By, Mike Moyer
People say you learn more from your failures than your success. After many years doing start-ups, start-up-like jobs and advising start-ups I still don’t have a private jet so I must have a wealth of important lessons to share. Here are the Top Ten, or at least the Top Ten I could think of while sitting here in the back row of coach.
- Always collect a nickel from everyone who promises to buy from you. Do this and you won’t need any other revenue stream. People make promises all the time, especially to bright-eyed entrepreneurs. Nobody wants to say no and it’s easy to say yes something in the concept-stage. When it’s time to actually pay, customers seem to vanish. Always remember, there is a difference between someone who says they are going to buy and a buyer. Do you best to figure it out early.
- Don’t go in “50/50” with a partner. I’ve seen this mistake too many times. When two partners go in together 50/50 it seems to always end in disaster. A business needs a leader. Have the guts to pick someone, it shouldn’t be that hard. Use a Grunt Fund to track who gets what.
- Never let anyone get in between you and the money. This applies to two fronts- financing and revenue. I’ve learned both these lessons the hard way. I once did a financing deal with a group of investors who wanted to call the shots on any new investors. When they were unable to raise the additional capital needed my hands were tied. On the revenue side it’s more common. I once had a business where my software system was going to be sold by a distribution company. The company’s sale team wasn’t nearly as interested in moving the product as I was. Sometimes distribution deals like this sound appealing and they can work out, but always retain the right to do your own legwork.
- Don’t think your product will sell itself. This rarely happens. Entrepreneurs need to always be in sales mode. Unfortunately most of them spend more time developing their product than finding customers. If you simply can’t resist the temptation to work on your product make a rule for yourself to spend at least as much time selling it. Preferably a lot more.
- Be sure to make a product that will sell itself. If people like your product they will do two things that will help your business. First, they will stick around and buy it again, second they will tell their friends.
- Marry the right person. Being an entrepreneur is a lifestyle choice. Be sure to marry someone who will support that lifestyle and follow you down the rabbit hole as far as it takes you. If you want to start a company start preparing your spouse now. I started laying the groundwork with my wife on our first date. So far she has stuck with me even through the most difficult times. Without the support of your spouse it just doesn’t work.
- Start start-ups early. One of the best times to start a company is when you have nothing to lose. Most college students fit this description quite well. Before I graduated from college I had started several companies including a direct-marketing business and a manufacturing company. It was easy. Now I have a family, a mortgage, a reputation and student loans. It’s much harder now.
- Raise the right amount of money. I’ve been in start-ups where we didn’t raise enough and ran out. And I’ve been in start-ups where we raised so much we made bad decisions like hiring too many lawyers and buying fancy office furniture. Be smart about how much you need, work hard on your budget and get the money you need to make it work. Being too lean hurts just as much as being too fat.
- Be careful not to overvalue “skin in the game”. VCs and investors always like to see that the entrepreneur has invested their own money or is taking a painfully low salary to show that they are committed and have something to lose if the venture doesn’t succeed. While this sounds logical, I believe that the best, boldest decisions are made when you have nothing to lose. If you have a lot on the line your decisions might be too safe and conservative. Investors need to set entrepreneurs up to think big and bold.
- Take lessons from other entrepreneurs with a grain of salt. Just because something didn’t work for them does not mean it won’t work for you.
Learning from start-ups and learning from failures are synonymous. Every successful entrepreneur I’ve ever met has seen plenty of failure but it rarely prevents them from trying again. The best way to learn to be an entrepreneur is to be an entrepreneur. Start early, start often!
Mike Moyer is the author of Slicing Pie, a book about dividing up equity in an early stage start-up company. For more information visit www.SlicingPie.com.