So You Want To Become a Start-up Entrepreneur?
POSTED ON 31ST AUGUST 2016
Taking the leap to become an entrepreneur will be one of the most exhilarating and the most stressful things you ever do in your life. The highs you’ll feel are far greater than you’ll experience as an employee. But you’ll often feel like you’re taking as many steps backwards as you’re taking forward, which can be both frustrating and stressful in equal measure.
Here I’d like to share 7 pitfalls I’ve learnt that you need to overcome if you want to be one of the entrepreneurs whose business succeeds rather than flops. Some are lessons that I’ve learnt the hard way; others are things I’ve seen be the downfall of other start-up entrepreneurs. I hope that by sharing them here, they can help many of you to build thriving new companies that go on to need the support of a specialist recruitment business like Scede that’s focused on helping successful start-ups to recruit.
One thing I can say with absolute certainty is that you’re not satisfied with the product or service you’re taking to market. Maybe you’re launching a new App… or maybe you’re creating an online marketplace to disrupt a traditional industry. Whatever it is that you’ve been working on so passionately, I know that you’ll have a big long list of ways that your product or service could be far, far better.
The thing you need to realise is that this big long list never really gets any smaller! Show me an entrepreneur and I’ll undoubtedly show you someone who has a big long wish-list of the things they would dearly like to do to improve their offering. As a start-up entrepreneur, the key thing is that you don’t allow this to be a reason for procrastinating and delaying the launch of your business. Once real consumers start using what you’re selling, you’re going to get loads of feedback that calls for significant revisions anyway. So don’t delay the point at which you get this valuable feedback – on the contrary, launch as quickly as you can with an offering that is value-adding but may still be far from perfect.
Business plans are great up to a point. They force you to map out your plan of action, to cost things up and to determine that ultimately there is actually a viable business here rather than a mere hobby. However, business plans are only as good as the volatility and uncertainty of the variables you put into them. If you’re launching a mirror image of an existing business then business plans can be quite precise. Starting an accountancy practice or a restaurant or an estate agency? If so, the timescales for bringing in revenues – and their associated costs – are fairly well understood in the industry. Your business plan will keep you honest and ensure that you only spend on the things you really need and that you’re bringing in new clients at the rate that’s needed to stay in business.
Many of us though are launching businesses in untested waters. If you have devised a new App or you have created an online marketplace to disrupt a traditional industry, you’re operating in the realms of the unknown. The only certainty is that when you start trading, all the assumptions you had in your business plan are going to need to be significantly revised. You may even find that the act of starting to trade causes you to pivot the business altogether. What you set out to create may not end up resembling your future business at all! So by all means write a business plan to keep the money men happy, but don’t obsess about it. No business plan ever brought in a customer or project managed a new internet venture being launched – so devote your time accordingly.
A major constraint on the rate of growth of your start-up will be its ability to generate a consistent and sizeable flow of quality leads. If the quality of leads isn’t there, your profitability will suffer as a result of the sales costs of interacting with such a high number of “prospects”. If the quantity of leads isn’t there, you’re going to become overly reliant on the skills of a salesperson (who might leave) or simply never get to the critical mass of customers that you need to really take off.
A key success factor for any small business is therefore to find ways of bringing leads into the business that are i) not dependent on key individuals, ii) are easily scalable and iii) are pre-screened so that your sales efforts can be focused only on the most promising of prospects. Whether that’s through referral partnerships, viral sharing initiatives or slick content marketing – it’s something to focus on if you’re always worrying in your business where the next good leads will come from.
Let’s cut to the chase when it comes to cashflow – money worries can be toxic for a business. They divert the attentions of an entrepreneur away from focusing on the things that will really make the business successful. Additionally, cashflow issues can hamper the speed at which you grow – since your ability to invest in smart ideas is constantly constrained by your ability to finance those investments.
Look around and you’ll see many of the most successful start-ups have built their products or services around payment plans or subscriptions that result in the business getting money from a client before they’ve had to pay the costs of actually delivering on those sales. Challenge yourself to think of ways that this same approach could be adapted for the markets you plan on serving. The upsides from removing cashflow worries are potentially worth restructuring your whole offering around.
Delegation can be hard. For the long-term success of your business, you need to focus your time on doing the most value-adding things in your company. But when you first start out, you may well find yourself getting involved in just about everything.
There will come a time though when the hours available in your day become a serious constraint on the growth of your business. It’s one of the hardest things for an entrepreneur to do, but you have to be more and more willing to delegate much of what you do to other staff. A key part of this is accepting that someone doing a job 80% as well as you might have done it is still driving the business in the right direction. Take this on board, accept it and act on it every day you can.
A related challenge is forcing yourself to “let go” of certain key tasks and deciding what can and cannot be outsourced. Entrepreneurs are sometimes undone by their egos and the desire to grow a large team of staff. I saw that even Buffer fell foul of this just recently and was forced into making layoffs.
The polar opposite approach is to outsource. Outsourcing can give you access to levels of expertise that you simply couldn’t have afforded to hire in-house. It can allow you to react and adapt in your business far faster than if relying solely on staff. Plus it’ll usually involve a far smaller financial commitment and so leaves your business much more resilient to riding out any financial shocks that may be in store along the road. Sounds like a great combination of upsides – and yet lots of entrepreneurs don’t really act decisively when it comes to outsourcing.
Last but by no means least, let me address the challenge of building a scalable business. Lots of new businesses evolve how they operate from year to year, adjusting incrementally to the fact that they’re now a bigger operation. This is quite different from building a business to be scalable from the very outset.
So I encourage you to carve yourself out some time and to think about what your business would look like if it were ten times larger. What challenges would you face that you don’t face today? What would you choose to do totally differently today if you knew with certainty that you would be ten times bigger? Then try to build your business from today onwards in a way that accommodates the need for efficient growth. Should your business thrive, you’ll find you can then grow far faster and with far less stress and pressure.
Tony Restell is the Founder of a niche social media agency and a serial entrepreneur in the digital recruitment sector. A guest lecturer at MBA schools across Europe, he helps candidates, recruiters and entrepreneurs to leverage social media to its full potential. Reach out to Tony with any follow-up questions on @tonyrestell.
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