When you launch a startup you need to manage all aspects of the business including the product, team, legal, finance, sales, business development, and marketing in addition to leading the company. Here I share with you a list of 13 mistakes to avoid and tips to get ahead to help you along the way. These were adapted from the Startup Field Guide: Mistakes To Avoid, Tips To Get Ahead available at Amazon. Enjoy!
#1 Create a plan for your business even though you probably won’t follow it
It is highly recommended in the traditional business world to write a business plan. It is extremely important for you to put your thoughts to paper, but a business plan isn’t necessarily required. The best thing you can do is put together a presentation with no more than 10 slides including a clearly defining the problem, solution, business model, how you are going to do it, competitive landscape, and so forth. The reason you don’t need to do a full-blown business plan is you probably won’t even follow it. When you put together a 10-slide presentation, it is much less time consuming and will always be an iterative process where you are bobbing, weaving, tweaking, and adjusting. You will learn that building a business is exactly the same way.
#2 Figure out your distribution strategy once you come up with an idea
Before going all in on a business idea, make sure you have identified several ways in which you will grow it. It is such a waste of time coming up with an awesome idea, building it into a product or service, and not having a way to get it in front of people. If you are trying to figure out how to grow your product quickly, think about how you can reach as many people as possible with the least amount of effort. It is good to think about other companies you can leverage and partner with to get in front of their user base. Think about establishing partnerships with companies that can sell or distribute your product to their customers. The companies where this works are the ones that create value for their business through your product or the overall deal you put together.
#3 Use a law firm that will defer their fees until you raise investment capital
There are certain legal services that you can pay for on a one-off basis, but those fees can add up quickly if you aren’t careful. The best thing you can do is to work with a law firm that will defer their professional services fees until you raise investment capital. They usually cap their fee deferral at $25,000, though that cap is negotiable. Interview the firms that offer a startup program like this and select the one with whom you feel most comfortable. This is an excellent way for you to stretch your budget as you start your company on limited resources. Many of these law firms want you to succeed as a business because they will typically take 1% equity in your business in exchange for the fee deferral. The more successful your business becomes, the larger payout they receive for taking on your company at such an early stage.
#4 Make sure you are building something customers want to use
Getting feedback from your customers is essential. There is no point in building a product if no one is going to use it. Customer feedback can come in a variety of forms: verbally, in writing, through surveys and feedback tools, purchase decisions, or silent feedback through analytical behavior tracking tools. No matter how you do it, make sure you put a system in place that allows you to get the feedback you need to build a great, targeted product.
#5 Make it easy for customers to contact you
Startups tend to be so impersonal and inaccessible to their customers. I think that is a mistake. Don’t be afraid to display your personal phone number on your website. In the early days of building your company, you should be thankful for a customer who wants to pick up the telephone and talk with you about your product. Through those conversations, you can learn about your customer’s wants and needs.
#6 Build a moat around your business
Do something different than your competitors that isn’t easy to replicate. Moats (large, treacherous trenches of water) were used in ancient times to prevent enemy access to the castle and/or village. You must do the same, figuratively. It may be a special feature that you have patented, the exclusive distribution deals you have landed, the large customer base you have built, or something else that’s tough for a competitor to do quickly. Regardless of what it is, you need to figure out what type of moat you will build around your business that separates it from your competitors.
#7 Building a business is all about systems
It takes just as much time to build a small business as it does a big business. The only difference between creating a small business and a big business is the way you think and go about building your business. It all comes down to one word: systems. If you want to build a big business, think about how your business can be scaled and replicated while providing the same exceptional service as you would if you had fewer customers. It requires you to think of how to deliver a consistent customer experience that will exceed expectations time after time. To do this, you must put systems into the core fabric of your business that will allow it to grow beyond just you. This forces you to think about your business as a template as if you are building a franchise. Whether it is the formula to deliver customer service in a certain way or conduct a sales call to acquire a new customer, all the systems must have consistency, predictability, and excellence.
#8 Don’t forget to trademark your company name
There’s nothing more damaging to your brand when other companies start exploiting your company name in ways you would never imagine. If you are looking to build your company into a recognizable brand that will conduct business online across the nation or worldwide, you will want to file a trademark application with the US Patent and Trademark Office (USPTO). They make it easy to file a trademark application once you have searched their database to see if the company name you have chosen for your business is already in use or available for registration.
#9 Use equity as currency
One of the greatest things you can do when you start a company is to use equity in exchange for professional services. To attract top-notch employees, setup an employee stock option plan to incentivize people to join your company. However, be careful when you do this. Be generous to those that hustle, but give equity in your company away sparingly if you believe your company is going to be a huge success and worth a fortune. Explore the use of equity and an employee stock option plan with your attorney as a way to exchange professional services in lieu of cash and to incentivize employees.
#10 Don’t expect others to be able to sell if you can’t
As a founder of a startup, you need to be able to sell. Sales can be brutal especially if it is not your forte. However, it is something you can (and must) learn. Selling is nothing more than presenting your product and then asking a question, “Do you want to buy it?” It is actually pretty easy. Of course, no one likes being rejected or hearing the word “no”, but that is sales and it will happen. Get used to it! It is so sweet though when someone finally says “yes!” Whether you are raising capital, trying to recruit a new employee, or pitching your product to a customer or potential partner, all you need to do is ask the question. Don’t be afraid because you have nothing to lose. The worst thing you will hear is no. Be persistent, and eventually someone will say yes.
#11 Hire slowly to find the right people for your company
Hiring employees is one of the biggest decision you will ever make when running your company. Take your time when you are trying to fill a position within your company, even if it means not being able to offload extra work you are doing. What separates your business from the competitor will be the people you hire and the culture you build. You need to hire the right people that will help preserve the culture you built. Use a hiring checklist when you begin to hire. This checklist will turn your hiring process into a system, which will include rigorous screening and interview questions to sift and sort through applicants to find the best employees that fit what you are looking for in an employee.
#12 Empower the employees on your team
If you can’t trust someone on your team, they probably should not be in your company. You have a rigorous hiring process for a reason. Of all the candidates you screen and interview, you only hire the best people to help you grow your business. Because of this, you need to let the people on your team run wild and do their thing. Believe that your employees will do the right thing and, typically, they will. When you do this you empower them to tackle problems on their own, push the limits and become doers.
#13 Have fun
Have some fun. Make coming to the office enjoyable for you and your team. Build exciting products, chase the next deal, and create something bigger and better than yourself. Take people out to lunch, catch a baseball game, go miniature golfing or go-kart racing. Regardless of where you find it throughout your day, there needs to be an element of fun for you and your team. If you are too serious, you may limit creativity.
Read: There are over 100 more tips in the Startup Field Guide: Mistakes To Avoid, Tips To Get Ahead you can read to help your startup succeed.
- @ February 12, 2013 1:36 pm