- It never feels like work, even when you are at it for 100 hours a week. When you are building a new venture, it can be more stressful to take a vacation than to go to the office.
- You hold all the cards. You may not prosper or even survive, but you will be in the driver’s seat. Chances are, you will not get fired or downsized (though you should be willing to step aside and let more experienced management take over if that’s best for shareholders—including yourself).
- You can turn on a dime. When you want to make a change in your business, you may have to run it by a few people, but generally you can act very quickly. No waiting for next quarter’s budget. No half-day meetings or extended approval processes. Just flexibility and speed.
- You get to choose which people you work with all day. That includes partners, employees, suppliers, and even customers to an extent. Why spend most of your waking hours with people you don’t like, or at least respect?
- You are constantly learning. You’ll be wearing lots of hats, particularly in the early stages. You may have to learn about accounting, finance, marketing, hiring, firing, training, sales, manufacturing, customer service, new product development, law, technology, product launches, market research…the list goes on and on.
- If successful, you will experience a powerful sense of accomplishment and a source of self-confidence for years to come.
Here are a few traits of successful entrepreneurs:
1.Tenacity. Starting a company is not for the meek. Sure, some people get lucky. But odds are that you will experience failure in many forms along the road to success. That’s especially tough because entrepreneurs tend to be so passionate about their ventures, that their self esteem gets tied to their company performance. To succeed, entrepreneurs must have intestinal fortitude to get through the tough times.
Want to get inspired by some real world entrepreneurs of yore? Read Giants of Enterprise: Seven Business Innovators and the Empires They Built by Richard Tedlow – one of my favorite professors of all time. You’ll learn about people like George Eastman, who dropped out of high school when his dad died and clawed his way to a successful career as a banker. Oh, and by the way, he tinkered around with chemicals every night after work for 6 years before creating a photography business, and another 20 years before marketing the Brownie, which essentially created the billion-dollar consumer photography industry.
For a more recent example, consider Sir James Dyson. Dyson spent 15 years and his entire life savings trying to develop a bagless vacuum cleaner. During that time, he created 5,126 prototypes that failed. He also failed to sell his invention to the vacuum cleaner market leaders. Number 5,127 succeeded, and now he’s a billionaire. So much for “third time is the charm”…
2. Flexibility. I ride a bike to meetings in New York City when the dress code, weather and logistics allow for it. Each time, I know where to begin, and where I want to end up, but I can never quite predict the path I’ll take. My route shifts, as I try my best to dodge traffic, red lights and the occasional open taxi door. It’s not a bad metaphor for entrepreneurship. Truth is, while it’s important to have a viable idea as we’ll see in the next chapter, most great entrepreneurs don’t succeed the way they expected at the outset. They do a fair amount of planning to come up with a seemingly valid approach, test the waters, and then modify their strategy, tactics – even their entire business model. A survey of Inc. Magazine’s Inc. 500 Award winners showed that 65% of CEO’s that wrote business plans “strayed significantly from their original conception, adapting their plans as they went along.” So entrepreneurs need to be good at rolling with the punches.
3. Salesmanship. Selling is a big part of starting a venture. As an entrepreneur, you may or may not be the one selling your product or service to your customers or clients. But for sure you’ll have to sell yourself and your ideas. You’ll have to persuade suppliers to work with a company that doesn’t have an established track record. And you’ll have to convince employees to forgo less risky jobs, and quite possibly to take lower salaries and less attractive benefits. You may also have to convince investors or partners to bet on you.
This scares some people. They think great sales people are born closers, or at least have the charisma of a fraternity president. While that couldn’t hurt, what’s important is that you can inspire trust, and be charismatic and persuasive. I once had a Chief Technology Officer (CTO) who could practically write code in his sleep, but had always thought of himself as a back-office guy – someone you’d never put in front of a prospective client. A few years after we parted ways, he tried his hand at selling tech development and recruiting services, and was very successful. Turns out he could sell anything as long as it was related to his passion for technology.
4. Resourcefulness. Many entrepreneurs don’t have ample resources, like support staffs or cash reserves. But good entrepreneurs have a knack for making the most of what’s available to them. Many founders work part-time as consultants to keep the lights on during startup mode.
One of my clients, Amanda, is a perfect example. She started an email newsletter about personal finance for women. Her first goal was to build a subscriber base. She couldn’t afford to launch paid marketing or PR campaigns, so she got creative. She had all her friends sign up and encourage their friends to sign up. She used social media like Facebook, Twitter, LinkedIn, and her alumni networks to spread the word. And as her list grew, she swapped promotions with other email newsletters. She also syndicated her content to other websites for women, and on personal finance, providing free articles in exchange for links back to her sign-up page. She positioned herself as a leading expert on personal finance for young women, and used that positioning to generate press. Within months, she had thousands of subscribers, at the low, low cost of zero dollars.
If you have the entrepreneurial traits I’ve described, you are off to a great start. If not, you’ll just have to break the rules – something else most entrepreneurs are good at.
An estimated 31% of Americans have considered starting a business but haven’t taken the plunge. Many of these “wannabe” entrepreneurs aren’t sure what to expect, or whether they are cut out to start companies.
There are lots of misconceptions about what it takes to start a business. Many people hear “entrepreneur” and picture a 22 year old computer prodigy, or a newly-minted M.B.A. with a Blackberry full of venture capital contacts. Others picture a seasoned veteran, who has started several companies over the course of many years.
In reality, entrepreneurs don’t fit neatly into demographic buckets.
Myth 1: Most entrepreneurs are fresh out of school, or experienced veterans.
A quick glance at the age of the 2009 Inc. 500 list dispels that one:
Myth #2: Entrepreneurs from top schools have a big advantage.
If you want to raise Venture Capital funding, it’s helpful to have classmates in high places. Peruse the bios of Venture Capital partners, and you’ll see a lot of Harvard, Stanford and Wharton MBAs, for example. But most startups don’t raise Venture Capital; how important is a fancy degree to them? Not very. According to a Kauffman Foundation research study of 549 founders of successful high-growth businesses, only 6% went to Ivy League schools.
This is the second in a series of posts following a BootStrap Bootcamp I ran in NYC in July.
Should you bootstrap your venture?
Before answering that, I’d ask you this: Do you have a choice? If you haven’t launched a successful startup before, don’t have a stellar track record within the industry you are pursuing, and don’t have a strong network of angel and venture capital investors, you might find it very tough to raise capital. Even if you can do it, it might take you nine months or longer to scrape together your funding. That’s going to be a long, painful process.
But what if do have the ability to raise capital. Should you always do it?
- You’ll be able to pay your rent without eating into savings
- If you budget properly, you’ll know you can keep the business going for some period of time
- You’ll probably be able to move faster
- You may find it easier to sleep at night – at least when it comes to your own personal risk
- Once you raise capital, you have to a responsibility to someone else. That means you’ll have to consider their interests when you make big decisions, which means you probably won’t have as much flexibility. For example, if you decide to change your business model, you’re going to want to get your investors to agree it’s the right thing to do. Even if you’ve only sold a small stake, you don’t want pissed off investors for a multitude of reasons (e.g. You need their help, they can make life difficult for you, etc.). That also means, you’re reputation with future investor prospects will be on the line.
- If you’ve got the money, you’ll spend it. That’s just human nature. The flipside of this is that if you don’t have the money, you’ll probably do more with less.
- Even if you have great contacts, it can take months to raise capital. Your time might be better spent operating your business.
I’ve seen many situations where founders planned businesses the wrong way. Here are two real examples, with fictitious names:
- Pamela Perfection. Pamela was holding back tears when she came to me. Months earlier, she had started a fashion accessories line, and her products were flying off the shelves at the chicest boutiques in NYC. Then she hired a group of bankers to write her a business plan, and raise capital for her. But by the time we met, all she had to show for it was an 80 page, spiral-bound Private Placement Memorandum (“PPM”) that she couldn’t even begin to decipher. No investors. No slide presentation. And no money left to fill customer orders. Pamela had wasted time on the wrong kind of plan, at a critical juncture.
- Wally Wingit. I met with Wally at the suggestion of a considerate friend in Venture Capital. Considerate because Wally had completely blown his presentation to the VC, and the VC was nice enough to give him a point in the right direction. A tech prodigy, Wally had spent months developing a whiz-bang Facebook application. Unfortunately, he spent 20 minutes giving the VC a demonstration, but failed to articulate critical elements of the business, such as his business model and marketing plan. He had heard stories about founders raising millions with a plan sketched on the back of a napkin, and hadn’t taken the time to develop his business plan.
This is the third in a series of posts on startup risks. I’m not trying to dissuade anyone from starting a venture – I just want to help make sure you are aware of the risks. And don’t worry – I’ll blog about the rewards, too.
Career Risk. While some entrepreneurs start company after company (aka “serial entrepreneurs”), others turn back to the job market. Unfortunately, your resume can look odd after a few years at startups, making it tough to fit neatly into any well-defined corporate roles. And if employers sense that you’d rather be starting your own businesses than holding a job, they might perceive you as a “flight risk”. If you manage to land a job after being an entrepreneur, you might find it difficult to fit in. Once you are used to turning on a dime, the slow pace of change at a large company can be frustrating. And after being in control, it’s tough to follow orders. The first time your boss Doogie Howser tells you to get on a plane to Timbuktu on a Friday afternoon for a meeting you consider a waste of time, you’ll know just how spoiled you’ve become.
Finally, entrepreneurs are likely to have rollercoaster careers, often with extreme highs and lows. They may dip into savings and forgo income while planning a venture, pay themselves just enough to get by during building years, and earn big payouts upon selling a business. But they can also experience sudden, significant challenges. Like rollercoasters, entrepreneurial career paths require intestinal fortitude.
…After I posted this, I got two amended charts from a lifelong friend of mine and fellow serial entrepreneur, Scott Kennedy. Just had to share:
Not everybody agrees with my argument that entrepreneurs should focus on their pitch decks, not on writing text-based business plans.
So, this morning I decided to get some more opinions. I surveyed over 50 experts, including venture capitalists from leading firms like Kleiner Perkins Caulfied & Byers, noted angel investors such as the backers of Method, and serial entrepreneurs like John Osher, creator of the Crest SpinBrush and the Gillette Mach3 Turbo Power razor.
The results? 90% of respondents said “focus on the presentation, not a text-based plan”.