Everyone in the startup world has heard the adage: “Launching a business is not a sprint; it’s a marathon.” But really, the comparison isn’t kind to entrepreneurship. A marathon at least has an ending point, a place you know you can reach and then rest.
A business just…keeps going. (If you’re lucky!) But here’s one way in which a marathon really is like a business: Without proper training, you’ll definitely fail. Shin splits from the marathon, employees splitting from your business. Stress fractures from running, stress from ruminating. You might even puke from both.
Passion and adrenaline will only get you so far. Way too many entrepreneurs show up at the startup starting line without so much as a stretch, and those folks may barely make it past the first mile marker.
Seasoned entrepreneurs and advisers agree: Before you jump into the race and hope to go the distance, you need to go through basic business training. Here, your guide from a wide range of coaches.
Step 1: Train in your off-hours
You know the saying “Don’t quit your day job”? OK, seriously, don’t quit. New businesses can seem instantly promising and exciting and full of potential, but they are almost never going to pay you a living wage immediately.
“So often people say, ‘We had this bit of momentum, and we all quit our day jobs and jumped into the company,’” says Duncan Logan, CEO of San Francisco co-working space RocketSpace.
“And then the momentum died off and they realised they’d made a terrible mistake — that it wasn’t a business yet. It was still a hobby.”
Logan’s advice: The best way to prepare for a launch is to run your new business as a side project and stay in your current job for as long as possible.
Sure, this means you’ll be juggling two jobs and potentially stressed out of your mind – but that’s good training for when your new startup takes over your entire life anyway. (Of course, this also means you may be building your business on your current employer’s dime, so be mindful of that: If you keep your day job but are too distracted to actually focus on it, you’ll quickly lose it.)
Step 2: Know why you’re launching
Do you know why? It sounds like a stupid question, but take a moment to really ponder it. Why are you about to devote your life to this startup? Why is this a business the world must have? Do you believe that strongly in it – not just in its potential, but in what it stands for?
If you don’t have a good answer, stop right now. Don’t restart until you’ve figured it out.
“When you have a decision to make and you don’t know what the right answer is from a financial or traction standpoint, you’re supposed to lean on your values,” says Blake Smith, CEO of Cincinnati-based online personal stylist Cladwell. But in the early days of his business, he says, he realised he’d never fully clarified his values. “Instead, I would ask other people what they thought and lean on them, which really caused me to spin my wheels in my business.”
Eventually, he says, he figured it out: His core business values were about authenticity and a desire to represent transparency in the clothing industry. That was his north star; every decision he made could be based on staying true to those ideals. “You have to be able to lead from your own values,” he says. Clarify yours at the start.
Step 3: Write it down
The written-out business plan: It used to be a standard part of launching a business. But many ’treps today are dismissive of it, says Donald F. Kuratko, executive and academic director of the Johnson Centre for Entrepreneurship and Innovation at Indiana University’s Kelley School of Business. They tell him that a business plan is old-fashioned and ineffective, a holdover from a simpler economy.
Wrong move, Kuratko says. No matter the business and no matter the industry, every entrepreneur needs to study the market problem they’re addressing – and that means understanding the market, and developing a concrete strategy for how they’re going to land that first customer. There’s no room to wing it.
“If you can’t articulate those things clearly, you’ve got a problem right off the bat,” Kuratko says, and the exercise of writing a business plan reveals those issues. “You want to make sure those points are addressed before you start, like making sure you have the right shoes for running a marathon.”
Step 4: Take your benchmarks seriously
You don’t begin training for a marathon by running 26.2 miles. You set your goals more modestly — start with a few miles, work up to 16, and so on. The same principle holds true behind the desk: Begin by laying out your interim goals, to ensure that you grow in a timely manner (you know, before the money runs out). These can be quarterly, six-month or even annual goals; it doesn’t matter, so long as you decide what success looks like and are realistic about whether you’re achieving it.
And that’s the easy part. Now you’ve got to stick to them.
Logan, the co-working-space CEO, is a cautionary tale in what happens if you ignore your benchmarks. When he started his previous company, he set some hurdles for the first year – and decided that if he missed them, he’d fold the company. Then he missed them…and instead of taking action, he says, he created excuses.
He set new benchmarks and gave it another six months. Those weren’t met, either. Ultimately, he dragged the company along for two miserable years before finally shutting it down. He could have saved everyone a lot of time and just quit when he knew things weren’t working.
“You need to have a very honest set of metrics and know that if you don’t meet them, you have to reevaluate before you’re broke,” he says.
Step 5: Enlist key critics
A running coach will be your greatest cheerleader – up until the point where it’s clear that you won’t reach the finish line. When you’re stumbling, a good coach will tell you to quit before you hurt yourself. Now it’s time to find your business coaches.
Logan recommends creating a “trust circle” of two or three people who can give you brutally honest, critical feedback on your business. Few people will provide that once you’re up and running – because they know how hard you’re working – so he recommends assembling this group before you start.
“As much as it might hurt, you need someone who will tell you, ‘Your baby’s ugly. We know you love it, but it’s just not going to happen,’” Logan says. “You need those people in place early on, because it’s so hard to see it as an entrepreneur.”
Step 6: Prep your personal life
Just like with marathon training, the hours spent away from home during a startup launch can wreak havoc on your work-life balance and spur resentment among loved ones. But Scott Bailey, managing director of the startup accelerator MassChallenge Boston, has some good news for you: It’s OK – important, even– to leave work and see your family!
“That feels like it goes against everything almost everyone else expects of entrepreneurs, because people – especially investors – want to know you’re full-time focused and dedicated,” he says. But nobody wants to see you friendless and alone. That’s bad for you, and bad for your business. “Sacrifice other things,” says Bailey – but not your relationships.
How? Set limits at the very start. Talk to your family about what’s most important to them. Maybe it’s your doing chores around the house, or attending kids’ ball games, or not checking your phone at dinner, or staying away from the computer while on vacation (as much as is reasonably possible, at least). When you stick to these agreements, your family will feel appreciated; you may be busy, but at least they know when they have you.
Step 7: Build a home budget
when training for a marathon, you cut back on pizza and beers. But when you prepare for your startup, well, you might just want some cheap pizza and beer. The rationale is the same: It’s time to monitor your intake — less junk food for the marathon, and less-expensive food for your budget.
Your startup may take a toll on your finances, which can put stress on your relationships. So before the business gets going, you should run the numbers on your personal finances and set up a strict budget.
“It’s OK if you don’t put a dollar into savings for a while, but you can’t be upside down a dollar every month, either,” says Walter Knapp, CEO of Boulder, Colo.-based advertising technology firm Sovrn. He knows it well: He’s helmed four startups and keeps a careful budget to make sure he’s always able to pay his fixed costs at home. Otherwise, he says, you’ll create “too much stress on you and your family, as well as your employees and their families.”
Step 8: Find your people
Like a running group that trains together, a community of other entrepreneurs can help keep you on pace. Incubators, accelerators and other entrepreneur centres may provide an accessible network. Join them.
Reach out to entrepreneurs in similar situations to yours, and try to develop relationships with more experienced people who can serve as mentors.
“You can gain a lot from other entrepreneurs, even if they’re in entirely different industries or have totally different ideas. What they’re trying to achieve and the struggles they face are so similar,” Bailey says. “It’s a great way to gain insights and spark new ideas, and everyone in the entrepreneurial community needs support.”
This article was originally posted here on Entrepreneur.com.
(Infographic) The 20 Most Common Reasons Start-ups Fail And How To Avoid Them
These do’s and don’ts can make or break your start-up.
So, you have a great new idea or invention, and you are ready to open your start-up business. But, you’ve been scared by the well-publicised statistic about start-up failure – more than 50 percent of small businesses fail in the first four years.
Opening and operating a successful start-up requires some luck hard-work and thoughtful planning – as well as the ability to adapt that plan. Having been involved as a consultant to numerous start-ups over the past decade, I have seen some fail, some achieve a modicum of success, and some make it big.
Here are a few do’s and don’ts that will help guide your start-up to the promised land:
- Don’t think that a great idea or a great product is enough. The start-up graveyard is littered with amazing ideas and products that have failed.
- Do have a business plan that includes every aspect of how you will run your operation and how it will be successful. It should include all anticipated costs, marketing, manufacturing, the technology required and staffing. A business plan should also include how you will market and sell your product.
- Don’t think your idea or product is original and because you and your friends think it’s amazing, means that it is and there’s a market for it.
- Do lots of research before you spend your money. As a consultant, I have on three separate occasions been asked to help with a business plan for a start-up, where I discovered almost exactly what they are doing has been tried before and failed. In two of those instances, the previous failures indicated that the idea wasn’t good. In the third instance, we were able to learn from the previous mistakes and actually make a successful run at it. The number one reason start-ups fail is that there is no market for their offering.
- Don’t assume you will get financing other than the money you start with from yourself, family and friends. Only a very small percentage of start-ups get Venture Capital (VC) funding and in fact, the funding bubble has burst. And that means early-stage start-ups are getting little or no love from outside equity firms.
- Do assume the initial funding you have will be all you get, so the goal is to have the lowest burn rate possible. Therefore, your initial business plan should have a route to profitability and sustainability before the money runs out. The number two reason start-ups fail is that they run out of money.
- Don’t think that your expert knowledge of your business, a well-developed business plan and proficiency in PowerPoint are enough to craft an investor deck that will get a private equity firm’s attention.
- Do hire an expert consultant who has done this before. VCs can smell an embellished or amateurish deck 100 miles away. You typically only get one look by a potential investor, so make sure your investor deck is the absolute best it can be.
- Don’t assume that technology will be easy or come as scheduled. In almost every start-up I have been involved with, where the need for technology advancement was crucial to success, there were unanticipated issues and delays.
- Do assume that there will be delays in technological deliveries and therefore you need to leave a buffer for that in your business plan. Do have a competent development team and if they are not performing, replace them as soon as possible.
- Don’t think that you can go at this alone or that it will be easy to assemble a winning team.
- Do select your team members carefully, trying to add as much diversity as possible. The most successful start-ups that I have seen have mixed experience and newbies as well as the more traditional kind of diversity. The number three reason startups fail is that they have the wrong team.
- Don’t think customers are just waiting for your offering and investors will be lining up to give you money simply because your idea is amazing – even if you have been a successful serial entrepreneur in the past.
- Do be humble and realistic about everyone you meet. Relationships are a key to success, and like with personal relationships, if you want to be successful, be sure you see yourself as others see you. I have witnessed a lack of self-awareness and a big ego from owner’s doom potentially successful start-ups.
- Don’t think you are leaving a nine-to-five job for the easy and flexible life of being your own boss. A start-up is a seven-day-a-week occupation and now it’s your money and reputation that are solely on the line.
- Do plan to work harder than you ever have with little return on your efforts for an extended period. Do be honest with everyone you interact with, as your reputation will ultimately be a key to your success.
To have big success as a startup, you’ll have to master all the do’s and don’ts above, and that’s a daunting task. So, before you begin, the question you must ask yourself is: “How badly do you want it?!”
This article was originally posted here on Entrepreneur.com.
3 Actionable Insights To Make Your Investment Pitch Perfect
The best pitches aren’t just short and to the point, they deliver on investor expectations and needs.
The best pitches aren’t just short and to the point, they deliver on investor expectations and needs.
1. Confront your product and market flaws from the start
Investors come from business and investment backgrounds. They will recognise the potential dangers in your business model. If you ignore these elements, you’re not addressing key concerns they may have, and how you will protect the business against them.
DO THIS: Look at your business from every angle. Where are your potential weaknesses, and what is your plan to overcome them?
2. Pitch to the right investors
The sectors and mandates that different investors and funds follow dictates the businesses that will interest them. Pitching your business to the wrong investors wastes their time, your time, and potentially damages your brand in the market place — waste the time of too many investors, and the word will spread.
DO THIS: Research the investors and funds you are pitching to thoroughly. This will narrow your focus, and help you develop your pitch deck. It will also help you unpack the areas of the business that you’ve discovered are important to the particular investors you’re pitching to.
3. Don’t follow fads
Investors aren’t interested in ‘flash in the pan’ business ideas. They care about products that stand a chance of long-term success. You might start off selling to a niche audience, but the goal must be to reach a wider audience as the product develops and matures.
DO THIS: Critically evaluate the staying power of your business idea. Is it a product that’s trendy but could lose traction as market fads change, or does it solve a real and enduring need?
5 Tips To Get You Ready To Launch That Business Now
Are you dreaming about becoming an entrepreneur, but not sure whether you’re ready to take the plunge? Some of the world’s top entrepreneurs weigh in on what it takes to be a success.
1. Think out the box
A general rule of thumb is that you should do what you know. Spend time in an industry before launching your business, build up a network and understand your target market and their needs. This is all sound advice, and has been the foundation of many successful start-ups.
However, there is an inherent danger that entrepreneurs should avoid at all costs: Many industries are bound by legacy ideas and systems that are the enemy of disruption and innovation. Entrepreneurs who didn’t know something couldn’t be done are often the ones who find a way to make it happen.
Approach an industry or idea with fresh eyes. Take lessons from other industries. Don’t be limited by your lack of knowledge — go out and learn, even if you’re learning on the fly.
Airbnb, Uber and Netflix are three of the most disruptive businesses in the world today, and they’ve achieved phenomenal success because they didn’t buy into the simple and engrained idea that an accommodation business should own property, a taxi service should own vehicles, or a movie rentals business needed to own DVDs.
If you really want to differentiate, you need to lead, not follow.
“Don’t be intimidated by what you don’t know. That can be your greatest strength and ensure that you do things differently from everyone else.” — Sara Blakely, Spanx founder and self-made billionaire
2. Be an open-source person
Have you been delaying launching your own business because you’re not sure if you’re ready? Some of the most successful entrepreneurs have taken the plunge and learnt along the way. Gil Oved and Ran Neu-Ner, founders of The Creative Counsel — South Africa’s biggest advertising agency with an annual turnover of R750 million — followed this simple rule in their start-up days: They always bit off more than they could chew, and then chewed like hell.
Their philosophy was that ‘no’ was never the end of a negotiation, but the beginning of one. This tenacity kept them going, even though they spent their first year barely making ends meet.
Gil and Ran are not alone in their thinking. Robin Olivier, founder of Digicape, a R240 million Apple products and services business, prepared himself for entrepreneurship by putting his hand up for anything and everything that came his way. “I’ve always been like that. I jump in with two feet and figure things out along the way.” For Robin, that’s the only way you learn.
Joshin Raghubar, founder of iKineo and the chairman of Bandwidth Barn and the Cape Innovation and Technology Initiative, began his career working for Ravi Naidoo at African Interactive. At 23, he found himself project managing the African Connection Rally, a massive partnership with the Department of Transport. Why? Because he was always ready to step in, learn something new, offer his opinion and take on any challenge.
Joshin believes that successful entrepreneurs are open-source people who are willing and able to consistently and continuously learn new things. If you’re moving forward every day, you’re already on the path to success.
3. Be significant
Start-ups are tough. They are lonely, and they take a lot from you physically, mentally and emotionally. Passion and significance are two key components that will keep you going through your darkest hours. If you can answer why you are doing something, you’ll be able to forge on, even when the challenges ahead seem almost insurmountable.
“If something is important enough, even if the odds are against you, you should still do it,” says Elon Musk, who isn’t letting go of his dream to colonise Mars during his lifetime, despite many challenging tasks ahead of him. The lesson is simple: Whatever you endeavour to accomplish, out of this world or not, do not allow yourself to be deterred by the odds. Bravely forge ahead.
Steve Jobs shared a similar outlook. Before entering into business with Steve Wozniak, he dropped out of college and took time off figuring out what he wanted to do with his life.
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work,” he said. “And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”
If you know you want to be an entrepreneur, but you aren’t sure what you should be doing or haven’t found the right business idea, think about the things that truly matter to you. What problem would you ultimately like to solve? Sometimes you need to build up to it, and start with one thing that will lead you to the next (consider how Musk built the Tesla to fund other parts of his business), but once you’re on the path to significance, nothing will hold you back.
“The key to realising a dream is to focus not on success but on significance — and then even the small steps and little victories along your path will take on greater meaning.” — Oprah Winfrey, self-made billionaire media mogul
4. Look for opportunities in every challenge
Some people see challenges, others see opportunities. The latter are known as entrepreneurs. Some of the most successful businesses have been launched in the midst of recessions. How? Because entrepreneurs aren’t daunted by a challenge. In fact, challenges are great, because they keep the competitive pool smaller.
Vinny Lingham, Shark Tank South Africa investor and serial entrepreneur, says that he would rather have been homeless than not start a company because he didn’t have any finances. He sold his house, rented back a room in his (now former) home, and launched Clicks2Customers, a business that hit the R100 million turnover mark three years later. He didn’t see the challenge; he focused on the opportunity.
You’ll have to keep a close eye on cash flow and find some really smart solutions to real-life problems, but that’s the foundation of a great start-up. It’s all about the lens you see the world through. Are you open to opportunities, or limited by challenges?
“Dear optimist, pessimist, and realist — while you guys were busy arguing about the glass of wine, I drank it! Sincerely, the opportunist!”— Lori Greiner, Shark Tank US investor
5. Failure is a critical element of success
Don’t let failure hold you back, or worse yet, keep you from trying. You already know that failure is a part of the business of entrepreneurship, but it’s easier said than done when you’re picking yourself back up after a bad break. Remember that with a shift in your perspective you can transform the stumbles and falls into opportunities to improve yourself and your business offerings. What didn’t work? What did? Keep at it — you only have to get it right once.
Oprah agrees. “At some point, you are bound to stumble, because if you’re constantly doing what we do, raising the bar; if you’re constantly pushing yourself higher, higher, the law of averages — not to mention the Myth of Icarus — predicts that you will at some point fall. And when you do I want you to know this, remember this: There is no such thing as failure. Failure is just life trying to move us in another direction.”
And what about Richard Branson? The billionaire mogul has launched more than 200 successful ventures, but he’s also had some dismal failures, including Virgin Cola and Virgin Brides. If he didn’t ‘screw it, just do it’ in the face of failure, where might he be today?
Instead, he believes in getting back up and pushing on. “The main thing is, if you have an idea for business, as I say, screw it, just do it. Give it a go. You may fall flat on your face, but you pick yourself up and keep trying until you succeed,” he says.
There’s no such thing as a successful entrepreneur who didn’t fail while they found their success. But, there are many, many entrepreneurs who haven’t found success because they’ve been too afraid to fail. Which will you be?
“Don’t worry about failure. You only have to be right once.” — Drew Houston, CEO of Dropbox
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