Let me begin with apologies. I was enjoying my little holiday in Delhi a little too much and couldn’t get into the flow of writing posts.
Here is a list of 10 things which I felt all aspiring entrepreneurs need to do before they decide to take the plunge into full time entrepreneurship.
This list has been created based on my interviews, informal chats, reading and experiences.
Just like everything in life (and my posts), this is indicative, not exhaustive, based on today’s context and doesn’t claim to be 100% spot-on.
But it’s still worth a read because unlike many other articles/posts I have read on this subject, this stuff isn’t philosophical.
1. Money to survive – Most entrepreneurs I have spoken to have confessed, that if there is anything that takes their eyes off important and long term goals, it is the paucity of cash to survive. If and when you decide to take the plunge, be under no illusion that millions will start pouring on day 1. It’s a known fact that more than 90% of businesses make little or no money over their lives. If you are going to be slogging it off in meeting people, developing products, writing code, setting up offices, wooing customers etc you need to know that somewhere a bank sits with enough booty to let you do this for a couple of years. Everyone I have spoken to has said that a 2 year cash pile is a good idea and a 1 year buffer is essential. Hey, you might strike it rich real soon and never need that money ever. But I won’t bet on it.
2. A Plan – Most plans don’t work, I agree. But what plans do, for the right person, is that it helps think up of all the stuff that needs to be put in place before making the play. Good plans work out contingencies and help plug leaks. These plans are required for investors, team members, interns, stakeholders to have confidence in you. Writing down what you want to do, how you want to do, when and where creates the kind of clarity which is almost impossible to pin down, when we let these ideas and thoughts roam around in our heads.
3. Getting the Home Team Involved – There is a reason why sports teams usually perform better while playing at home. It’s because the Home Team i.e. the crowd, spectators, sponsors etc is firmly on the side of the team and that helps, even though they aren’t doing the playing. A considerable amount of time needs to be spent on letting your family, friends, stakeholders, well-wishers, bosses etc know why and what you are going to do as an entrepreneur. Many (probably most) won’t understand. After all, change is perceived as bad and change in a good situation (comfortable salary, position, perks, bonus etc) brought on by yourself is considered madness. But they will appreciate the fact that you decided to get them on board. Many will help out with contacts, introductions, ideas and even money (0% interest money with indeterminate payback period). And once you have a little success, creating a cult of evangelists will be easy.
4. Team! Team! Team! – I know that most of us dream of being the sole commander of our forces in the quest for glory and money. But a look at startups and armies across the world may be instructive in lessons of having a team. Getting a good startup, up and ready, is a difficult stressful job which involves a lot of heart/headache. And no one has all the skills. Get a team of co-founders or management ready before you decide to get going. You will need it. And getting them on-board requires time and lots of convincing steam (meetings, presentations, trial and error etc). But it will all be worth it once you have the killer app/product/service up and running.
5. Investor/Stakeholder Introduction – You may never require investments. Maybe you have enough. However startup history has shown that lack of financial capital is the No.1 killer of startups globally. So ideally one should start talking to investors long before one decides to enter the fray. How does that help when you have no service/product or even a good plan ready?
a. Knowing a person is underrated. If you know an investor, because of a past meeting, you won’t have to waste time doing the waltz when you have to ask for money.
b. Investors will usually help you understand and fine tune your idea at the outset for no extra charge.
c. They may agree to be your mentors and help open other doors.
d. Hiring employees becomes easier.
e. They will let you know if your idea sucks and save you a lot of heart burn (Though I suggest you don’t listen to the first guy who says this, but if 10 of them say so, then a little thought is in order)
Stakeholders like distributors, channel partners, agencies etc will do the same and be ready to do business with you when you finally get your act together.
6. Market/Idea Research – Take a lot of time to understand the market you wish to operate in, understand the future, the technology and the skills required to make it big. Many times, people get into markets with this amazing mind-blowing idea, only to later realize that the market doesn’t want it, or worse, there are laws, taxations and bigger players making the entry barriers real high.
Do your homework, understand the market better than any expert, talk to players in this field and other stakeholders. Understand the issues, trends, technologies, legalities, costs, revenues, benchmarks of the market. All of the above will give your startup great confidence, flexibility and differentiation.
7. Prospective Customers – Though part of the above point, it was important enough to warrant its own place in this list. Talking to prospective customers not only gives you great insight into the market, but also increases their readiness to doing business with you, when you become a full time entrepreneur. Why? Because they know you and you have developed a product/service based on their feedback. Human beings are naturally helpful to those whom they have invested time and energy in. Talking to lead customers of a market also helps you create great focus and differentiation in the market.
8. Readiness to Fail – This is fairly counter-intuitive since all our lives, our parents, teachers, girlfriends, bosses, subordinates have been stressing on the need to ‘not fail’. This trait has a predominance in Asian cultures and promotes risk-averse excellence, especially in academic and corporate environments. Shaking off this mindset is of great importance and the lure of risk-aversion is sometimes just too tempting. Unfortunately most of us will be alone in this endeavour unless you have friends who are successful entrepreneurs. But if to-be entrepreneurs refuse to take calculated risks (which by the way is nothing more than enterprising work backed up with common sense, far-sightedness, pragmatism, ass busting work and self-belief), then you might as well put your savings in Fixed Deposits. Cause that’s the best returns you will ever make.
9. Bootstrap your life – Cut down on loans, don’t buy that new car, eat out lesser, rent out a smaller house, control your mobile bill, buy lots of work clothes on sale (since you plan to be working 18 hour days duh!), don’t plan that trip to Spain (watch ZNMD instead). Why? Because you signed up for this shit. I don’t want to explain this further than this quote.
“Entrepreneurship is living a few years of your life like most people won’t. So you can spend the rest of your life like most people can’t”
10. Plan B and Backup Plans – Plan B and backup plans are real important. Why? Well a lot of people recommend having a Plan B ready in case your startup fails (90% probability). I have a different take on this.
I think it’s important to have a Backup Plan and not a Plan B. The difference? (I feel like writing a post dedicated to this one)
Plan B is the stuff you plan for which is just below what you actually wanted to achieve. Like running a marathon (42.195 km) and aiming to do so in 4 hours, but actually being able to run only 30 km and giving up. Why? because 30 km isn’t bad by any standards. It’s good enough. You went out to prove that you can run long distances, that you are fit, focussed etc and you did. To an extent.
Backup Plan is the stuff you plan for when you have crashed and burned in your endeavour to reach your aim. Like running the same marathon and getting really tired at 30km. But still continuing despite dehydration, cramps, pains, the wind, the sun, a bad stomach and making it in 6 hours. But making it. The backup plan comes into play when you let your friends know that you will probably require medical help and an ambulance to take you to the hospital once you finish. Then it’s not just good enough, its epic.
Plan B is setting yourself up for being average. Backup plans are for those who don’t aim for second best.
Startup Yapper 