Unlocking Startup Success: The Vital Role of Mentorships

Are great business ideas sufficient to build successful startups? No.

Founding, building, scaling, and fundraising for startups are challenging undertakings. Every step of the business fundraising life cycle from pre-seed to IPO test the entrepreneurs’ expertise and skillset.

However, while the journey is challenging, Bahrain’s start-up ecosystem provides the necessary support and guidance.

Launching a startup, for the first time, can be a daunting exercise. Founders are faced with numerous key decisions, which can impact the success, trajectory, and sustainability of their business. For that reason, mentorship is essential for young entrepreneurs and new founders, so that they can have the backing of an industry expert and/or a more experienced entrepreneur.

Having worked with plenty of startups in the region, in my experience as a business coach, mentor and as an entrepreneur myself, I believe that mentorship is useful at every business stage, but for young entrepreneurs I find it is particularly useful in the initiation, strategy, and fundraising stages.

A survey conducted by UPS found that 70% of entrepreneurs who received mentorship had firms that lasted at least five years. In addition, Endeavor Insight found that 33% of top-performing startup founders had all been mentored by successful entrepreneurs.

Initiation Phase:  Driven by passion, ideas are powerful, but the “challenger” role of the mentor allows the idea to be tested and refined to ensure it is better suited for the market and can drive profitability in time. Mentorship at this phase helps avoid wasting valuable business resources and with the support of expert advice redirects efforts towards the right strategy.

Strategy:  how the business makes money, the most appropriate business model and growth strategy to adopt along with decisions linked to expansion, hiring, revenue generation (amongst others) are areas essential to the success of the business. Often the entrepreneur might not have experience or knowledge in all these areas, and thus through the help of a mentor, can receive the require guidance and support with those pivotal decisions. Streamlining the decision-making process with a strong strategy are core factors to healthy business growth. Additionally, while seeking growth, entrepreneurs might be keen to grow fast, burning a lot of cash, pressuring their cashflows and threatening their growth potential. Again, choosing the right pace and adopting the most suitable strategy are key areas where mentors can support the founders.

Fundraising:  Attracting investments and raising funds requires a very specific skillset. I’ve seen multiple startup founders, that seek a lot more (or much less) funding than they require for their next phase of growth and/or they are unclear about how their funding will be spent or the milestones that they are promoting to the investors.

Oftentimes they also lack the expertise required to pitch their idea to the investors thus end up attracting the wrong investors (yes, it’s not just about raising funds, it’s bringing in the right type of funding and investments). Here, mentors work closely alongside the founder on the growth strategy, assumptions, key spending decisions and the right funding options available that are both cost effective and satisfy the business needs.

Every startup founder has the goal and dream to sustain and lead their business to success, a UPS survey showed that mentored startups have twice the survival rate of non-mentored companies, and 92% of small business owners agreed that mentors have a direct impact on the growth and survival of their business. Data of US businesses survey reflected those businesses receiving mentorship increased their annual revenue by an average of 83% compared to 16% for those who don’t use mentorship. Statistics reflect what we see on the ground, that mentorship can be a very valuable asset to startup success.

It’s important to note, that no entrepreneur “knows it all”, it is essential that they invest in their own learning and seek the right kind of support at every stage of their business. Both Mark Zuckerberg and Bill Gates have sought advice from Steve Jobs and Warren Buffet respectively over the years, that’s to show that while an entrepreneur can be a strong business leader, they can save time, effort, and money by seeking the right kind of support as they grow their business and build strong teams.

Author: Noorhan AlZann, CFA, MBA – Founder Noor Coaching WLL