14 things you better love before becoming an entrepreneur by Shachar Gilad on thenextweb.com is a great test for determining if you are ready to be an entrepreneur.
Here’s the list with my comments on each one. Go to the article to read Shachar’s comments which are invaluable.
- Recruiting. Since virtually all investors judge a startup first by its team, it stands to reason that recruiting is at the top of this list. The keys to recruiting are building a founding team and key employees from your own network. In fact I’ve heard an experienced entrepreneur say that if you can’t find your first dozen employees from your network or your co-founders you won’t succeed in your venture. One of the problems with recruiting is that hiring people for a VC-backed startup is way too easy. In fact one of my pet peeves with founders is that they judge the success and growth of their ventures by the number of employees they have. Wrong! Staff are overhead. If you want to brag, brag about how few employees you have, not how many. I plan to write an entire blog post on recruiting as it’s so important.
- Fundraising. The best way to finance a company is with customer revenue. But few companies can bootstrap like that. So fundraising is critical. If you are the CEO consider fundraising a full time job. Even after you raise a round you have to start working on the next round. Fundraising is salesmanship: you are selling your equity. If you don’t enjoy selling and can’t handle rejection you will have a hard time raising capital.
- Customer support. I find far too many founders who don’t even have customer support on their radar! They are so focused on building their product, raising capital and hiring that they forget that no matter how great your product is there will be a need for customer support. So plan for it from the get-go.
- Tradeshows. Tradeshows and conferences aren’t nearly as important as they were in my day back in the last century before the Internet started eating up tradeshows and other events. So whether or not tradeshows are part of your marketing plan is highly dependent on your industry. It’s pretty easy to search and find what are the key tradeshows and conference by industry. If they do play a key role in your market then you better budget for them – even if you just attend, T & E will be expensive. If you exhibit, get ready for some major expenditures. One trick I played numerous times was to get space in a partner’s booth. So make sure to include this in any co-marketing plans you make with partners.
- Working long hours. The one caveat here is you need to understand the point of diminishing returns. Many studies have shown that productivity drops off sharply and errors rise equally fast once you push past your limit, whether it’s 70 or 80 hours a week. Learn your limits and the limits of your co-founders or else you’ll spend a lot of time fixing bugs or problems that go induced at the tail end of a 15 hour day.
- Making tough decisions. The toughest decision is firing someone. Having done two turnarounds – Addison-Wesley Publishing’s Software Division and The Daily Jolt – be prepared to fire a number of people. I’ve lost track of the number of people I had to fire, either because my predecessors made a mistake, I made a mistake or it just wasn’t a good fit. Again, an entire post could be written on this subject. But to sum up, as Eric Schmidt of Google once said, “The worst decision is no decision.” Realize that you are going to make some bad decisions, but decide. Nothing staff hate worse than indecisive executives.
- Flying. Not much I hate worse. Luckily for me I had a co-founder who loved flying and piled up a lot of points so we often got upgraded to first class, which made something I hate quite tolerable. But as I pointed out in another post, traveling is a good way to get to know someone and see how they handle the inevitable hassles of travel.
- Being broke. The saying goes “Cash is king in startups. And the saying is correct. You need to track two numbers above all others: one, your burn rate and two, cash on hand. As I was taught by a VC at Greylock, investors expect you to stretch the dollar, not just spend it. So consider every dollar you spend very carefully, as an investment in your venture, not just an expensive. Steve Blank in his books hammers away on the need to manage cash to avoid going broke.
- Risk. There’s a common misconception about entrepreneurs that they are big risk takers. That’s totally wrong. The goal of a founder is to reduce risk whenever possible. There are three main types of risk: management risk, technology risk, and market risk. Your goal is to take manageable risks. Your investors want to see predictability in your venture, not volatility. So yes, startups are risky, but learn to manage and reduce risk.
- Moving fast.