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7 Tips for Startup Success

| July 4, 2013 | 10 Comments

tumblr_miz1avwQCu1rhf0i3o1_1280“I dreamt of being an Entrepreneur one day, and hence I’m here!”, if this is what inspired you to be a part of the horse race, then you are definitely in the wrong place. This is not the game for the cat in the adage.

Likewise, you can’t be a great entrepreneur if you get into it without having a clue about what it takes to create a new business enterprise. Every new entrepreneur should follow the tips below, if they want a shot at being successful.

1. If you don’t have a clear idea, you won’t make it.

It’s one thing to imagine something working, but it’s a whole other thing to make a business out of it. Make sure the idea that you have thought of is workable, and not does only remain on paper. Think hard about your idea and every part of the business that it might become and then come to a decision on whether or not it is worth your time. You have done plenty of research on your plan, so do not harbor any thoughts on hypothetical profit scope. While pivoting is always an option in case your start up hits the dead end, take your idea through multiple rounds of cross checking to ensure you do not face the classic dilemma of an entrepreneur – “Should I preserve, Pivot or Stud Down”

After all, you will not really like to be in the company of RiotVine, Xmarks or YouCastr

2. Start on a small scale.

Before your product is ready to hit big time, you have to find out if there actually is any interest in one what you’re doing. You don’t want to spend months on your business only to find out that there really isn’t any interest out there in what you’re doing. You should remember that any new venture brings with itself a plethora of rejection. Hence, it is better to have a “test drive” rather than getting drained of your savings at one go. And if you are angel/seed funded, starting small but dreaming big is more of a norm and less of an option. Traditionally, any angel or seed funding you may get will come with the rider that you do a pilot project, ensure proof-of-concept and when you have crossed the “valley of death” , you bring in more resources and hit the market full throttle.

3. Outside financing is for further down the road.

Until you have a product that is ready to hit the market, you should be taking care of all of the financing yourself. Often, your ‘superb’ idea might not work initially and might take some time to pick up. During this juncture and always, you should remember, that nothing is yours except the money in your bank. It’s never a good idea to take people or a bank’s money before you are sure that your business is going to make money. Paul Graham, the co-founder of Y-Combinator, famously said that being overfunded is one of the least recognized but important reasons why start ups fail.

4. Keep your day job.

This one can be combined with the above mentioned point. This is because the only way that you are going to be able to fund a new business venture is by having a job and paying for it yourself. Your entrepreneurship is not going to happen in a single day. You may even want to get multiple jobs to be able to finance your business in the early stages. Of course, companies like Yahoo will hate this – its employees launched start ups while being on the payrolls of the company, there is no reason why you should not use the certainty of having a job to cushion the uncertainties of a start-up.

5. Your business needs to make a profit.

Okay, this one is obvious, but many new entrepreneurs focus way too much on other things besides the one that matters most: profit. If you find yourself looking at web page analysis or other numbers other than your profits, you’re doing something wrong. Your business needs to establish a brand but most importantly skyrocket your monetary gain. Arguably, the single most important reason that led to the Dot Com bust was start ups focusing on eye balls and not revenues.

6. Make sure you work with the right people.

Human resource is THE most important asset that any start up has, and if not picked properly, it can also become the sinker that sunk the ship. Be extremely careful whom you select as your core team, and more importantly, as your co-founder. A very common mistake that entrepreneurs make is not being attentive enough while selecting a co-founder. You need to see for yourself if a person is the right candidate for the job before you accept them onto your team. You need people who would deliver and not anyone who would eat away on your resources. The people in your team should be there to drive your business to newer heights, and it should not be the other way round.  Don’t just hire people because they are your friends.

7. You need to be a motivated to succeed.

Ideas are dime a dozen – execution is the key that separates the chaff from the wheat. Big and impressive looking spreadsheets, long strategy meetings and other such things are indeed required, but for a start up to go past the tipping point, the founder(s) will have to dig in and get dirty. Many entrepreneurs fail because they don’t fully commit to their new businesses. They think that they can hire a few people, let everyone know what the great business idea is, and then everything will work itself out. That just doesn’t work. Every successful entrepreneur puts their lives into their work, which means that there won’t be much free time anytime soon. If you really are sure that entrepreneurship is right for you, you have to say goodbye to some of the things that you are used to in your daily life.

These are all very basic principles that all entrepreneurs should know, so if you dream about having the next great startup, be sure that you have what it takes to make it. Remember, hard work never gets wasted!

Ronald Alexander is a passionate writer and avid blogger currently associated with Forsyth.co.uk, which provides business services including flexible office space and virtual office services in Manchester.

Image Credit: www.hoverstate.com

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  • Michael Luchies

    Some good points here Ronald. I disagree with both #1 and #4, but not completely. Many young entrepreneurs credit their success to their naivety and not having everything clear at first. This also prevents a lot of young people from just starting the business because they are worried about their plan and every aspect of the idea. This is where I think #2 is very important, especially the part about STARTING!

    #4 is a completely right and wrong answer depending on the entrepreneur you talk to, industry, product/service, etc. There are many people that are very passionate about one side of this argument. Mike Evans from Grubhub is very passionate about quitting your day job being the key to success as an entrepreneur. He states that the physical feeling of hunger in your stomach is the greatest actual motivator for your new business and is what helped him succeed. Craig Cordes from Cordina Cocktails, who I interviewed a week ago, worked full time in Houston while starting a successful business in New Orleans. He would use the money from his job to fund the business and drive from Houston to New Orleans to work on the business every single weekend.
    Thanks for the points and the article!

  • Daniel DiPiazza

    I liked the bite sized chunks on this. Wanted to piggyback off what @michaelluchies:disqus said here – I think, for me at least, quitting my job was ESSENTIAL. It all goes back to psychology. Basically we are more apt to respond to negative motivation that positive in many cases. It’s easier to run away from something “scary” than towards something “good” in many cases. For me, I knew I wanted to start my own thing, and the fear of starving, which relates to death, pushed me to find a way to make it work.

  • Mike Darche

    #4: I’m with you guys on this one.. It really depends on your circumstances. If you currently have a job with enough flexibility, it will be much easier for you to start something than somebody working ridiculous hours for minimal pay. Another problem might lie in a conflict of interest. You’re less likely to follow through with your plans if you have a stable job to fall back on when your idea/implementation hits a major roadblock. Many successful entrepreneurs have argued that you can really push yourself to do your best work when you burn the bridges behind you. This doesn’t necessarily mean putting yourself in a tough position, but steadily letting go of alternatives to your idea or excuses that prevent you from making it happen.

  • Cara Murphy

    I think @michaelluchies:disqus said it best- “#4 is a completely right and wrong answer depending on the entrepreneur you talk to, industry, product/service, etc.” It is a very personal decision, but one that should be thought deeply about because everyone has a different situation. Daniel, I think you’re right- psychology, your outlook on life, and how you face challenges and obstacles in your life has a large impact on what path is best.

  • cesar romero

    Great points here guys. Number 4 seems to be the favorite and with no surprise, after all, for many of us, the 9-5 gig or “normal job” is our first experience in generating income and becoming self-sustainable. I think if your job is flexible enough, milk it until your startup project can take a life of its own; if your job is not flexible enough, quit; seriously, sure you will have new problems and pressure but at least you will be free to work full time on what you want and grind for something you believe in.

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  • Sillowine Sanderson

    Theres a lot of successful people who all have different ideas and perspective on how they become who they are. For me, rick schaden has been a real inspiration for me! Helping other businesses become something big/successful is something we can all learn from. I think his methods are right on!

  • Chaz

    I think that is a very valid point, complacency can breed delay whereas if you truly believe in your idea then you will find a way to make it work – and if you’re job finishes and it’s a choice between finding a new one or having some money to keep you going and spend full time work on the new business idea then why not I say!

  • http://www.figurewizard.com/ figurewizard

    It is a fact that many good young businesses go on to fail because they have not understood that profits alone do not guarantee success. The real danger is that as sales and profits rise, so does the cost of investing cash in current assets such as goods on the shelf or outstanding cash from customers of charge card service providers – If you run out of cash you risk going out of business.

    Investing too much in fixed assets too – for example delivery vans or computers will also drain liquidity and therefore cash from the business. What is always needed by any growing business is to be able to accurately forecast both their liquidity and cash flow as well as their profits to avoid such problems before they happen or to raise the finance to support their success.