Every entrepreneur I know finds it a challenge to balance the joys of entrepreneurship against a set of frustrations they never anticipated. Of course, most of you expect that raising money will be difficult, as well as staving off competitors, and handling that occasional toxic customer. What you don’t expect is to feel out of control, or to always be fighting the many demands for your time.
Based on my own experiences in startups, and many years of advising new business owners, I’m convinced that there are a few common frustrations that we all need to anticipate and prepare for, rather than let them be a surprise and a painful dent in your enthusiasm and personal satisfaction from living your dream. You need all the positive traction you can get to survive and prosper.
In the spirit of helping you prepare and respond positively, I offer my list of the most common new venture founder unexpected realities, with some thoughts on how to mitigate each one:
- The business seems to be driving you, rather than you driving it. The list of things to manage seems to grow endlessly, including financial crises, personnel, investors, and customers, with each going in different directions, and threatening to be out of control. There are just not enough hours in a day, and knowledge available, to keep up with it all.
Thus I recommend that you learn early how to focus on the things you can do, surround yourself with help rather than helpers, learn to say “no” often, and keep some balance between your business and the other elements of your life. The startup world is all about causing change and reacting to unknowns, so set your expectations early to deal with it.
- Managing cash is an overwhelming burden, in good times and bad. You expected the difficulty of finding funding, but you never expected it to go so fast into unanticipated expenses, inventory, support, and marketing. Then there are those pesky competitor responses, always driving down margins and forcing you to develop new features.
The norm for entrepreneurs is to be optimistic on revenue projections, and miserly on funding needs. I urge you to be more realistic in your projections on both ends, for example, always asking for enough to cover the next 12-month runway, plus a 6-month buffer for your next milestone to include contingencies and time for the next fundraising.
One or more key players need extra attention or replacement. Every startup is like a family, needing constant commitment to specific roles and priorities. Inevitably, someone you counted on will disappoint you with conflicting objectives, emotional challenges, or an inability to deliver. In a startup, this can be a team member, investor, or even a vendor.
There is no way to predict where and how this will occur, but it should help to realize that it does happen, and you should not assume you are the cause. Just don’t take the “shortcut” of not doing your due diligence on aspiring team members, strategic partners, investors, or vendors. Cheaper in the beginning can be more costly in the long run.
Endless pivots are required to keep up with market changes. No matter how certain you are that your solution, target market, and customer need are well-proven, you are likely wrong, or the world changes by events you could not have anticipated. Thus you need to reduce the extra pain by having a Plan-B, and a process for rapid change.
It may help to realize the essentially every successful startup has endured one or more pivots, even though few remember them today. YouTube and Facebook, for example, both advertised themselves as dating sites until they recognized from results that the dating market segment was already over-saturated.
Getting to the next level of growth is a constant challenge. Scaling a business is hard. Every time you think you understand the market, you see your growth flatten, or fail to respond to your best initiatives. You will never seem to have the time, skills, or resources you need for that key acquisition, global expansion, or new product offering.
The key here is to plan ahead, nurture a relationship with your favorite venture capitalists, and leverage the growth and assets you already have with other lending and funding organizations. Of course this means taking some smart risks, not resting on your laurels, and continuously updating your business plan and strategy.
With these forewarnings, and a little extra effort on your part, I’m confident that you can make your entrepreneurial journey a lot more satisfying, less frustrating, and you can leave a legacy we can all be proud of.
*** First published on Inc.com on 06/17/2020 ***
Go to Publisher: Startup Professionals Musings