TriNet CEO Martin Babinec Discusses "What an Entrepreneur Needs to Know" on Acclaimed Radio Show Tomorrow's Business
SAN LEANDRO, Calif. (March 30, 2005) TriNet CEO Martin Babinec recently discussed "What an Entrepreneur Needs to Know" with Steve Mandell, host of the popular program "Tomorrow's Business." The show aired in its entirety March 21st on Baltimore's Business Radio WBIS 1190, as well as in selected segments on 103.5 WGMS in Washington D.C. The conversation centered around lessons learned from Mr. Babinec's entrepreneurial journey—his 16 years founding and building a profitable business.
Key to the discussion was Mr. Babinec's distinction between a lifestyle business and an enterprise company. Mr. Babinec explained, "A lifestyle business is where the entrepreneur does not have to answer to others and has greater control, but the company is constrained by the amount of cash flow that can be generated and remain in the business subsequent to compensating the owners. Typically, lifestyle companies are not being driven for high growth and do not scale to a large size."
An enterprise company, in contrast, might achieve scale by getting an infusion of capital beyond its own self-generated cash flow. That outside capital is typically put to use building a team, developing infrastructure, and opening up more sales opportunities—all of which help grow a revenue base faster than the company would otherwise achieve by itself. As a result, it provides a path for investors to get a return through an IPO or the eventual sale of the business for a much larger price than that which might be paid for a lifestyle business.
An entrepreneur should make the decision upfront: will he or she create a lifestyle or an enterprise business? But making this decision is harder than it seems. At the outset, Mr. Babinec himself believed that TriNet was going to be a lifestyle business, but two years later shifted paths as he came to be more aware of the long-term competitive forces at work in the HR outsourcing industry.
"Anyone who has founded and grown a business over 16 years has something in their hands which is different than what they expected at the beginning of their journey," Mr. Babinec explained. "It was no longer possible for TriNet to remain a lifestyle business, and I had to adapt my vision for the company accordingly."
Other differences between the two types of companies exist as well. "Most company founders have one area of expertise," said Mr. Babinec. "It could be knowledge of sales, finance, product or business processes, but they really need all of these, plus leadership skills. I n a lifestyle business, it's not uncommon to have all the top roles consolidated in the founder. In an enterprise company, the entrepreneur must pull together a team with functional expertise in these and other categories if the company is to indeed grow to an enterprise level."
Mr. Babinec offered additional tips for entrepreneurs: gather information from peers who may have been through what you are experiencing, look at the business through the eyes of a dispassionate investor, and dedicate some quality time towards your own learning—read, go to seminars, conferences and classes—even in the face of constant pressures to use the time exclusively for growing sales and resolving internal challenges.
When asked if entrepreneurs can be taught, Mr. Babinec replied "Yes, absolutely! Entrepreneurship isn't a genetic thing. The learning environment matters more."
Audio files containing the entire show can be accessed here: http://www.wgms.com/index.php?nid=35&sid=191567
About TriNet Group, Inc.
Founded in 1988, TriNet (www.trinet.com) delivers comprehensive human resource services to small and medium-sized companies. Its offerings include human asset administration, employer risk management, online HR services and support, payroll processing, tax compliance, workers' compensation, group health and welfare products, and strategic human capital consulting services throughout the United States and Canada. More than simply an HR services provider, TriNet contractually assumes certain legal and financial responsibilities regarding employer rights, legal compliance and risk management.