Entrepreneurial Scars

The Other Watercooler

Five Things I Would Tell Someone Who Wanted to Be An Entrepreneur... Before they became an entrepreneur (aka... The Five Things No One Told Me... Before I became an Entrepreneur) by Suzi Bonk, Sofa Logic

1. Being Successful In Business & Having a Successful Business Is Simply About People...

Everyone has heard one way or the other that having a successful business is about people. Not just any people, but great, experienced people that can form a team, build successful businesses. It seems that there are three groups of people that make up most businesses; the shareholders, the employees, and the customers. I think that in my short career life as an entrepreneur, I would like to suggest that an entrepreneurial trap is spending too much time focused on the demands of the first two groups, and not enough time meeting the needs of the last group.

Funny enough, customers are an essential part of any business. And it's a natural assumption as an entrepreneur to think that everyone in the world would want to buy what you have, so you don't spend much time trying to find out if they really WILL buy whatever it is you have... Widgets aside, somebody's gotta buy whatever you got. If they don't you won't have shareholders for very long and you certainly won't have employees for too long either. I think finding customers first isn't a bad idea. Certainly investors will be more inclined to invest, and you won't have trouble recruiting highly skilled and experienced people to get your business off the ground.

Customers are not just some obscure group of people that might be crazy enough to buy something from you... they make or break a business.

(Avoid this knock! Learn from me on this one, I learned it the hard way...)

2. A Business Plan and a Business is a Living Entity...

Opportunities give birth to business plans, business plans evolve into start-ups, start-ups mature into businesses. And those businesses either die young; become the corner store in your home town; grow too fast like a teenage boy and require new management; and/or, mature into mammoth conglomerates that no one really knows too much about or understands.

In my short vocation as an entrepreneur, I have had more than one start-up die young. It might be fun to manage the business that grows like a teenage boy. I'm not all that interested in the local corner store other than to pick up my morning OJ. Ultimately, I'd like to start a business that is either bought out by or becomes a 'mammoth conglomerate'.

The point is that what you start out with in a business plan is not going to be the result. That's a guarantee. Starting a business and growing a business is like raising a child. They require more time than you have in a day, they need nourishing, parenting, and all that other fun stuff. But they will never end up like you thought they would, so measuring your own expectations is important.

The business plan you wrote, the business you're trying to create, and the market you're trying to build it in, are guaranteed to change. Be prepared to change with them. Be aware, and be fluid.

3. Understanding How Money Works Is as Important as Figuring out How Much of It You Need...

In the words of Barry Moltz, "Cash isn't just king... It's queen, jack and every other face card in the deck." [I remember reading this somewhere so it might not be direct, but I would like it to be...]. Oddly enough, without some means of cash, there is no business. It is the life blood of your company. You need this, it's important.

It also seems important to find out how money works. I have yet to get a complete grasp of how this stuff really works. It's somewhat of a mystery. One thing I do know is that if I get money from a paycheck and I take it out of the ATM, then buy something, it appears to be gone. And gone much quicker than I anticipated, partly because going back to the ATM is so easy. If getting investors was like going to the ATM, business would be a different thing. (I suppose in the dotcom world it was a little like that, but we've moved past that now... Getting investors is more like winning a lottery ticket. Ask the old lady at the drug store how to pick your numbers wisely.)

Oddly enough they expect you to make money on a consistent basis, and then they expect that you'll make more money. It takes a lot more money than you think to be successful, it costs a lot more money than you think to get a customer, it takes more energy than you think to manage the money you have, and it takes a tremendous amount of something-or-other to continue to have money. It comes and it goes. The trick is to have more of it coming than going.

Get to know your bookkeeper well. Find out how money works. Learn what balance sheets, income statements, cash flow statements, projections and all that funny stuff really mean. Know that information better than anyone else. If you don't know or understand, or if you're dyslexic like me - find someone who REALLY understands the ebb and flow of money to help you!

4. Entrepreneurship is Not for the Faint of Heart... It is a Vocation & a Lifestyle

It's a scary world out there and you're going to take some hard knocks along the way. And the one you just survived isn't going to be as difficult as the next. The good news is, when all has gone to the bottom of the barrel, there is only one direction to go and that's up.

However, you should know that... Investors will pull out of a deal and partnership negotiations will fall apart; family gatherings and holidays might never be the same; you could lose your house, car, family, pets, marriage, backyard, and all that you hold dear; your mother might not understand why you don't call her anymore and your siblings will think you're crazy; you could suffer from depression for a while and need to see a therapist; some big business guy will lie to you and not return your calls; you could get fired by the company you started; and you will get screwed over countless times.

Some of these things, if not all of these things are likely to happen. Don't burn bridges with people if you can help it because they will end up employing you at some point if all else fails. Consider these things your right of passage. Everyone successful in business, has gone through some of these things if not all of these things.

Key to surviving is finding other entrepreneurs to commiserate with, mentors to guide you and provide advise, and lastly, get some tough skin. Try not to take these things too personally. If you do, only allow them to bother you for a day. Then move on. Get back up at it. Real entrepreneurs tend to play this game regardless of the consequences. And they will do it over and over again no matter what. If you're not prepared to lose over and over again, go bankrupt a couple of times, and learn the real gift of humility - this is not for you!

(I keep doing this over and over again... Somedays I wonder if I can handle one more day...but there I am bright and early, eager to see what happens once again.)

5. Investors, Jerry McGuire & the Five Page Document...

I only know a small fraction of what there is to know about the nature of investors. A very small fraction. What I have had the opportunity to observe, more than know personally, is that investors invest in people. And more frequently than not, they invest in people they know or people that offer very credible referrals. Enter: Jerry McGuire.

You gotta remember that movie, Jerry McGuire... Well, if your family and friends have already put their cash on the line after you; and you don't know any investors personally, then my suggestion is that you find your own Jerry McGuire. You will need someone who knows a diverse group of credible investors, who is willing to bet on you, and who can make introductions and help negotiate on your behalf. You need an agent. Get a good one.

Jerry McGuire could be your lawyer, an accountant, an advisor or mentor, banker, a fellow entrepreneur, (landlady depending on where you live) or a professional broker. It is unlikely that you will be able to cold call Bill Gates directly and ask him to invest in your company. He has people that watch out for crazies like that, called bodyguards. Kidding aside, although I don't know the man personally, all likelihood is that he has business gatekeepers. You will need Jerry McGuire to make the connection on your behalf.

And when you get there, know that the decision to invest in your company will be based largely on a five-page document. They call it an executive summary. Don't blow your brains out on a 500-page business plan. Write the most concise and compelling executive summary you can. Explain what your business is - Not just what you plan to do, but what exactly IT is... and of course all that other Business 101 stuff.

In going through this process, know that: If you have the customer, you can "shop" your deal around town. Or you might not have to shop hardly at all. If you don't have the customer, you'll get kicked around town.