Mentoring for Business Owners: What It Brings and How to Find a Mentor

Do I need a mentor as a business owner?

Owners of small businesses make many decisions alone. Employees are not the right people for every worry, the tax adviser sees only part of the picture, and within the family the subject quickly becomes personal. The wish for someone who has experienced a similar situation is therefore widespread.

Mentoring promises exactly that. At the same time the term has become blurred. It is used for paid programs, for coffee meetings with an older colleague, and for consulting offers. The guiding question of this analysis is: what does mentoring demonstrably do for business owners, who is it suited for, and how do you find a mentor who actually helps you?

To answer it, I first clarify the term and distinguish it from related forms, then present a model of mentor functions, examine the findings and two views, and end with an approach for the search.

What is a mentor, and how does he differ from a coach, consultant, and advisory board?

In this context a mentor is an experienced entrepreneur or executive who supports another entrepreneur over a longer period, usually without pay and without authority to give instructions. The person supported is called the mentee. The mentor does not prescribe solutions; he shares experience, asks questions, and occasionally opens doors.

The distinction matters because each form answers a different question. If you have a concrete problem in accounting, you need a consultant. If you want regular, binding feedback on running the company, you should consider an advisory board as described in the article An advisory board for the Mittelstand. A mentor fits when the issue is your role as an entrepreneur itself: decisions, doubts, and the path from founder to business owner.

The model: three functions of a mentor

In the 1980s the organizational researcher Kathy Kram described two groups of functions for mentoring within companies: career support and psychosocial support. The Canadian researcher Étienne St-Jean examined and adapted this model for entrepreneurs. He drew on focus groups with 51 mentees and 8 mentors and confirmed the result with 360 participants of a mentoring network in Canada that had paired more than 3,500 founders with experienced entrepreneurs since 2000 (St-Jean 2011). He distinguishes three functions.

1. Career-related function

   The mentor helps think problems through, offers pointers from his own experience, makes contacts, and helps assess one's own situation realistically.

2. Psychological function

   The mentor listens, encourages, takes doubts seriously, and helps cope with setbacks. He is a confidant outside the business.

3. Role model function

   Through his own example the mentor shows how an entrepreneurial role can be filled. The mentee compares himself with him and learns by observation.

The model is useful because it sharpens the question "What do I expect from a mentor?" If you mainly want professional advice, look for closeness to your industry. If you mainly need someone to talk to about doubts, look for discretion and listening. If you are looking for a role model, look for a life path you would like to follow yourself.

What does research show about the benefits of mentoring?

In a second analysis of the same 360 founders, St-Jean (2012) examined which parts of the relationship foster the mentee's learning. The career-related function contributed most strongly to learning, followed by the psychological function and the role model function. For these functions to work, trust and perceived similarity between the two were needed. Both were more likely to develop when the mentee opened up and also talked about difficulties.

St-Jean places mentoring within a broader movement. In the United States, according to his account, the SCORE program supports small businesses through a network of more than 13,000 volunteer mentors; in France the France Initiative network counts almost 5,000 volunteer mentors. Such programs rest on the assumption that founders learn mainly informally, through experience and conversation, and that they often lack people to talk to.

A second finding calls for caution. St-Jean, Radu-Lefebvre, and Mathieu (2018) examined in the same Canadian sample how mentoring strengthens entrepreneurial self-confidence. It worked best for mentees with a less pronounced learning orientation who felt similar to their mentor. For mentees with a very high learning orientation, self-confidence declined as support became more intensive. One interpretation by the authors: those who learn on their own anyway tend to read very close support as a sign that they cannot manage alone.

The limits of these studies are clear. They are surveys at a single point in time, not long-term observations, and all participants came from one program in one region of Canada. Whether mentoring improves revenue or survival cannot be derived from them. What is supported is the link with learning and self-confidence. A small qualitative study by Nabi, Walmsley, and Akhtar (2021) with 18 students in the United Kingdom who were mentored by entrepreneurs found the same functions: expertise, role model, and emotional support.

A good mentor does not make your decisions for you. He makes sure you make them with your eyes more open.

Two views: a mentor or paid support?

The first view considers the unpaid mentor superior. He has no interest in prolonging the relationship, he speaks from his own entrepreneurial experience, and he can afford to be frank because he has nothing to sell. St-Jean's studies show that precisely this experience delivers the largest contribution to learning.

The second view stresses the weaknesses. An unpaid mentor is hard to hold to commitments. His experience is a single biography formed at another time and in another industry. If you listen to only one mentor, you easily adopt his blind spots. A paid coach or an advisory board, by contrast, is committed and contractually bound to clear tasks.

My assessment: the two forms compete less than it seems. A mentor is strong on the role of the entrepreneur and weak on oversight and commitment. An advisory board is strong on oversight and weaker on personal doubts. For most owners the sequence is what counts: early in one's entrepreneurial life rather a mentor, and as the business grows, additionally a body with clear tasks. The finding on learning orientation adds to this: a mentor should provide as much support as the mentee needs, not as much as he can offer.

How do you find the right mentor?

Three criteria can be derived from the findings: professional closeness for the most important function, perceived similarity for trust, and your own willingness to speak openly. Where you find such a person depends on region and industry. There are some typical routes.

• Your own network: former customers, suppliers, or entrepreneurs from associations whose path you know. How to maintain such contacts deliberately is described in Networking with a plan.
• Chambers and associations: German chambers of industry and commerce (IHK) and chambers of skilled crafts sometimes broker contacts or refer to programs.
• Volunteer programs: associations of retired executives, for example under the name "Alt hilft Jung" (old helps young), or the Senior Experten Service offer support on their own terms. Conditions change, so ask directly.
• Entrepreneur circles: peer exchange groups in which several owners advise each other complement a single mentor with several perspectives.

The Mentor Test: five questions before an arrangement

• Which of the three functions do I need most urgently: advice, backing, or a role model?
• Has the person experienced a situation similar to mine, such as growth, succession, or a crisis?
• Do I feel understood after the first conversation, or lectured?
• Would I be willing to tell this person about a mistake that embarrasses me?
• Have we explicitly agreed on rhythm, duration, and confidentiality?

How does the collaboration succeed?

A mentoring relationship needs fewer rules than a consulting contract, but a few agreements help. What has proven useful is a fixed rhythm, such as a meeting every four to six weeks, a topic the mentee sets in advance, and an agreed term of, for example, one year, followed by a check on whether both want to continue.

A useful tool for preparation is the decision journal. If you have written down your expectations before a decision, you can discuss them with your mentor and review them together later. Especially for founders who are only just learning what can go wrong in the first years, it is worth reading Why young companies fail.

The next step

1. Write down which of the three mentor functions you are missing most right now.
2. Make a list of ten people who have already mastered a situation similar to yours.
3. Approach two of them with a concrete question instead of asking "Will you be my mentor?"
4. After each conversation, go through the five questions of the Mentor Test.

A concrete question is the better start because it commits neither side. A good conversation often leads to a second one on its own. How your role changes as the business grows and what you then need a sounding board for is described in From founder to business owner.

Conclusion: what does mentoring bring business owners?

The opening question was
mentoring demonstrably does for business owners, who it suits, and how to find the right mentor. The answer: according to the available studies, mentoring fosters learning and self-confidence, mainly through career-related advice from personal experience. Whether it improves revenue or survival is not supported. It is particularly suitable when the issue is the role as an entrepreneur, less so for binding oversight. And it works best with trust, perceived similarity, and support that is no closer than the mentee needs.

You rarely find a mentor through a single request. You find one through a list, a few good questions, and the willingness to speak openly about your own difficulties. That openness is, in the end, the larger part of the work, and it lies with the mentee.