Thursday, June 7, 2012

An Open Letter to a Beginning Entrepreneur

What if you could go back several years when you first decided to become an entrepreneur--back to the days when you were a beginning entrepreneur? Chances are you didn't even call yourself an entrepreneur. Like many, you were probably armed with nothing more than a laptop and dream. You decided you could no longer take cubicle life or working for someone who clearly is not as smart as you. Perhaps you thought to yourself, I know I can do this better than them and make a lot more money in the process. Now you are a veteran entrepreneur with the scars to prove it. You know things today that you wish you knew back then because it would have made your path much easier. Well, that is the very nature of this post--an open letter to myself as a beginning entrepreneur several years ago.

The Nostalgia of the Startup

I know you are excited to finally be doing your own thing and you should be. You had the courage to take a step that most people only dream and talk about. You are one of a very small percentage of people who actually take action. During this period of nostalgia, you will feel as though you can conquer the world and change whole industries. You will not require a lot of sleep because adrenaline will be a type of wonder drug. People will feel energized and excited when in your presence because your extreme optimism is infectious.

Do not squander this period by focusing your energies on the wrong things. Why? Because it will not last, but we will get to that later. For now, the best advice I can give you is to be in front of as many people as you can, talking about your new business and what you can do for them. Give demos, free lectures and, yes, free samples. Do not be afraid of giving away your service or product. These will turn into reviews that you can use when pitching potential customers or investors. However, be mindful of your value. If you give something away, always be sure to get something in return. In this case, a written review or referral if the user of the service or product is satisfied. More importantly, find out what they do not like about the product or service and how you could change it to better serve their needs.

Safeguard Your Baby

Your startup is like a newborn baby that should be safeguarded and not handled by just anyone. During the startup phase, you will be a bit vulnerable. Anyone with negative, unconstructive criticism can cause you to doubt yourself and throw you off course. Surround yourself with people who are supportive of you and your ideas and purge your life of naysayers and toxic personalities. This is not to say you must surround yourself with "yes men." In many ways, they can be even worse than naysayers. You need people who are supportive enough to encourage you and who can give you constructive criticism to help guide your decisions.

These people are of two types; those who are supportive cheerleaders and those who are experts in areas where you lack expertise. The cheerleader is the one who pats you on the back and tells you how proud they are of you. The expert is the one who advises you on different aspects your business operations. A mentor. Find as many of them as you can and consult with them often.

Everyone else should be excluded from discussions regarding your new business. If it happens to come up in conversation, keep it brief. If the conversation goes negative or toxic, change the subject. If you are unable to change the subject, politely excuse yourself. This sounds harsh but I am giving you this advice from several years in the future. Been there, done that, so protect your baby.

What Goes Up, Must Come Down

I know you will find this next bit of information hard to believe but just hear me out. This initial period of nostalgia will eventually go away. Once that happens you will go from being up one minute and down in the dumps the very next, even though nothing significant changes. The only change will be your perception.

This is totally normal and happens to all entrepreneurs. In the beginning, you will get sales and people will show lots of excitement. But this honeymoon period will eventually end as you venture out into a broader market and encounter customers and contacts that know very little about you. The best advice I can give is for you to expect this to happen and respond to it appropriately.

How do you get past this or minimize the effects? While going through the period of nostalgia, get out of your comfort zone early and get in front of your target market. You will initially get sales from people who know you or are separated from you by 1 or 2 degrees--friends and contacts of contacts. This group is willing to give you a chance even if your presentation is not polished. This is a great start but spending too much time here will stunt your growth. You need to be in front of prospects who will ask tough questions and force you to perform at a much higher level. As the sales from friends and contacts of contacts begin to wane, this new tougher group will make up for it as you start to close those sales. Following this process will also increase your level of confidence because you are able to sell to fresh faces that never heard of you.

Mind Your Business

This next point cannot be stressed enough. In an attempt to save money, you will be tempted to take on tasks you have no business playing with. This includes bookkeeping, accounting and lawyering. This is damaging for two reasons. First, it keeps you away from being in front of customers, where you should spend the majority of your time. Second, you did not go into business to be an accountant, bookkeeper or a lawyer because you simply do not have the training or experience. Leave these tasks to the experts. You cannot pull off being an accountant by installing QuickBooks and entering transactions. Retain the services of professionals for these important tasks. A good accountant will have contacts with other industry experts such as lawyers and bookkeepers. These professionals will work for you on a consulting basis and are not as expensive as you think.

Consider what your time is worth. Every minute or hour you spend trying to figure out QuickBooks is another minute or hour you could be promoting your business or closing sales. Stick to what you do best and leave the other stuff to the experts. However, be sure to consult with them regularly to make sure you understand how your business is performing, especially with regards to cash flow.

Beware of Sunshine Patriots and Summer Soldiers

During the American Revolution there were farmers who fought during the summer months, then went AWOL during the fall or winter. Then there were the Sunshine Patriots who were very supportive of the Revolutionary War so long as things were going well. Thomas Paine described both groups in his Crisis Pamphlet in 1776 as follows: " The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country."

So, what's with the history lesson? Entrepreneurship also has its summer soldiers and sunshine patriots. They are the people who want to ride your coat tails of success so long as things are going well. Some of them, and this is the most important point, will want to partner with you. If you make the mistake of partnering with these types, they will leave you standing on the battlefield alone once the entrepreneurial winter months hit. We often refer to them as "wantrepreneurs" or entrepreneur wannabes who are not willing to pay the price. Simply put, be extremely cautious of those offering to be your business partner while things are going well, especially if they have never run a business before or bring nothing substantial to your business.

Fund Your Business with Revenues, Not Bank Debt

You will be tempted on a number of occasions to fund your business with bank debt. Don't do it. If you have a viable product or service, you should be able to fund the company through your revenues. Of course, this is only possible if you spend your time in front of customers and not trying to learn QuickBooks. If you need additional funding to deal with slow paying clients or if you need to purchase product, seek out investors amongst friends and family. Despite what most people believe, the most common funding sources for entrepreneurs include personal credit cards, revenues and loans from friends and family. Bank debt should be nowhere on your radar at this point. Get out there and SELL, SELL, SELL!

Be an Entrepreneur!

If you are going to be an entrepreneur, then be an entrepreneur! You are no longer a specialist or engineer, so give up your fetish with technology. This is not to say you should not do a good job. Do the best job possible when delivering for your customers. But as an entrepreneur, your responsibility now is to grow your business. Get out there and sell like crazy and work to get out of your business. You want to reach a point where your business can function without your direct involvement. If you insist on doing everything yourself and not bringing on team members who can do your job, you do nothing more than create for yourself a miserable job that you can never leave.

Sleeping Under a Desk Isn't Cool

Stories of young entrepreneurs sleeping under desks and living off of Coke and pizza makes for great television. Now that you have chosen the path of entrepreneurship, you can certainly expect to work some extremely long hours but life requires balance. Force yourself to take breaks and to step away from your work. It is during these moments of rest and recreation that some of your most creative ideas will surface. Be sure to stay active in your community and set aside down time for close friends and family.

Remember Who You Are

Never under value yourself--not for a customer, a partner or a vendor. Never allow anyone to force you into a bad deal. You always have a choice. You bring a great deal of value to the table, so do not be afraid to charge appropriately for your services. Always remember, those who pay you the least will give you the most grief. Trust me, it will not get better over time.

To close, I just want to implore you to heed the advice in this letter, for I have been down the road that you are now traveling. This journey will be the most fun you will ever have in your life. It will also be the most challenging and the scariest. Just keep the faith, press on and you will reach your destination. Godspeed and I look forward to seeing you in The Players Lounge (You will learn what that means in a few years. Believe or not, you're actually going to write a book about it!).

Well, there you have it. This is my open letter to my beginning entrepreneur self. I'm going to hold onto to this until someone invents a time machine. Then, I'm going to instruct them to go back in time and hand deliver it. Until then, the least I can do is take these lessons from the trenches and pass them onto the beginning entrepreneurs I come across on a regular basis, which is why I wrote my book.

Entrepreneurship is a thrilling ride but at times it can also be a difficult journey. I decided it was time someone wrote a book that goes beyond the happy talk and get to the good, the bad and the ugly of entrepreneurship. Those who have read it say they wish they had such a roadmap when they first started out. Well, now you have it, as the advice and lessons in the book are pretty close to what I would tell my younger self. It is also the advice from a number of mentors and entrepreneurs of varying stripes. Whether you are a beginning entrepreneur, a struggling entrepreneur or someone just itching to get started, this book was written for you. Click here to head over to Amazon and get your copy now so that you can make your way through The Gauntlet and on to the coveted Players Lounge.

1 comment:

  1. This is really really good info for newbies.
    Very practical and it's obvious that it comes from experience and not theory. I love that.

    I wish more inexperienced people would stay quiet and that more experienced people would write good articles like this one !!

    ReplyDelete