Pouring your heart, soul and finances into a new business is exciting, but in the game of entrepreneurship, risk is an inevitable partner.
To date I’ve launched three businesses, each into alien sectors, and I’ve had one epic failure (I’m talking bankrupt failure), alongside thousands of invaluable experiences.
Of all the lessons I’ve learnt the hard way, here are the things I wish I knew as a young entrepreneur.
Start like you are a million-dollar business
When starting a venture with people you have close ties to, your relationships will evolve and be tested throughout the inevitable highs and lows of doing business. To keep those relationships intact throughout the business’ lifetime, and beyond, create a solid foundation of mutual trust before pouring in equity.
When I started my first company, one of my partners insisted we have a 50-page shareholder agreement in place before we contributed any equity.
At the time I thought it was ludicrous as our business had a zero-dollar valuation. We hadn’t even agreed on our financial modelling yet, but she insisted the shareholder agreement be watertight.
“Start like you are a million-dollar business,” was her advice.
A year on when I left, it was a clean break. The lengthy agreement meant the terms of my exit were transparent and fair for everyone involved while, importantly, friendships remained intact.
Now, whenever I go into a venture, I maintain that million-dollar mindset and ensure the foundations are laid properly from the outset to protect relationships and investments.
Double your budget and triple the time you think it will take
Having an entrepreneurial spirit often goes hand-in-hand with a certain level of naivety, and so it should. Disruptive ideas are typically born from blue-sky thinking.
Having a bright idea is a great start, but they are a dime a dozen in the startup economy. It’s the execution that matters, so don’t ignore the logistics.
Doubling the budget and tripling the amount of time you think it will take to get your idea up and running allows for breathing space — which is necessary for the inevitable bumps in the road to success.
No-one will be more excited, motivated or passionate about your idea than you are, so use this to your advantage by working hard and being kind to those who support you.
Check your ego
Ego is the ‘junk mail’ of the brain, so be sure to check it at the door. It’s a steep learning curve — but no amount of preparation can match the value of experience.
If you have the opportunity to find a mentor, jump at it. Buy them a coffee, run your ideas past them, and most importantly, listen to their pearls of wisdom even if you think you know best.
Invest in branding
Branding is how your consumer sees your product and differentiates your business from the rest of the market. Set aside a healthy budget for this — it’s the best way to take control of your story.
Think of the most successful companies in the world and how they are synonymous with an icon or colour. That’s the power of branding.
People will judge your business from a first glance, so think heavily about what image you want to portray.
Listen and appreciate the feedback, good and bad
I once thought I had a brilliant business idea until a top-level Microsoft exec served me with some honest feedback: “You’re not solving a problem, this idea will bleed money.”
And it did.
My third business left me in severe debt. Albeit scary, this experience left me with the greatest lesson I’ve ever learnt: always listen to the hard truths, no matter how much it hurts.
It’s human nature to wear rose-coloured glasses when it comes to our own ideas, which is why both positive and negative feedback is invaluable. While it might be crushing to hear that your plan isn’t feasible, it will allow a critical assessment of any gaps or blind spots before it can hurt your bank account and reputation.
A short-lived blow to your self-esteem is easier to brush off than a venture that launches and crashes soon after.
Learn to listen more objectively — whether you are starting out or scaling a successful enterprise, there’s always room to learn and improve.
I used to think in order to sell my concept, I had to talk about it non-stop, when in fact, a good idea speaks for itself. Be succinct, ask for feedback, and really listen to questions to tailor your pitch for each unique audience.
Looking back on all of my business ventures — be they rock bottom failures or otherwise — I’ve learnt that what differentiates business success from failure is not revenue, but rather, experience. And that’s something you can’t learn without diving in and having a go.