Preparing to launch your start-up means more than simply making sure you have a viable product and potential customers. Here are five tips on how to prepare yourself to be a founder.
John Bradberry was fascinated by the idea of how someone may prepare to start a company. Bradberry, himself an entrepreneur and venture capitalist, has worked for two decades as a consultant to small business owners, and he found himself attracted to the story of one of his clients, Decision One Mortgage founder JC Faulkner. “I wanted to understand why it worked so well, how did he bring the pieces of the puzzle together, and how does that apply to start-ups of other types,” Bradberry says.
For answers, he went first to academic research on the subject, and then thought back on his own experience as an entrepreneur. “One of the concepts that crystallized for me was readiness,” Bradberry says.
In his book 6 Secrets of Startup Success, Bradberry puts forward five steps that he says will help a person prepare to start a company. While laying the foundation for a successful company means making sure that one has a marketable product or service that will reach paying customers, founders who have already achieved some measure of success say that a dose of personal preparation may help a founder weather the early stages.
Here are Bradberry’s five steps, along with words of advice from entrepreneurs who have learned the value of personal preparation.
Step 1: Clarify your reasons and your goals.
Property management company Renter’s Warehouse has been the most successful of Brenton Hayden’s start-ups, but his failed companies have come with their lessons, too. Hayden, who calls himself “a great salesman,” was working at Kellogg’s until he was laid off eight years ago. After someone tipped him off to the money to be made in real estate, Hayden found a job working for someone else in the industry. He lasted about six months. “I realized I could do most of this on my own,” Hayden says.
He launched Renter’s Warehouse in 2006. Since then, he has launched a number of other companies, none of which has met the same degree of success. After his tax accountant suggested that starting another company may help him qualify for deductions, Hayden started a limousine company in 2008. “In short order I became the number one most booked limousine company in Minnesota,” Hayden says. And though Hayden says his limousines were the nicest in the Minnesota area, his company stalled. Hayden wasn’t losing money, but he wasn’t supporting the company, either; his attention was elsewhere. He broke even every year, running his limousine services at below-market rates. Other limo companies in the area tried to keep up, but since they were in business to make money, they couldn’t beat his rates. “I am pretty much sure that I am responsible for the total collapse of the limousine business in Minnesota,” he says. Hayden sold the company on New Year’s Eve of 2010.
“Really do your research,” Hayden advises any entrepreneur, whether they are starting their first company or their fifth. Don’t rely on a great idea, he says. “I call great ideas the death of your company and your personal finances. Often if you’re starting up they’re both going down the drain.”
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Step 2: Understand your entrepreneurial personality.
Southwestern Missouri isn’t the first place most people would think to start a company selling spices. Yet that is exactly what Jeff Brinkhoff chose to do, building the company out of his father’s milk barn with $25,000 in cash. “It was a one man operation until I found somebody to help me package the first few orders,” Brinkhoff says. Nine years later and with $6.3 million in revenue, his company—Red Monkey Foods—is No. 465 on Inc.’s list of the fastest growing privately-held companies.
As for how he managed to build his company from its beginnings in a town of 800, Brinkhoff says that it was “a matter of tenacity.”
The most important quality any entrepreneur can have, Brinkhoff says, is the determination not to fail. “The first thing when you look at the bottom line when you go into this is you have to think one thing and one thing only, and that’s ‘I will not fail,’” Brinkhoff says. “And you have to be careful that it is not ‘I will not fail’ while you’re going down the wrong path.”
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Step 3: Map your skills and experience.
Bryan Janeczko worked at Morgan Stanley before founding NuKitchen, a start-up he sold to Nutrisystem two years ago. Now Janeczko has a new venture, an online start-up incubator called Wicked Start. Understanding one’s own experience is critical in the early stages of starting up, he says.
“Many entrepreneurs I speak with have great ideas and even a great plan, but 99 percent of them have no practical industry-related experience,” he says. Like many entrepreneurs, figuring out what he did not know almost cost him his business. Janeczko said he was health conscious before founding NuKitchen, an online diet service, but he didn’t have any experience in food service. “That nearly put us out of business after losing $500,000 over the course of one year,” he says. “The solution is to either moonlight part-time, volunteer, or—better yet—take a paid role in as senior a position as possible in a business that most resembles your business model. At minimum, bring on a co-founder with the experience to help you.”
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Step 4: Leverage your relationships and resources.
When Bradberry advises entrepreneurs to leverage their relationships and resources, he means that they should contact all sorts of qualified people in business who can help them make connections and network and make all sorts of other judicious business moves that will nudge them toward profitability. And then there's A.W. Pickel III, who chose to leverage the relationships of his young children and the resources provided by a professional skeptic who was expert at downing a six-pack.
Pickel was 36 years old, an employee at a savings and loan bank, and married with four children when, after working a late night preparing files that he says probably netted the bank about $15,000, his boss chastised him for leaving the light on in the executive washroom. Pickel decided he had endured enough.
When starting a company, “get counsel from different sources,” Pickel says.
For Pickel, that meant sitting his four children around the kitchen table and asking them for suggestions for his new company’s name. “Their name was Pickel’s Mortgage,” Pickel says. “That didn’t fly.” And if wisdom can come from the mouth of babies, why shouldn’t everyone have an ounce of truth to dispense? Pickel felt he needed to get some advice from someone who would tell him the truth, who would not be uncomfortable telling him his idea was a disaster. “I don’t wear my religion on my sleeve, but I do go to Church,” Pickel says. “One of the guys I had gotten to know was a guy named Joe Gray. He’s one of the least religious guys I know.” Because of that, Pickel says, he felt that he could trust Gray to be skeptical. “I knew he would shoot straight,” Pickel says.
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Step 5: Position yourself for high performance.
Founders have to be ready to deal with whatever challenge may arise, Bradberry says, because—no matter how well-prepared the founder is—his or her company will almost certainly take an unexpected turn. “I find that often the biggest and most healthy businesses look very different from what the founders first envisioned,” Bradberry says. “They responded to what the market was telling them and it was something they could execute on.”
To be ready for whatever challenge or opportunity may arise, founders should try to keep their personal lives in order. If one is like Pickel, that may mean finding time to retreat from the world. “My wife says I am wildly entrepreneurial on the outside, but that I’ve cautiously thought through all the options on the inside,” Pickel says. He sets aside time in the early mornings to contemplate the day ahead. “What I do is in my mind I go out a year or two years, and then I examine those consequences. You can’t think when everybody else is yelling at you. You have to do it when no one else is around.”
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