The vast majority of the articles included in the newsletter are geared towards businesses and organizations. I thought we’d take a break from that for a week to simply explain a major point of confusion with many community members when they are looking at the actions (or inaction) of local property owners, businesses and organizations.
Most people view business or property ownership from an external, “sterile” perspective. Decision-making in businesses, for properties, or within organizations is based in their sense of logic; consequently, they don’t always understand when entrepreneurs don’t act as they think an entrepreneur should act like. They ask questions like, “why wouldn’t they just sell the business/property?” or “why are they concerned that they are too busy?” and even more internal questions about hours, types of payments received and inventory management. What people don’t understand is that decisions are sometimes made from a non-business or more emotional perspective. When we run into that scenario, we refer to those people as “artisans”, for lack of a better term.
The differences between artisans and entrepreneurs are many, and some people display elements of both decision making types. Each has their own strengths and weaknesses, and each responds to opportunities and threats differently. It is important to determine which type of business you are dealing with (or which elements within the business you are dealing with) to determine your level of interaction and their staying power. Here are a few key differences:
1. Entrepreneurs build businesses for their targeted clientele that they, themselves are passionate about. Artisans build businesses that they are passionate about, and they hope others are too (just not too much). Entrepreneurs look for market gaps that are large enough to create a profitable business venture or a sustainable organization, then they acquire the necessary resources to effectively take advantage of the market opportunity. That doesn’t mean they don’t enjoy the category of business they are working in or have working knowledge of that area (they consider themselves a resource, too), but their overriding goal is to make a profit within the market. Artisans look at the things they love or love to do and figure out how to make a business out of it. Because artisans are generally fairly interesting and well-connected people, they exist in “bubble” groups of like-minded individuals and hope that the bubble is big enough to garner support. If their “bubble” contains individuals that think more like an entrepreneur and can freely share concerns/opportunities, an artisan can be more successful.
2. Entrepreneurs are focused on succession planning to aid in the continuation of a business and to maximize profitability. Artisans either don’t want someone else owning “their” business, or they are such an integral part of the business that it loses almost all of its value without their involvement. To artisans, a business or organization is an expression of themselves. They can’t see the business ever existing without them, so they typically don’t incorporate realistic transition planning into their overall strategic plans (some don’t even have overall strategic plans). Entrepreneurs always plan to transition the business. Some just like to do a lot of different things (we call these people “serial entrepreneurs”) and they will switch between business types every few years by selling off their former venture and investing in a new one. Or, entrepreneurs will know how to effectively “kick out” of a business to minimize losses or maximize gains as they either expand another business or go in a different direction. Although both types may have some sentimental attachment to the business or organization, entrepreneurial businesses are built to function in a “turn key” environment and artisan businesses typically can’t function long term without the artisan.
3. Entrepreneurs fit their store hours and internal processes to fit the public. Artisans fit their store hours and internal processes to fit their lifestyle. Entrepreneurs look at hours and services from the perspective of maximizing inflows for the business. They want to be available when consumers are wanting interaction with them, and provide services that make it easy to spend or donate. Artisans form hours and amenities based on their lifestyle and how they want the consumer to interact with them.
4. Entrepreneurs make calculated decisions between quality and profit margins, with profit margins coming first. Artisans make calculated decisions between quality and profit margin, with quality coming first. This is one of the biggest differences between artisans and entrepreneurs… Artisans will often “take the hit” on products and other costs to fit their own internal criteria and have margins that suffer because of it. Entrepreneurs will often focus on margins and try and find comparable alternatives that improve margins and preserve profitability. The positive for the artisan is that the higher quality and understanding of niche products/services inspire more loyalty. The negative for the artisan is that the decrease in margins bleeds away profitability and makes long term sustainability difficult. The entrepreneur may have more staying power by focusing on margins, but they also become more homogeneous and have to build brand loyalty through dedicated marketing plans.
5. Entrepreneurs talk in terms of adding services or amenities to fit the needs of their clientele. Artisans typically view doing “extra” as something that cuts into their personal time. Events, activities, and other “beyond working hours” types of interaction represent marketing opportunities for the entrepreneur. Those same issues cut into “personal time” for the artisan. The Artisans will spend “personal time” strengthening their own internal network instead of broadening a base that may represent a lower return on investment.
6. Entrepreneurs view marketing as an investment, and seek to invest in advertising mechanisms that are part of a cohesive branding strategy to build traffic and sales. Artisans view marketing as a waste of precious resources and rely on internal networks to further their message. This trend is one of the most damaging to the artisan. Stating “I don’t have the money to market my business” is essentially eliminating one of the major tools you need to build resources for vital business activities. Artisans have an intuitive ability to connect with their target market that remains dormant without a cohesive brand strategy that makes actual sense. Artisans depend far too much on social media, and with the declining effectiveness of page posts, coupled with a distinct lack of brand awareness that exists in many artisan business, problems will inevitably develop. Entrepreneurs focus more on marketing because they have to. The necessity to stand out to a given customer base through constant repetition of prevailing themes that are important to a target market is critical to their long term success. It’s ironic that the artisan should have the competitive advantage when it comes to marketing because of their inherent uniqueness, but because of personnel and decision making limitations they almost always lose this competitive high ground. Which brings us to the next point:
7. Entrepreneurs train and build human resources based on people with solid foundations and willingness to learn. Artisans rely on friends, or friends of friends to fill their staffing needs, even if their skill sets don’t synchronize with the needs of the business. Because entrepreneurs attempt to build “turn key” businesses (businesses that can function with or without their presence) they typically have well-defined training programs for staff. Artisans have much less “definition” to their different employment types, and their training really depends on who they hire, what they are needed for at the time and the preexisting personal relationship. Sometimes, the fact that an artisan business has people of diverse backgrounds that aren’t technically trained in a specific area is an advantage; they view problems in such a different manner that unique solutions are found. However, many times conclusions are made about the ability level in an artisan staff that makes them “responsible” for a critical area of the business that they really shouldn’t be involved with (for the good of the business). Entrepreneurs often tend to discourage innovation because they “slot” employees for certain duties without giving them the personal fulfillment that accompanies the creation of a new project that they manage from start to fruition. Both the entrepreneur and the artisan must be cognizant of their management style and the ACTUAL skills of their staff to achieve long term success.
8. Entrepreneurs put the long term health and viability of the business first, they understand that achievements come through hard work and they view success through metrics. Artisans take business decisions in a series of short term “chunks”, they don’t always mind hard work (as long as it doesn’t conflict with the rest of life) and they measure success in how they feel about their lives and the business/organization. Entrepreneurs are very money and brand conscious. They tend to look at the cash flow implications of their business decisions and engage in longer term planning for alternative marketing, events, expansions or other activities. The longer term mindset of the entrepreneur tries to project and intersect with market trends because they can’t adjust quite as quickly as an artisan (but they are a LOT quicker to adapt than a hierarchical organizational entity or a corporation). The artisan thinks short term, and usually takes on projects in a highly compressed time frame. They “go with their gut” a lot rather than tying data to decisions. They make look at register totals for a day or week, but they often have trouble associating metrics with their own marketing or business efforts.
9. Artisans hold on to people/things for emotional reasons. Entrepreneurs can let people/things go for business reasons. Artisans will generally shut their doors rather than execute a sale (in a realistic fashion). They will often hold onto staff (or have them in positions they aren’t qualified for). Artisans generally create more loyalty among their staff because of the emotional connections they engage in, and their employees tend to showcase more passion for the business and they are better advocates than employees of other business types. However, when an employee exits an artisan business on bad terms, sparks likely fly… Entrepreneurs will look at staffing as an input and make decisions accordingly. They will sell a business or a portion of a business for the right price and tend to view business development as asset development.
10. Artisans tend to create things that have a phenomenal short term run. Entrepreneurs view each opportunity as something that builds long term capacity to grow the existing venture or to form a new one. When people talk about short term burn out, they generally talk about artisan businesses. Some artisan businesses have a long term existence, but they coast with an owner that’s been burnt out for a long time and lose substantial value over time. They typically start a little slower, reach tremendous heights and then have trouble building a structure that allows them to evolve. Entrepreneurial businesses follow curved growth patterns that have growth acceleration or deceleration that corresponds with each reinvention of their business and their ability to adapt. Entrepreneurial businesses generally don’t “boom” or “bust” as quickly as an artisan business because they have a more strategic growth pattern in mind.
Now, when you look at a property that someone “won’t let go of” or a business closes that could have probably been sold with “blue sky” or businesses make decisions that you don’t quite understand, you may be able to empathize a little more. Businesses and organizations are made of people. People bring their own values and experiences to their businesses or organizations. Both entrepreneurs and artisans have their pros and cons, and if we have a better understanding of where each group is coming from, we can better determine how to help and interact with them.
See this article and MUCH more in this week’s Emporia Main Street E-newsletter!