QUESTIONS EVERY ENTREPRENEUR SHOULD ASK
WHEN PEOPLE OFFER ADVICE
http://nzentrepreneur.co.nz - May 2nd 2017
When you know nothing, even fools can sound like geniuses.
This is a vital lesson that all entrepreneurs need to
learn as soon as possible – one that I and other
entrepreneurs I know have had to learn the hard way,
many times over. When you first start out in
entrepreneurship – by this I mean as a founder or
co-founder of your first business – your entrepreneur
knowledge base is likely to be missing many of the
important skills, knowledge and experience required for
success. Often you and your co-founders may have
some industry experience and job experience, but most of
the time you and your team will be missing experience in
at least a few of the following business areas:
- Startup and entrepreneur strategy
- Raising capital
- Marketing and promotions
- Accounting and financial management
- Management and HR
- Systems and process creation
Not to mention just the general entrepreneurial and
business building experience you only get from having
been through the process before. The learning that comes
from experiencing the highs, the lows; the mental,
emotional and physical trials and tribulations that
inevitably come with the problems and challenges of
creating something great out of nothing. Now as a
smart entrepreneur you will have enough self awareness –
through your reading, research and learning – to know
that there will be some skill and knowledge gaps you
and/or your team needs to fill, and you will eagerly
consume any and all information that you can get your
As a smart entrepreneur you will also endeavour at some
stage to seek advice from experts in business building,
and/or specific areas you need help and advice with.
And this is where my warning applies. Because you’ve
never done this before, how do you know whose advice you
should take on board? And how do you tell good advice
from bad or irrelevant advice?
Because while seeking advice is the right thing to do,
taking the wrong advice can be catastrophic. Not
only that, but because you are new, you will find every
man, woman and their dog eager to give you their
‘two-cents worth’. And some of them will want you to pay
hundreds or thousands of dollars for it.
While it’s fairly easy to take advice offered to you by
friends, family and colleagues with a grain of salt
(because you are more aware of their backgrounds and
experience), it can be very difficult to filter the
advice offered by people you don’t know. This includes
all the various kinds of business coaches, business
mentors, consultants, professionals and all the people
you may meet in the entrepreneur ecosystem – other
entrepreneurs, startup mentors, incubator and
governmental advisors, and of course, investors.
This is because you do not yet have enough entrepreneurial
knowledge yourself against which to filter and assess
the validity or ‘usefulness’ of any information or
opinions coming your way. So in the early days of your
entrepreneurial journey, relative to your limited
knowledge, even those who know just a small amount more
than you (let’s call this the ‘knowledge differential’)
can sound like a genius!
Over time, as your own entrepreneurial knowledge base
grows, your ability to filter advice increases. (Some
entrepreneurs call this their ‘bullsh*t meter’, but I
don’t believe irrelevant or non-qualified advice should
necessarily be classified as BS.) So here are five
questions every entrepreneur should ask when people
offer advice on entrepreneurship, along with a weighted
scoring system, to help figure out what you should pay
attention to, and what you might want to ignore.
1) Has this person personally started, built or
turned around a business as a founder or co-founder?
The first thing you want to know is, do they have personal
experience in doing what you are setting out to do, i.e.
starting and building a business? This is important
because giving advice about things you’ve never
personally done is easy. Actually doing it is difficult.
Would you rather take advice about how to climb Mt
Everest from someone who has done it themselves, or
someone who just read the theory? Unless they have
tested and proven the theory they are advising, and
experienced the mental, emotional and physical
challenges themselves, they cannot possibly understand
the challenge you’re facing.
Scoring: For an answer of yes, score 2 points. For an
answer of no, score -1 point.
2) Has this person started, built or turned around a
business with no or little capital, i.e. ‘bootstrapped’?
Building any business is challenging. But building
businesses with no or very little capital is even more
so. If the person offering you advice has started a
business themselves that’s good, but was it a business
with access to capital (i.e. started with plenty of
capital or achieved funding early on) or did they have
to bootstrap it? That is, their only funding was from
personal funds and/or sales revenue. Because starting
and building a business with ‘more’ money is quite
different to starting one with ‘less’ money.
In addition, many mentors and advisors you will meet will
be from corporate or professional backgrounds, or
businesses where resource is plentiful in comparison to
those of startups and small businesses. If they are
going to be advising you on what you should do to make
your fledgling cash- and resource-poor business fly, you
want to know they have experienced the pressure and
emotional turmoil of making decisions and taking action
when there is no money or in-house resource to delegate
Scoring: For an answer of yes, score 1 point. For an
answer of no, score -1 point.
3) How successful were they?
Did their ventures fail or succeed? How long did they
exist before they were sold or closed? How big was their
exit? There is nothing wrong with ventures
failing, as they are a valuable source of lessons and
experience. Most entrepreneurs will fail several times
before they succeed. But hopefully there is evidence of
at least one or two success stories. If someone is
telling you how to succeed in climbing Mt Everest but
they have never succeeded themselves, you might want to
take that into account.
Scoring: If the person has had at least one success (i.e.
made money from selling/exiting a business, or they
still own the business and it is profitable) score 1
point. If the person has had at least one success and
one failure score 2 points. If the person has had less
than one success score -1 point.
4) Does this person have experience, knowledge or
connections in my industry?
Ok, so now you know what entrepreneurial experience and
success they have had, you now need to understand
whether their advice is valid for your particular field
Now if the advice they are offering you is in respect of a
particular business function (for example accounting, or
marketing, or HR) then this is not necessarily so much
of an issue. These are like the ‘hard’ skills of
business, simply a matter of following a proven process;
there is a right way and a wrong way to do things. For
example, calculating a GST Return is the same in any
But if the advice they are offering is anything to do with
whether or not your idea is valid, or how to best
execute the opportunity in your market, or anything
which requires knowledge of your industry – it is
vitally important. Using the mountain climbing analogy,
there may be numerous different ways to conquer Mt
Everest – but would you ask a world class chef how to
climb it? Only if they are also a world class mountain
Scoring: If this person has experience, knowledge or
connections in your industry, score 1 point. If this
person has no experience, knowledge or connections in
your industry, score -1 point.
5. Lastly, what does this person stand to gain?
This is about understanding your advisor’s motivation.
Most of the time people’s motivation will simply be that
they are good people, and they care about you, want you
to succeed and will do anything they can to help you –
including offering their advice, be it solicited or
otherwise. Many of the most enlightened people you meet
will have an ethos of ‘paying it forward’.
On the other hand, many professionals will tell you that
cheap or free advice is the most expensive advice there
is. After all, if the person giving you the advice has
no vested interest in the advice they are giving you,
how can you be sure that it is valid? So at best we need
to apply a neutral outlook to free advice, and let the
scores from the earlier questions speak for themselves.
If the advice is from a professional, that is someone who
makes a living selling their advice, then obviously you
will either already being paying for it… or it could be
that they want you to start paying for it; that is, they
want you as a customer. This can be a double-edged
sword – if they make their money from selling their
advice (e.g. as a consultant, mentor, professional
director etc), there’s a good chance they have some
advice worth paying attention to, otherwise they
wouldn’t be in business. On the other hand, they may
simply want to win you as a customer. The key here is to
look for evidence that the advice they are selling has
helped other entrepreneurs and business owners. You want
references, testimonials, case studies – whatever you
can find that supports their claims of expertise.
If the advice is from a potential investor you need to be
even more wary, because the lure of potential funding
can cloud your vision and cause you to lower your guard.
In your desperation to find money, you may be tempted to
overlook any potential negatives – after all, who are
you to doubt the expertise of someone who has already
made the money you need, right? And don’t forget that,
by necessity, the investor/entrepreneur dynamic requires
a certain element of tension. Both investors and
entrepreneurs want a deal that gives them the best
possible return for the least possible risk. By
definition, the investor wants to ‘win’ from whatever
situation they are engineering just as much as you do,
and again, you need to be mindful of this when listening
to their advice. (If you are seeking funding, I highly
recommend researching how to perform due diligence on
Scoring: If this person stands to
gain financially from helping you and there is evidence
that their advice has helped other entrepreneurs be
successful, score 2. If this person stands to gain
financially from helping you but there is no evidence
that their advice has helped other entrepreneurs be
successful, score -1. If this person has nothing to gain
financially from helping you, score 0.
As far as this suggested entrepreneur
advice scoring system goes, the maximum anyone can score
is 8, and the minimum is -5. By no means do I believe
that this system will enable you to differentiate good
advice from bad advice – it can’t – but hopefully it
will provide you with some sort of framework to figure
out how much stock you put in the advice that you are
To this end, it should be fairly
obvious how much trust you put in advice from each end
of the scale. Advice from entrepreneurs who have ‘walked
the talk’ gets the highest weighting. I’ll let you make
up your own mind about how to treat advice that falls
somewhere in between. (Which includes the advice I am
giving you right now, which by my calculations is only
likely to score around 4–6 depending on your industry!).
While at their core entrepreneurs need
to be optimistic, trusting and open when seeking and
taking advice, this needs to be tempered with a healthy
dose of cynicism – or perhaps a better way of looking at
it… wisdom. Taking full accountability for the advice
you seek and choose to act on is key to your learning as
Because as the saying goes, “Fool me
once, shame on you. But fool me twice, shame on me.”
Richard Liew is the founder and editor
of NZ Entrepreneur magazine and Espire Media. He is an
entrepreneur specialising in sales and marketing, and
holds a bachelor of commerce in finance from the
University of Auckland.
May 2, 2017