Managing Expectations

Hi friends,

There was a recent article regarding entrepreneurs operating in Singapore where they have the tendency to unrealistically value their firms. They tend to compare themselves to the deals in China and India where the market are so much bigger.

When I read that article it dawns upon me that entrepreneurs, in many cases are like scientists and engineers where they always view their invention to be the best and hence will command high commercial value. Generally it is not common to find a scientist or engineer who view their inventions to be inferior or useless. And this is quite understandable. Having pour in (sacrifice) so much time, efforts and money (though some comes from various funding) it is not difficult to understand the close bond and passion that is being developed between the inventor and its invention. It is almost like a parent who will always believe deep in their heart that their children are good (in its own way). Hence in a similar way, whenever it comes to putting a value on their inventions, it is so easy to look at the vast market (especially in China and India) to develop a value that will be attracted by their product or services. However such entrepreneurial approach, without a clear understanding on the market dynamics can be a downside to the entrepreneur as the venture firm or any prudent investor for that matter will not buy into that potential without clear market indications. Entrepreneurs need to know how to manage their expectations. Whilst it is the goal of a firm to maximize return on their investment, unless they have done proper market due diligence and are able to convince the investors that their market potential is realistic, it will be a tough sell. Managing expectation requires one to be knowledgeable of the market and be open (to himself) to any adjustment that is needed. In this way not only are they able to attract many suitors for their businesses but also as a result of that, be able to bump up their valuation due to competitive bidding. Since this is due market forces of willing buyers and willing sellers, the entrepreneurs will come up as the winner at the end of it. Managing expectation is an important ingredient in any business dealings and the mastery of it will prove to be beneficial in the long term.


Looking out:

Small web application team who have a neat idea to develop into a potential product or services.

Internet marketing business selling into emerging markets.


Have a good weekend ahead
KH