I’ve always been the type to rock the boat at work but not so much that certain things will tip over. I’ve also been the same way with my business or even a game of poker. We generally know when to take a risk but things are not so clear when starting a company. Is the company that I’m trying to start worth it? Personally, I believe there are some general rules we can follow to see if the decisions to start a company is either a gamble or a calculated risk that can potentially be something worthwhile.
1. Know what you’re risking
“Never put all your eggs in one basket”. That part is easy such as not quitting your day job. But the real question should be “which eggs should I put in the basket?”. Not all eggs are created equal. A lot of the times, when you are starting up a new company or new business, there are going to be costs involved and it may not necessarily be money. It may be your time or even something else entirely different.
Here’s an example:
Once in awhile I would come across an old friend who started an MLM-based business. That friend would always push me in joining him in the MLM-scene. I’ve been in that scene before. Lots of people making tons of money using pyramid schemes. He says I would be making tons of money. All I would need to do is buy their overpriced demo kit and I would be on my merry way to making tons of money. He maybe right. People have made tons of money off these schemes.
The risk? Relationships with friends. Your morals. I wasn’t into the business of recruiting people just for money or to support a bad product. How you make the money is just as important as how much.
2. It must be more than a feeling.
In the world of start ups, you have to know what you’re doing and be committed. Starting a company has to be more than just trying to satisfy a feeling. It must be a consistent passion. The idea of having your own company is always going to sound exciting. Tossing around grandeur ideas with friends about owning lavish homes, having full control of their lives and being your own boss will always sound like a dream. That is. Until you actually start working towards it. If your first month of business feels like a regular job, you’re better off getting a regular job. Running a start-up takes many many hours to properly start. A 12-16 hour day is a norm for start-ups. And even then, there are still risks as always. Be prepared for the ups and downs of the business. If you’re still around after a couple of down times, you know you’re in it for the long haul.
I have helped almost a hundred clients try to launch their startup. Less than 5% of those clients have become successful. The secret? Commitment and consistency. If you don’t have either. Get out now. If you’re half-assing things, you’re only making it worse by not doing your best. Even worse, faking yourself into thinking you’ll eventually become successful. I’m also sorry to report that if you’re the CEO/founder, you’re the person that has to work the most.
3. Be prepared for failure and/or adapt
If you’re one of the lucky ones who is starting his/her company off well, make sure you have a backup plan. As I said in the previous item, there are also some down times. If those downtimes turn into something serious, you have to be ready for it. Create a secondary plan over what you should do in case traffic hasn’t increased for months or when customers start leaving. There maybe days where all your twitter followers and facebook fans will disappear one day. Make sure you’re ready for it. If your business is taking a different direction but is working very well you may have to go for it. Don’t be stubborn. The founders of YouTube originally created the company to help assist sellers on eBay to demonstrate their products through video. Instead, people are using YouTube for pretty much anything. So the founders adapted and went for it.
4. Make sure you have real support.
If you’re single and young, you’re good; especially if you have your parents behind you. If you have a girlfriend or boyfriend who is backing you up that’s good but not necessary unless of course he or she is your fiancée. If you have close friends, cool but stay grounded. Most of them will tell you what you want to hear with a few haters mixed in. The best support is friends (or friends of friends) who have been in the field and have been in real funded startups before. They would tell you what you need to know and what you need to hear.
If you’re married, make absolute sure that your wife or husband is with you one hundred percent and that you tell them all the risks that goes into starting the company, especially your time. Keep them updated on how the business is going. If there are children, make sure you get them in the mix too because you’re going to have to tell them why you’re spending all this time and money going after some crazy idea. Any less support than that will lead to endless arguments and resentment hovering above the family if the business takes its first sudden loss. Not only will you compromise your business but your relationships with your loved ones. Ultimately, you must remember these three words: Family comes first.
5. Have the right people
Unless you’re running a lemonade stand, a start-up company cannot be run by one person. You will need people. Just don’t have too many. I can’t tell you the millions of times where I’ve been in meetings at houses, some community center or even a restaurant where a bunch of people are wanting to start a website. From these meetings, ideas are literally thrown from everywhere and everyone is either nodding at the idea or shooting it down. Very seldom will you find a start-up company that is coordinated enough to orchestrate 10-20 people. Start small. Find people who share a common vision. The right people do more than just talk about ideas; they prototype them. What may sound good by ear may not look good on paper or even on the web or vice-versa. If you can find people like this, you’re in good hands. If they happen to be good friends, that’s a plus too. Find people who are not only good listeners and talkers but good executors as well. People who know their roles early on in a company that have the same amount of passion as you do are going to play large roles on how the company gets shaped.
6. Know why you’re doing it.
Startup companies who become very successful usually have a staff who is passionate and consistent in building their company’s roadmap. Of course, it is important that people who start companies also need to eat. Successful companies are usually genuine about how they want to solve a problem or start an online service dedicated to helping people. I know a couple of programmers who have helped several companies for free just because they loved to work on a project they were passionate about. A little healthy obsession doesn’t hurt either. A good indicator is your determination and desire to make something worthwhile. Make something you know you’d be proud of, irregardless of whether you were paid for it or not.
In the end, your determination and adaptability play a major part in getting a startup on the right foot. Take it entrepreneurs. It’s yours.