A Few Hard and Fast Rules to Consider Before Starting Your Own Business
Keep it simple. And ordinary.
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If you want to grab the brass ring of entrepreneurship and control your own destiny, there’s good and bad news. The good news is being entrepreneur is a solid and viable career choice, and it’s never been easier and cheaper to start your own business. The bad news is that getting caught up in all the media hype around kick-ass, rockstar entrepreneurs can leave you with some pretty faulty assumptions. After all, their first businesses RARELY resemble their later stage businesses—but it got them in the game, being business owners and experiencing entrepreneurship first hand. In the interest of a little reality check, here are a few things you need to know to get started on your own gig...
Embrace the Ordinary
If you think you’ve got a killer idea that’s going to turn you into the next Mark Zuckerberg, maybe take a breath. Your “original” business idea, whether it’s a product or service, likely isn’t. Original, that is. “Original” forces you into an uphill battle of trying to explain what you do and why it’s unique to clients and customers. And chances are, someone with more resources than you is already working on the same thing. So the time you’ll waste trying to be innovative is time you could spend actually generating cash from an idea that’s not original or sexy at all.
Take a look at College Hunks Hauling Junk, for instance, launched by two college students who started their junk-hauling company with a borrowed van and a few flyers posted around their neighborhood. Today, College Hunks is a multi-million dollar company with more than 100 franchisees. “We didn’t invent the next Facebook or Google,” College Hunks co-founder Nick Friedman tells me, but rather took a "simple concept like trucks and labor," and turned it into a brand recognized for its company culture and service. Essentially, the company professionalized and differentiated a really boring business with clever use of branding and customer service. So think about how you might add your original spin to, say, an accounting business, a tutoring company, a landscaping service, remembering along the way: Unsexy is profitable!
Create a (Very Short) Startup Plan
Forget about the complex, multi-layered business plan you may have learned about in college. Those can take months to write and unless you’re seeking investors (and you shouldn’t anytime soon—see below), you don’t need it. Make your business plan short. One paragraph. This plan is for your eyes only and you’re probably going to revise it again and again. Write down what your business does, how it delivers its product or service, who your customers are, how you’ll market to them, how you’re different from competitors, and how you generate revenue. Make your answers brief—one sentence each. Organize these answers into paragraph form and you’ve got your first draft. You can probably do this over a weekend. Next, take each sentence in your plan and create five immediate action steps. This is your to-do list, so give yourself deadlines. As you work your way through this list, you may find that the answers to the these initial questions may change. If so, revise your plan, keeping in mind what worked and what didn’t. This is a living, breathing plan that should evolve as your journey as an entrepreneur takes shape.
Avoid Taking (and Burning) Money.
Investors are difficult to come by and won’t give you the time of day unless you have actual customers, highly credible partners and/or board members, cash flow, and a clear exit path so that they have a prayer of making money. But you don’t actually need investors if you’re starting a company that can get off the ground right away with your own two hands (and probably the helping hands of a partner).
So forget money pits like the website that will need massive traction before advertisers will give it the time of day, the venture that hinges on licensing unproven intellectual property, the new product that you think is sure to be acquired by a major consumer packaged goods company. Basically, those kinds of things will cost a truck load of cash before you even know if you have a viable business. Instead, explore business models that rely on immediate business-to-business sales, service fees, or other such models where sales are not based on circumstances that are entirely out of your control.
“I worked as an IT consultant for few years so had knowledge about the industry,” Nishidha Kumaresan, CEO of Pioneer Technologies, an IT consulting firm, tells me. “I was working when I started the company. I dipped into savings and part of my salary and took the help of some friends to fund payroll and repaid them once we received payments from our clients.” Kumaresan worked 17 hour days to get her business off the ground so, no, it wasn’t a piece of cake. But she was able to call all the shots.
Think about what resources, tools, and services you and your immediate family, friends, and contacts have that you can immediately leverage. To avoid unnecessary expenditures, steer clear of business ideas that require you to invest in additional resources. Remember you’re bootstrapping, so you’ll have to become an expert at begging and borrowing (no stealing, please).
Assemble Your Tribe
Want to increase your chances of success? Surround yourself with great people who can fill in your knowledge and skill gaps. The sooner you acknowledge what you don’t know, the sooner you can seek out that co-founder who can code, the bad-ass marketer, the detail-oriented operations person. You probably already have these people in your network and they may be just as eager as you are to start something new. "I have tried building a business on my own as well as building one with individuals that mirror my skill and mindsets and both are are possible but uphill battles,” says Tyler McConville, CEO of NAV43, a search marketing agency. “I am very creative and vision-driven. Finding a business partner that is more cautious, logical and methodical was the missing ingredient for my recipe to success.”
These days, you can assemble an army of virtual team mates without spending a dime on office space, thanks to virtual hiring companies like Upwork, Elance, 99designs and a host of others. You’ll need to get comfortable interviewing and building rapport with people in a digital environment. Consider testing out candidates with smaller projects, and then moving toward longer, more complex jobs with people who you like and trust. Even after you start bringing in some serious money, you can use your experience with these digital hiring platforms to grow your distributed team while keeping expenses in check and profits high.
Remember, there’s no such thing as easy money or a free lunch. But if you’re level-headed, realistic, and focused on how you can start generating cash, you’ll be well on your way to having a successful startup.
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Scott Gerber is the CEO of The Community Company and coauthor of the book Superconnector: Stop Networking and Start Building Business Relationships That Matter. Follow him on Twitter.