Obviously, receiving one of the Ernst & Young Entrepreneur of the Year awards means a person is doing something right.
But what that "something" is can be debatable and often different for each entrepreneur.
"It's the whole ball of wax," said Becky Lunceford, founder and chairman of Lindon-based For Every Body, a 2006 EOY award recipient for the Utah region and a judge of this year's competition.
"It's hard to separate one thing from another," Lunceford said. "You just have a feeling about the ones that really stand out."
Several of those standouts will be selected from among 25 finalist companies and honored with EOY awards during the annual gala at 6:30 p.m. Thursday in the Grand Ballroom of the Salt Palace convention center. (To read profiles of each of the finalists, look inside today's Money section.)
The people who judged those finalists said what's crystal clear, at the end of the day, are the myriad ways in which companies can fall short of the degree of excellence expected of Utah's best entrepreneurs.So for all the nascent entrepreneurs in this enterprise-rich state, here is a cautionary primer of what NOT to do if you strive to follow companies like Backcountry.com, Stampin' Up!, Overstock.com and LoveSac to EOY glory.
Do what everybody else is doing.
This year's finalists don't just offer good products or services. Many have literally built a better blender or home security service or retail store. Or they've found new ways to sell insurance, software and doors.
Innovation and creativity play a part in deliberations, said judge Mark Burton, founder and chief executive officer of Ogden's International Armoring and a 2006 EOY winner. Companies that lack those qualities won't be rewarded.
"It might be because their approach to how they did business was not very inventive or necessarily original," Burton said. "Maybe the background of the company was not quite as strong as some of the others."
A number of this year's finalists excel at what Burton called "staying ahead of the curve."
"Some of them have reinvented their companies," he said. "They were going down one path, and they discovered another path with so much more potential. To change your approach, especially if it's working, is a real risk. You have to have some vision to do that.
"It's like this: If you're going along making $10, maybe you're happy with that, but then you see an opportunity to make $100. That's huge, and if you're really going to be an entrepreneur, you take the step."
Other companies, he said, created markets where none existed before or found a business model no one else had seen."They found a new way, and they did it very well," Burton said. "There's some very profitable companies out there."
Don't worry about profits.
Ah, profits. Money's not everything, of course. But it does make the business world go 'round.
"They need to show profitability; that's the reason you're in business," said Lunceford. "Also sustainability: Is this a business that's only going to be here for a short time because they have a product that's going to be outdated or out of style soon?"
Burton said strong financials are always impressive, though some companies' growth is so explosive that it most likely won't last.
"We discussed one company, and we just looked around at each other and said, 'How do they do that? How do they produce that type of margin?"' he said. "And you do ask, will they be able to sustain that, and probably they won't. But it's impressive to see it."In addition to strong sales, Burton said, businesses should reflect sound financial practices across the board. And, he added, most if not all of the 2007 finalists do that: "This is picking between one A+ and another A+."
Don't worry about people.
However, even the best sales figures won't help a company that doesn't excel at public and employee relations, judges said.
"The company culture definitely plays a part in it," Lunceford said. "You want to know it's a culture that is as rewarding to employees as it is to customers."
Company culture is one of the criteria specifically mentioned in judges' guidelines, Burton said.
"It's how their employees view the entrepreneur, the respect level the entrepreneur has among employees," he said. "I think that all goes hand in hand. You do find companies out there where that is not the case, but I don't think we found that in any of the organizations we dealt with (as EOY judges).
"But there were some that had done some unique things that were interesting in the approaches they have, not only to retaining employees, but to getting better production or performance."
In fact, Burton said, learning about the best practices of some of this year's entrants led to some soul-searching for him."We pretty much had a corporate culture (at International Armoring) that I enjoy, that I like and feel comfortable with," he said. "But I will tell you that as I went through the judging process and saw what these companies are doing, I did evaluate myself and think, 'You know, I might be able to improve in this area or that.' From that standpoint, I learned."
Try too soon.
Sometimes there's just not enough time for an entrant to learn what it takes to be a winning entrepreneur, Burton said.
"There were a couple of (companies) we looked at that probably were too early to be at this stage," he said. "They're a great company, and probably a couple more years, or maybe even just a year of proving their business model, is all they need."
Early success doesn't always merit EOY recognition, Burton said.
"Maybe they've had success so far, had success funding their companies, they've been able to develop a business plan," he said. "(But) following their business model and having success doesn't necessarily qualify them for this."
It's possible, too, that a company was simply competing in a crowded and generally excellent category, he said."There were something like 60 companies we got files on. To bring them down to the 25 finalists was extremely difficult," Burton said. "When we got down to it, maybe their category was so strong this year that there was another company that maybe was around a little bit longer or did something more unique."
Don't try at all.
But that's no reason to give up, Burton said. True entrepreneurs keep the faith, forging ahead with their dreams despite monumental obstacles.
"Some of the companies were obvious finalists because of their performance, because of the story of these individuals and what they have accomplished many with very little resources but just sheer determination," he said.
This area is where checklist-type judging won't do, Burton said.
"You can't go dollar for dollar, necessarily," he said. "There are some great stories in there, and that had a little bit of an impact on us. The stories weren't the primary (criteria), necessarily, but when you weigh all the components together the stories can become more meaningful."
Staring down possible failure teaches an entrepreneur what she's made of, Lunceford said.
"You have to be able to handle constant, never-ending change," she said. "You have to go where the market is and not let it make you sick and lose sleep. Taking chances and being dynamic is part of what it takes to make it."
In the end, the real lesson might be an old chestnut: If at first you don't succeed, try, try again.
"Just because somebody doesn't win the award doesn't mean they're not a great business; they're all successful businesses," Lunceford said. "Just to be nominated shows they're doing something right."
Burton's company was a three-time finalist before winning last year, and he said he learned something each time."It wasn't based on one criteria," he said. "Some companies had very strong revenues but did not make it as finalists. My recommendation for them is to try again. Keep doing what you're doing, look at what you can do better and try again next year."
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