First-time Entrepreneurs, Be Aware of these 50 Things
Don’t make a business plan where you target to get a few percentage points of a multi-million of billion market, and you think it’s going to be easy (or “how hard can it be”). For example if you say search engine business is multi-billion dollar industry and you can make a search engine that can achieve 1% market share in 1 year. That’s complete bs.
Do try and get as much feedback on your business plan as possible, especially from potential target customers. Don’t take any criticism personally. Absorb it constructively and discard it if you don’t agree with it at all.
Get few good months on evaluating your idea and all the factors around it. It’s not a bad thing if investors don’t like you idea, or they find its crazy. It means you may have the potential to change something.
Don’t do a startup for the money. It wont take you too far. You must feel very passionate about the idea and the difference it will create, because start-up is very very tough and only passion can take you through those tough days.
Defined quantifiable goals for product releases, fund raising, client revenues etc. Regularly measure them and adapt your business plan as required.
6. Try to have a complimentary founding team. example, if you are good at technology get a business guy and a marketing guy. At least 2, maximum 4 co-founders should be good (any more become tougher to manage)
7. You must be able to trust your co-founders and be comfortable working with them (try to have co-founders you have worked with in the past). Several startups fall apart due to inability for co-founders to come together as a team
8. All co-founders should have well-defined roles and responsibilities. The CEO should be chosen and re-evaluated unanimously and should be the one driving the company’s vision and agenda. He must take everone’s ideas into discussion and be able to make objective decisions
9. CEO must set high standards and be able to lead by example. He must be a good sales person with vision for the product / service and the company.
10. Cofounders should get equity split as appropriate (does not need to be even split) and the equity should be vested over a period of time (typically 4 years sound right).
11. Try and seek favours from senior industry professionals and have a Board (it’s easier to get Board of Advisors than Directors as advisors carry less or no legal responsbility)
12. Do not compromise on first few employees hiring. Avoid the tendency to hire someone quickly so as to get started.
13. Share equity with the key team members once they prove their worth (also have their equity vested)
14. Hire people who are comfortable to work with, strong polarizing personalities won’t work.
15. For the above 2 points, you may have to interview a lot of candidates (on average, at least 10 per position)
16. You will need to create an amazing pitch on why such good candidates should join you earlier. Do highlight the value of learning for those guys.
17. Early hires should be generalists and very smart guys. No matter how much you think you know what you need, you dont know until you do it. Generalists can adapt and work towards the right solution earlier.
18. Once the product / services are built, bring in the experts to drive it forward to another level.
19. Team fit should be the first and undisputed attribute you should have in all team members.
20. Firing will be tough part of your life, but you will have to do it. Do it professionally as and when required.
21. Have clear accountability of tasks for all team members including yourself, and do regular reviews (atleast quarterly).
22. You are likely to be hated by some team members, and others around. Get used to it. More you succeed, more critics you will get. It’s natural human tendency to criticize others of something they cannot do.
23. Keep your team well aware of overall goals, have open discussions with them, motivate them and keep them as happy / comfortable as you can. Be very transparent around the company’s challenges and goals.
Running the Company
24. Find outsourced accounting / finance, legal and other related operations team to help you out. As long as it works, its fine. Spend bare minimum time on it.
25. Keep the HR part to yourself, retaining a motivated team is a key to success.
Investors / Fund Raising
26. You may need to interact with different kinds of investors throughout the life cycle of your start-up. Have one of the founding team members spend good time on investor relations.
27. Don’t expect investors to be as passionate about your start-up, or expect too many efforts from them. They care for their investment and the returns only.
28. Learn to deal with investors, get advice from other entrepreneurs. For example, – Investors are buying an idea, a business opportunity from you …and they get stuck into hypes (like e-commerce where all investors chased the same dream for a long period) – they get 100s of business plans every week, you need to find a way to stand out of the crowd – try to get introduction to senior investors (rather than junior guys at VC firms) – investors talk to each other, so do not try to lie to them. If you are smart, you can manage them carefully and make your investment deal competitive
29. Do not get too hung up on the company’s valuation or over raising funds you do not need. Typically larger fund raiser reduces your cost control lean mode of functioning.
30. Do not take holidays immediately after a fund raiser, it may give a wrong impression to the team as well as investors.
31. For product development companies, be focused on short term goals as well as long term deliveries. Have weekly release processes.
32. Your offering should help your customers dramatically. Either by cost, or by offering better product / service, or helping them get more business, or some other pain point. Customers wont buy another “me too” product if there is no major benefit.
33. In earlier parts of product development, get a prototype out with 20% of the effort and getting 80% of the product. Do it well, and do it fast.
34. The explanation of your product, its distinct features should be simple. If you can’t simply explain it and get your clients’ eyes lit up, you won’t go too far.
35. Be willing to adapt / pivot in case your product / service does not sell after a defined period of time. Do regular reviews of your business progress (monthly / quarterly) and change the plan as required.
36. Understand the difference between a small feature you add, versus a defensible tough to replicate product you create. – On one side, Competition is out there with better funding and existing clients. – On the flip side, do not be afraid that larger companies like IBM will copy you.
37. Respect competition and try to stay close to what’s happening in the market. Sales
38. Sales and clients are most important make or break factors for a startup. If you can get client revenues, you can fix all issues within your startup and make it succeed.
39. Selling is likely to the most tough job. Best is to try and sell as you build. – Your target clients dont have time, they dont need to deal with alternate vendor, and they cant be bothered to even hear you out.
40. Try to get early customers to engage with you in building the product. Its the best way of proving the concept and making a relevant product. 41. Be open to business partners as well. For example, If your startup is good at products, be open to finding a business partner who has great distribution.
42. Be objective around your product / service, its only as good as customers say it is.
43. Find the right balance between hearing what customers want, versus what you want to build as the future. If you are innovative, most customers may not follow your vision early on.
44. Selling is the most important part of any entrepreneurs life. You will have to sell internally (to your team, co-founders, board) as well as externally (to clients, business partners, new recruits, etc) all the time. You must be a great salesperson.
45. Manage your emotions well, you will have a roller coaster ride for as long as your start-up will last. Don’t get too excited with small victories, and don’t feel too let down with day to day issues. You will have more bad days than good days.
46. You will need to work very hard most of the times …. do take some breaks from time to time as it may take years before you achieve something.
47. Be good at multi-tasking. You will need to manage the HR, develop the products, raise funding, originate clients all in parallel .. these are not serial events.
48. Never hesitate to ask for favours. None of the above steps will take you too far if you are shy or afraid of asking. Many people are willing to help.
49. You will need to be good at prioritization. Your resources within the company are always limited and you will need to get a lot done.
50. Most likely you will fail. Once you accept that, then you are fearless and you will work harder to succeed. – In any case, the learning you get from failing is gonna be incredible. So entrepreneurship is worth it