I know you--you have been talking for months about your new business idea. The more the beer or wine, the more emphatic you get. I am behind you all the way. But are you ready? You know the idea is the easy part, right? Getting yourself prepared to do this, well that's a whole other issue isn't it?
As a first-time entrepreneur, there are a number of steps you can do to best set you up for success. After working with hundreds of founders over the past 10 years, one starts to see patterns. At The Startup Factory we invest in 10-12 startup teams through a selection process that puts us in front of 300-500 teams a year. (Yes, it's as hard to get into TSF as it is to gain acceptance to an Ivy League school.)
Though the following recommendations don't guarantee success, I believe they can increase your chances of getting off to a great start and building a great company.
Financial. Think in terms of Maslow's hierarchy of needs. You'll have to cover the basics--food, water and shelter etc. (The phrase "living the ramen noodle diet" applies here.) Reconcile these needs with keeping your expenses low. If you set the bar too high--for instance, keeping your BMW car payment and country club membership--and it leads you down a short runway, you are putting undo pressure on yourself. My advice: Sell the BMW and get a used car. Forego the membership and cut your expenses to basic needs.
Save a little money before the leap to give you at least 12 months of financial runway. The correlation between founders deferring salary for a year and company success is high. If you think an investor is going to fund your lifestyle think again.
Mental. Don't roll your eyes. This is important and could be the most critical factor of the five. Managing your personal expectations about the journey could mean the difference between your company's success or failure. Too many first-timers assume that the undeniably euphoric first few weeks or months of the journey are sustainable. They are not. Ever hear of the "valley of death"? It's the period between the launch of your business and the point in which the business takes off. Sometimes it lasts a few months. Many times it can last a year or so. Companies frequently never exit the valley of death.
Are you ready to manage through that time period? Set realistic expectations with yourself with the understanding that you will need to reach out to others when things get rough.
Spousal/Significant Other. Ahhh your live-in partner. Where are they in this decision? If you haven't discussed this with him/her you are in trouble. Remember that valley of death? Well they will be right along side of you. Don't you think you should bring them in before you decide to leap so they can enjoy the euphoric-you before they have to help you manage the grouchy-you? You need a support system. Bring them in early and tell them what is going on inside your head. The last thing you need during the startup phase is home drama.
Co-Founder. You have a co-founder? Great! Are they a friend from childhood or college or a neighbor you play hockey with? Over the course of months or years you have gotten to know them as you sit over a beer or the apartment or the coffee shop. Not good enough. Not even close. In fact I would posit that this arrangement is probably a false positive. You need to have tough conversations about roles, financial expectations in good times and bad, and all the other nasty stuff that is going to creep in to the business.
Are you both prepared financially to go 12-18 months with no funding? Are you both prepared to work 60+ hours a week? Any divergence in these answers will create tension that will eventually impact the business. Get these issues out early and often.
Market. Your idea is not the key to future success. Your target markets acceptance of your product will determine whether you succeed or fail. Who are these elusive targets? Do you know how to find them? Can you find them for less than the lifetime revenue they will generate for you? Use Lean Startup or Customer Development methodologies to uncover evidence that prove the validity of your idea. The great news is that most of the techniques can be done BEFORE you create or launch your product.
Not one of these recommendations is about your invention, innovation or product. But, surprise, they are as critical to your success as the original idea. Get these five bases covered and you just might make something special.