Not Your Daddy's Country ClubA club signifies something special and unique where the members have something in common. They take pride in the membership and often inform others of there affiliation. Indeed, we feel honored just to be invited guests. To become part of this crowd often requires stiff fees. This keeps out the riff raff and those who are not quite up to the club's standards. Such is the case with Club Entrepreneur with one stark difference. The price of admission is not what you pay to get in, but what you pay to stay in. For no more is required than making a trip to your local Department of State and paying a nominal fee to officially start a business. With this comes the nostalgia of the startup, delusions of grandeur and of multi-million dollar buyouts. This is the first stage referred to here as The Lobby.
Baby You're a Star......Or at least you feel like one. The Lobby represents the earliest days of the startup with lots of fanfare and attention. This is also the most delusional stage, for founders believe success will come over night. This nostalgia is what causes them to make critical errors in judgment that puts them in a crisis down the road. Following are the do's and don'ts of The Lobby that will give you momentum and minimize mistakes.
The Do'sAlthough nostalgia and delusions are dangerous at this stage, they serve an important purpose. The level of energy and enthusiasm is both effective and contagious. Others can feel it when the founders walk in the room. This energy should be used for nothing other than generating buzz and getting eyeballs on your product. In other words:
1. SELL, SELL, SELL!
2. Seek Back Office Expertise
At a minimum, you need legal, accounting and bookkeeping expertise. While you are out blazing trails and generating buzz, someone has to mind the shop. No need to hire full time staff as there are a number of independent consultants who provide these types of services on an ongoing basis. The accountant and bookkeeper are the people you will communicate with the most, so seek out those who are a good match for your business and your personality type. In an effort to save money, new entrepreneurs fumble through the above tasks themselves, wasting precious time that should be spent growing revenues. I tried this myself many years ago in my first company. Instead of saving, I lost money--in time spent trying to learn these skills, in costly mistakes and in lost sales.
3. Targeted Networking
This is part of the buzz building campaign, and a time to make nice with those who can help you in the future. They include potential investors, collaborators, partners and customers. This also includes social networking. In general, spend time with smart, optimistic people. If you have mentors, and you should, spend as much time with them as possible.
The Don'tsThe don'ts are just as important as the do's because they keep you away from the most pressing responsibilities of sales, marketing and generating buzz.
1. Bank Financing
This is perhaps the biggest no-no of them all. For a detailed discussion on why, see the post Top 3 Reasons New Entrepreneurs Should Avoid Banks. There are two main reasons for this advice. First, over optimism may cause you to take on more debt than you can handle. Second, the process is cumbersome and time consuming. I went through this with one of my companies and it took weeks and a mountain of paperwork to get approved. This became a full time job and took my attention away from growing the business. Though the bank eventually funded us, we were beyond the start up phase. Revenues were way up over the previous year and we had projections of 1 million dollars based on invoices, signed contracts and purchase orders. We also had a good deal of cash on hand. Someone just starting out will not be so "lucky." For a list of the most common funding sources for new startups, see the post Top 3 Funding Sources for New Entrepreneurs. On a side note, we were not lucky at all. This would later become one of our biggest mistakes. I detail the entire experience in chapter 6 of my book on entrepreneurship.
This is not to say you should not hire, for you may have a company where hiring is a must. The amount and type of hiring is the danger. The same rules apply here as with bank financing. Over optimism may lead you to believe you need more hands on deck than necessary. Before long, you will be stuck with large payroll obligations and not enough funds to cover them. This is also where your legal, accounting and bookkeeping experts come in handy. Part of their job is to keep you grounded in these matters and to serve as a reality check.
3. Toxic Personalities
This one is overlooked too often, though it should be obvious. Stay clear of naysayers and negative people. Allowing them to influence your thoughts at this stage is like putting sugar in your gas tank. You may even need to limit contact with certain friends and family. Click here for the post 5 Signs of a Toxic Personality.
The Bottom LineThe Lobby is a crucial stage where the foundation is laid for the remainder of your venture. Stellar execution with a focus on the most important tasks, will help you through the next stage of Club Entrepreneur. It is the stage where bad ideas and those who poorly execute go to die. However, it is also where heroes are made. We call this next stage The Gauntlet. Click here for part 2.
Godspeed and I look forward to seeing you in The Players Lounge (you will soon learn what that means).