sets in, the skill sets present may not be the skills sets the company needs. Firing a friend or colleague who has been there since the start is not easy, and coaching can help an entrepreneur identify people who are not making positive contributions to the company and with procedures for letting them go.—BM

Recruiting a coach

According to the 9-year-old International Coach Federation (ICF), it's becoming easier to find good business coaches. The federation's membership has increased eight-fold in the past two years and it estimates that the total number of coaches world-wide hovers around 10,000. The ICF recommends following these coach selection recommendations:

  1. Educate yourself about the coaching process.
  2. Know your client's (or your own) objectives for working with a coach.
  3. Interview three coaches before selecting one. Ask them about their experience, qualifications and skills and request at least two references.
  4. Remember that coaching is an important relationship. The connection between the person being coached and the coach should feel right.

The ICF hosts a searchable directory of its members called the Coach Referral Service (CRS), which makes available information to match the appropriate coach with a client, depending on the client's needs.

For additional information on business coaching, visit: International Coach Federation, www.coachfederation.org; Professional Coaches and Mentors Association, www.pcmaonline.com. —BM

Keywords: coaching clients, effective communication, mentoring program, presentation skills

Contact NBIA

Phone: (740) 593-4331
Fax: (740) 593-1996
340 West State Street, Unit 25
Athens, OH 45701-1565
info@nbia.org