Start a Business? Not So Fast ...
In almost every Radical Mentoring group, there’s a guy who wants to start his own business. I’ve helped a couple get going successfully but have also talked several off the ledge. So this post may shock you after a recent post when I said you have to own something to become wealthy.
There’s a lot to consider when you launch out on your own. I’m all about starting your own deal, but there’s a bunch of landmines. Let me share a few I’ve seen (and a couple I’ve stepped on!) . . .
- Don’t just go with the best idea– We get in a hurry watching others succeed. We think “I should be doing that” so we start coming up with ideas. We pick the best one and here we go. We did this during the internet craze in the 90’s. Everything was going to the web. We picked the best idea we could come up with, raised money and launched a venture called Fitability. We returned 9 cents per dollar to the investors. Ugh! We should have waited for the idea, not just the ‘prettiest dog in the pound.’ If an opportunity seems too good to be true, it probably is. Do your homework, take your time, seek lots of input and pray. A lot.
- Don’t start with a location – When I saw the building pictured above . . . sitting on Main Street in a growing small town, I started thinking “That place has potential. Bet you could get it for next to nothing! What could go in there and succeed?” Wrong question. Start with your core competency and your domain expertise. Thenfigure out locations, offices and such. Most great startups start with a customer, not with your whiteboard. What customer need could you meet? Is it a felt need? Is it a ‘nice to have’ or a ‘must have’? Is it a market that’s buying? Growing? Thriving? or contracting, shrinking or restructuring? There’s opportunities in either direction, but you need to be sure you understand the trend and sail with it, not into it.
- Don’t start without the end in mind– Issues surface when things go badly and when they go swimmingly. It’s often the first time guys read the agreements they’ve signed. If one founder wants to build a company and run it for life while another wants to build it and sell it, there’ll be problems down the road. Flesh all this out before you write any checks.
- Don’t go it alone– Even if you could, it’s better to team up with someone to start your first business. Remember the African proverb, “If you want to go fast, go alone. If you want to go far, go together.” But choose carefully . . . beliefs, values, integrity are key. Again, domain expertise and core competencies that balance yours give you a leg up. Starting a business with someone is a lot like marriage . . . be sure you’re ‘equally yoked.’ I’ll work for non-believers, I’ll hire non-believers. But I won’t share ownership or authority with anyone who doesn’t know and follow Jesus.
- Don’t start without enough capital – Four of five businesses fail in the first five years because of a lack of capital. Being able to raise capital is a ‘litmus test’ for your idea. I once sat with a guy who ran up $56,000 in credit card debt trying to start a business. It didn’t work and he was all alone. He’d chased his idea without getting counsel from anyone. I’m betting he’s still paying off that debt. And what is ‘enough’ capital? Take your revenue forecast, cut it in half. Double your expenses. Now you’re a lot closer to reality.
- Don’t build your venture around your people– Build your team around your venture. You’ll always be ‘people away from your objectives.’ None of the 30 startups I’ve been involved with ended up doing what they started out doing. As the business morphs to stay alive and vibrant, your people needs will change. Try not to hire people you can’t fire . . . like relatives. Remember ‘structure follows strategy.’ Build your strategy, then develop your ‘people plan.’ Get the ‘right people on the bus’ for now but stay flexible.
- Don’t ignore your ‘wiring’– Starting a business is harrowing. You must have a high tolerance for ambiguity and uncertainty. There’s absolutely nothing wrong in working for a good organization owned by others. Entrepreneurship isn’t for everyone . . . being a ‘fish out of water’ is no fun for the fish nor his family and friends.
- Don’t do it without your wife’s full support– If you’re married, you must be on the same page with your wife about the financial and relational demands of starting a business. She has to ‘sign on’ for the risk and the demands on your time and energy. You need a secure home with 6 months of expenses in the bank and enough life insurance on yourself so your wife and kids are taken care of if you keel over from the stress of the startup.
Personally, I have no idea how anyone starts a business without faith in God. Knowing He’s with you regardless of the outcome gives courage and confidence . . . key ingredients for peace (and sanity) while involved in a startup.
One last caution . . . be very careful ascribing your business idea to the Lord. I’ve heard more than one sad story of failed ventures that began with “God gave me this idea.” I can’t say which ideas come from Him and which don’t. We’re 10 years into a startup I was absolutely sure came from God. Who knows what will happen in the future but up to this point, it hasn’t happened how we’d hoped.
Now that I’ve given you these criteria and cautions, let me say there’s nothing quite like starting and running your own business. The relationships you’ll develop with your team, your customers, and supporters can be golden. Your faith will grow deeper and more essential . . . your prayer life more authentic and desperate. Raising teenagers is the only thing that’ll keep you on your knees more.