As you sat watching the fireworks explode in the night air, bringing yet another year to an end, you may have quietly committed to a resolution that this was finally going to be the year that you take the plunge and start your own business. Naturally, you’re a bit of a geek, so it will most likely be in the tech sphere.
The idea has been brewing in the back of your mind for years and, for some unknown reason, the time finally seems right to take those unguided steps and break away from the security of your 9-5 job. Just knowing you are about to follow your passion makes you feel energised and reinvigorated, spurring you to hand in your notice to your boss with the hope that one day you will be driving past him in your new Ferrari and wave.
As the old saying goes “you can’t buy experience”, and without proclaiming to be an expert on your specific idea, here are my seven “insider” tips to help you on your new journey or make you think twice before you take those pioneering steps.
Cash is king! If starting your business were a chess game then this is the piece that could win or lose you the game. So keep your eye on it. No matter how much profit you make on paper it means nothing unless those profits generate cash for the business. Ever wonder why Groupon took off in the early stages? Yes, a clever idea, but I can promise you the $1 million that its investors gave Andrew Mason after a few months of operating sure went a long way to helping him build his business.
Don’t be afraid to tell people what it is. Trust me, the fact that you are already working on your idea puts you ahead of the pack. People have great ideas everyday but as you will soon realise executing those ideas is where the skill lies. Everyone else either doesn’t have the skill, the time or the courage to take the plunge. What they will however do is mention someone they know who could help or is already in the space which will go a long way to building your network and understanding your product.
Sorry, but it is a sad truth, no matter how grand your idea is virtually no VC will touch it unless at the very least a product has been developed and it shows some market potential. You are going to have to either fund the early development of your idea either yourself or lean on any Angel Investor you know who can give you some of the upfront capital.
Most things take twice as long as you forecast them to. Regardless of the endless hours or constant hassling things take time. You will be dealing with corporates who are not watching their bank balance as closely as you are or with suppliers to whom you are ranked as their 9 035th favourite customer. So when you sit and forecast how quickly you will be able to buy that Ferrari, in most cases double that time.
In your previous working life you may have been top of the corporate crop and smashed every target given to you. Surely people who you deal with now will see that and give you the same sort of respect. Sorry to burst your bubble but you are the new kid at school again. You are going to have to build your reputation one success at a time before anyone will part with their hard earned cash to either invest in or buy your product. In fact, establishing your credibility is perhaps as instrumental to your success as cash is.
Ever wonder what the finance person actually does in your office or can’t understand why it should take so long for the IT manager to build a three page website? You are about to find out the hard way. People are one of the biggest assets you are going to miss when you go out on your own. Unfortunately, you will not have the cash to afford to pay them so you are going to largely be left to your own devices. Yes, you can do some of the admin but by identifying what the biggest “people asset” is that you need, and investing in them as much as you would invest in your product, you will dramatically increase your chances of success. This may mean giving up equity or coming to some other solution, but remember your idea is not what will win the game, it is how you execute it that will.
Too often marketing is left as an after-thought or thought of as something that anyone can do. I mean how difficult can it be, you just make an advert right? Your product may be the greatest out there, but unless it is packaged and presented to the consumer in a way that positions it so that your target market sees it, understands it and makes them want it, you stand no chance of succeeding. Considering the marketing of your product can even tactically change what your product offering at launch is. Oh, and please don’t forget to budget for some marketing expenses. You can’t just put it on Facebook and expect everyone to “share it” with all their friends.