|Try to avoid going down the wrong roads!|
I would ever suggest an entrepreneur not pursue a dream, but informing you of hazards, could help reduce future disasters. Startups fail for many reasons. There is no shame in failure, in fact, we learn from it; at least most of us! Our ability to learn and adjust is critical to survival.
Regardless of all the planning and preparation, we do not know what we do not know. We cannot control all the external factors that influence our lives and businesses. There are no road signs, but sometimes we can read the trends. This is an essential part of growing the business successfully.
There are some entrepreneurs that may do better learning in another business first. The ability to learn how a business is developed and products sold can be valuable. I do see many inexperienced entrepreneurs that want to start a business and they were never exposed to any of the things they will encounter. In fact, it is more common than one might think that a founder launches into an area with no prior knowledge or training.
Entering the wrong way on a one-way street is something you would be wise to avoid. You may meet unexpected traffic and become involved in an accident. Starting a business without learning everything you can about the area can be just as detrimental, especially if you are using your own money or expecting near term income.
The following are just a few areas you should consider before starting that new company.
1. Funding: Money usually takes time to obtain from investors. Startups have no money and it may be a few years before any serious funds arrive. This means NO SALARY in the near term. Loans are sometimes possible, but it may end up being a personal loan. If the business fails, any debt guaranteed by personal assets leaves you responsible for repayment of the loan. No founder ever believes their business will fail, yet many do. So, do not plan on a near term salary and protect your personal assets the best you can!
2. Business: Founders must learn everything possible about their business. They should be able to address all questions an investor may ask. Investors see the CEO founders as the face of the company and they need to trust the CEO and believe the individual is skilled and knowledgeable. Take your team on the road to help in presentations, but you must also demonstrate your skills. If the team answers all questions and you answer none, investors may question your knowledge or consider whether they need you to be part of the company. So, make sure you know your business and can address as much as possible.
3. Investor trends: Investment trends change over time. What was interesting a month ago might not be interesting in a few days. IPO markets can open and close in the same month. Investors may be enthusiastic while the markets are doing well and skittish when the markets turn bearish. The trends are important and recognizing that they change rapidly suggests you must be willing to change with the trends. So, watch reactions of the investors and evaluate their moods and interests; i.e., try to recognize when a strategy change is required.
4. Skills: Some people have extensive skills while others require more training. It is hard to pass yourself off as an expert when you have not spent time in training or learning. Understanding where your skills are the strongest and hiring team members to supplement your weaker skills is a good strategy. Your ability to demonstrate all key skills exist in the company will generate more confidence in tentative investors. So, determine what you can do well and create a hiring plan to augment those skills.
5. Attention to detail: Some people will review everything you do and say with a keen eye. Attention to detail by external people requires that you develop a high degree of attention to detail in house. You and your products are being scrutinized to the highest levels. Sometimes a single slip-up or error can cause investors, customers, or partners to stay away for long periods. So, always be careful with everything you and your business do.Taffy Williams is the author of: Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon