Things that every entrepreneur should take into account at the first steps of his/her own startup
Based on my own experience founding two startups and on the experience of different entrepreneurs in similar situations, I can tell you that creating your own business is a very difficult, time-consuming and energy demanding but in the end gratifying task. Everything starts with a great idea, an idea that could make the world a better place. You usually begin by planning the first steps of the development of your product or service. But there are a lots of things you don’t even stop to think about before starting running your own company. Things that, in the near future, will delineate how your company will operate and grow, how strong will the dependency between you and your company be, how will you balance your personal and professional life and most important how happy you will be in your routine.
In this article I’ll refer to the facts, by providing key advices that every entrepreneur should take into account before creating its own company.
- Choose the right partners: my first advice is to find partners with similar personal values to yours. You will invest a lot of time with them and like every relationship, every now and then things will go wrong. You will find yourself taking difficult group decisions where personal interests will play a critical role. If all the partners share similar core values, the discussions will end in good, effective and democratic decisions in favor of the growth of the company. If not, day after day discussions will start eroding the relationships and the decisions will not be tied with the company’s objectives.
- Invest time in market research: focus your time and energies in doing a good market research before building anything. It’s not necessary to invest a lot of money in a complex research, with a very long report full of numbers. There are basic techniques that can be used to get very important insights about your startup, like market segmentation and the business model canvas. From those techniques, try to estimate the total value of the market in which your company will operate and also the percentage of penetration that you could achieve in the first year of operation of your business. This information will give you very important knowledge about competitors, pricing strategy, investment needed, sales objectives and customers archetype.
- Ask yourself important questions: why are you running your own company? Which are your long term objectives (three to five years)? How will you achieve those objectives? How will you become an expert in the field of your business? Finding answers to these questions is a key factor to be able to convince others about how great your idea and company will be. And when I say others, I refer to your potential customers and investors, the team that works with you, your friends and family.
- Achieve validation through MVPs: after you have done the initial market research you should start building the product or service that will drive your sales. The traditional waterfall methodology for developing products is no longer working in nowadays dynamic markets. Neither you nor your potential customers know which their true necessities are and your mission is to discover and solve them. My advice is not to waste your valuable time and energy by involving yourself and your team in a long development process without market validation. All you have at the beginning are hypothesis about your product and your customers. So try to validate those hypotheses by building small Minimum Viable Products (MVPs) to gain market feedback. I recommend everyone that is running their own business to take the time to read the book “Lean Startup” from Eric Ries. It changed my way of thinking about business and life.
- Focus on product-market fit: in a new company a lot of things are happening at the same time and it is very easy to get yourself distracted with minor tasks or problems. But you should know that your most important objective is to build a product or service that customers are willing to pay for. A company has gain validation when there is a critical mass of early customers that pay for your product and service. In that point you could say that you have achieved product-market fit and that you are ready to focus in growing your business. A great resource for learning about this topic is the book “The Customer Development Model” from Steve Blank.
- Learn how to manage risks: I believe it’s a better approach to take an incorrect decision, recover and learn fast from your fail rather than avoid doing anything because you are afraid of making mistakes. You will find yourself taking complicated decisions in a context of extreme uncertainty and like everything in life you will need to find a balance. Try to measure the potential impact of your moves before taking risks, considering that if you go too fast you could take a wrong decision and put your company in a difficult situation, but if you go too slow you could never gain traction in your business.
- Work in your contacts network: take into account that you are not alone in the complicated task of starting your own business. Out there, a lot of people like you are running their own startup. Try to be in contact with the entrepreneur community, there is always someone there opened to help you. But take my words of caution: while the past experience of other startups could be very helpful for your own company, try to put them in the correct context: place, time and resources. A strategy that works to a company, may not work in your own business and context.
- Measure progress using metrics: having a methodology to measure progress is a critical point for creating a successful company. You will be taking a lot of decisions at the same time, but how will you know that those decisions are helping you to move your business towards your objectives? How will you know which decision is having more impact than others? To answer this questions you should, after setting your short and long term objectives, find metrics that enable you to measure progress. You could think in obvious metrics like revenue, profit and amount of customers, but I encourage you to think in variables that are at the real core of your business model such as the Churn Rate in a subscription based business or the Customer Lifetime Value in a B2B business. For me it was very useful to see which metrics were using business models similar to mine.
- Built a dream team: day after day you will be working in a platform or in a cool new technology. But you will not be doing this task alone. You will be working with an amazing team of professionals. It will be your responsibility to be enough motivated to be able to motivate the people that work with you. A key factor to consider is to build a company culture in which people could have autonomy to manage their time, take autonomous decisions and have clear objectives and purposes. Your team is the most important asset that your company has. Take care of it. I recommend the book “Working with Emotional Intelligence” from Daniel Goleman. It helped me understand better the personal relationships at work and how to build an amazing working team.
- Think in every aspect of your company: a mistake I made, and from which I have learned the hard way, was not to thought in every aspect of my companies before creating them. At the beginning, as I said before, we usually start by planning and investing time in the first steps of the development of our product or service. Even more, if we have a technical background, we just want to start developing and putting our hands on the product. But we don’t think in things such as the pre-selling process, the pricing strategy and products margins, the post selling support, how important the product or service is for the customer, the size of the team we will need to hire to operate our business, the complications of getting out of the business (if needed), the funding necessities for scaling the company, and lots of others. These things don’t seem to be important at the beginning, but they will determine how your company will operate in the near feature. You should think in all these aspects of your business and determine if you are willing to take the challenge. After all, you will be in the center of the hurricane and you will need to invest a big amount of time before having success.
You have to find something that really passionate you and that is very aligned to your core values and abilities. Nobody can teach you how to be an entrepreneur. It doesn’t matter what are you studying or the degrees you hold. You will need to go outside and make your own experience. The most effective way of becoming a successful entrepreneur is to put your ideas under test and gain feedback from the market, from your customers and from your network of contacts. But don’t forget to also learn from others experiences. Read everything you can about topics related to your business and stay actualized in the state-of-the-art methodologies to boost you productivity and the efficiency of your company.
Creating your own company is a very challenging endeavor, but in the end it is very gratifying. I hope that these advices help you in this difficult task. And remember, achieving your goals is not the most important thing, most of the time you will be walking the road to your goals, so try to make that road a wonderful trip.
What do you think about the initial steps that an entrepreneur should take in the process of creating his/her own business? Please share your ideas with me in the comments section. If you like this article, please like it!
ABOUT THE AUTHOR:
Jorge Ezequiel Esposito is a passionate tech entrepreneur, a software / embedded-systems engineer with in-depth knowledge in mathematics / algorithms / electronics and a team leader that is always concerned about maintaining motivation by giving people autonomy and purpose on their jobs. He has vast experience on founding, growing and leading innovative tech startups. He is a result-oriented person with strong focus on objectives and metrics. He seeks innovation by combining academic research and new technologies with the needs of companies and people.