You got this idea, found an existing problem, the gap, and came up with a great concept. You are checking with friends and family, do your research, and still the idea sounds pretty cool. But you have doubts. So more real your idea becomes, so more you are getting scared. Let’s face it, getting a business off-the-ground is not an easy task… not even for Elon Musk (pictured on the right).
Becoming an entrepreneur is a life-changing event, like getting married, or becoming a father or a mother. Everything will change in your life – for the better or worse. Gone is the time you are thinking to yourself “this idiot is my boss-boss-boss, really?”. But also gone is the time that you can say “look at the time, already almost 5pm”. Gone is the time that you can spread blame “not my problem”. Gone is the time you are getting a bonus for “working so hard”. It is your company, nobody cares how hard you work. All what matters is that you progress and succeed. Nobody cares why it blew up, it is your time, your investment in sweat and money at stake. Did I mention that this is scary?
Ok, let’s break this down a bit and make it less scary. I am a person driven by a challenge to uncover the unknown – which is a common trade of entrepreneurs. I call it the “black question mark”. Black is a friendly color, the color of a void, the non existing color. It wants to be filled with light and rainbow colors. And this is what you do: you will take apart the black space ahead of you, segment it into smaller not-so-scary question marks, and solve one at a time. You will look back and see the path you created.
I am helping you along with a few things and put some expectations out, which I learned myself. First of all, if you start a company, your life is usually not changing immediately. Unless you are well-connected, these days nobody dumps $10m onto your idea. You do not have to quit a job, look for office space, and hire employees. You may come to this point, but not anytime soon. Most parts of your life will continue. And this also applies to your day job. You will keep it.
The amount of money you realistically can raise these days is typically in steps of low five figures incubator money, low to mid six figures angel money, and low seven figures from your first round VC. You need to determine when it is the right time to raise funds. Unless you are just right of college, incubator money makes no sense. You are giving away a third of your company and limit your prospects of raising money in later rounds. Figure out a way to bridge this gap. The best way is to live frugal for a year or two and save that money. If you are mid-career and you are not house-poor, this should be possible. Yes, it will eat into your retirement fund, but look at it as an investment – albeit a risky one – but you know this already.
We have this covered, you still have your job and you have some funds to get started. Your next goal is to do your homework. In my previous post I said that business plans are pretty useless. You need to get that business model. Read this post if you do not already understand the difference between a business plan and a business model.
Build a Prototype
The following step is to build a prototype, a demo, proof of concept, whatever you want to call it. You need to do this on the lean which means you focus on the essentials. Nobody wants to separate from his hard-earned money, but when I talk to people, it is even harder for people to come up with the time needed to ramp up for their business.
Here is some advice for you: do not slack off in your day job. This is the wrong time to get fired. You need the funds. Pay extra caution to deliver superior quality in your day job. An entrepreneur is measured in results not in time served. You will do it the same way with your day job. Become more efficient, cut the fluff, those useless meetings, and the chitchat at the water cooler. Get your stuff done. If you do this, you will not have to work overtime.
Focus, focus, focus
Cut out all the useless spent spare time, that browsing on CNN for gory stories, yes we get easily fascinated with the like of Jodi Anthony Peterson. Cut the time you are just sitting there, or just have the TV running in the background. Take active charge of your time. Spend valuable time with your children and your spouse. Take this relaxing moment, but always thing about how you get the most bang out of your time. Yes, there will be some compromises. One advice: do not ignore your children or your spouse. Not the right time to get a divorce either and it would not be fair to the kids anyway.
At this point you figured out how you put yourself into the right mindset, have funding for a prototype, and time. The next milestone is scale. You need to grow, you need to move at reasonable speed, and you cannot do it all alone. There are several ways to scale. If you have enough money to play with, you can hire a professional team and contract elements out. Depending on what you do and how many funds you have, I highly recommend that. If you cannot do this, your idea is too risky to get funded, or perhaps just a hobby, try to find partners. There are various meetup groups. Go to those meetings and just talk to people. If your idea is great but not exclusively made for profits, you may want to scale through volunteers. If you look carefully, you will see that many staple Web sites do not have rich backers but are operated by individuals and a huge volunteer base. Sometimes those sites grow into big companies, eg Huffington Post or Crunchbase.
To summarize, expect large changes in your life when starting a company, but do not be worried: it does not all happen at one time. Use your day job; do not neglect it, to get off the ground. Cut out all the fluff and convert time into quality time, enough left for your business. Get other folks involved, either by contracting them, or by finding partners and volunteers.
Once you have a prototype out and have that business model, life looks very different. This is the right time to start pitching for real funding. This might be the time, your life might change quiet rapidly, but not so unexpected anymore.
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