Beware of These 6 Assumptions in Your Startup
Entrepreneur's New Year’s Guide
It’s easier to dream than to do, and by necessity, entrepreneurs are some of the the most daring dreamers around.
However, they also have to be the "doers" to make those dreams reality. And to get there, each entrepreneur has to figure out this "doing" part. Even when you're sure you've got your industry figured out down to a science, you'll find hurdles along the way to success.
Yet by keeping an open mind and lending an ear to advice from the experts in your field, you'll succeed -- especially if you avoid the following assumptions as you move your startup to launch.
1. That you can do it all on your own
While many entrepreneurs believe they can handle the tasks on their own, and would rather not share the spotlight, at a certain point, they realize that, sometimes, keeping that "founder" title to themselves is not worth the headaches that that job entails.
So, don't miss any opportunities for having another pair of trusted eyes look over your project. Share the huge responsibilities involved with starting any business. And try to find a founder with a different line of expertise than yours (typically, one founder knows how to make the product; the other knows how to sell it).
2. That your startup is a business
A business is an established entity, with a formula for achieving growth, attracting capital and realizing a return on investment. A business should have a reliable business plan, with a calendar for launch dates. Unfortunately, this isn’t really a startup.
Startups operate off of guesswork, a tentative plan, very little capital, almost no employees (for the first few months) and, often, without a known model to rely on. Building a startup is a process of experimentation and figuring out what works -- and when things don’t work, the founder is often the one footing the bill.
Compensating for those drawbacks is the excitement of starting something that is yours, and the brave hope of success. This is why you should not conflate "startup" and "business" as the same thing; you are merely trying to get to the stage of turning your startup into a business.
This is not the time to be safe; it’s the time to go rogue, find out what works and see if you can make it bigger. After all, most of the heroes of Silicon Valley started out in a garage.
3. That your launch will be everything, and that your launch date is rock solid
The words “launch early” have been such an old startup standby that most people forget what they mean by the time they schedule the dates into their web calendars.
After all, it’s hard not to get carried away by ambitious plans. You’ve spent months just trying to put your ideas together, and even more time packaging those ideas in a pretty, sleek prototype. Now, you want all your friends and family to see it! And, then, once you launch, you know you can aggressively go after funding. Have your eyes turned into dollar signs yet?
Anybody who has been through this process (even once) knows that this imagery of how it will go almost never comes to fruition. There will always be some type of hold-up -- somewhere.
So, rather than putting all your hopes (or eggs) in one basket, complete with a Facebook-event page and hopes of catching the eye of an investor, launch quietly. In the best-case scenario, take your working prototype, fine-tune it to the needs of your users, launch again, fine-tune again and launch yet again. Then repeat this process until you’re fully happy with the product and have a larger customer base. That’s when you start pitching investors.
4. That your product and team are going to look exactly as you'd imagined they would
Do you think computers are exactly what their creators imagined they'd be? Twenty years ago, would you have considered that phones would be touch screen and connect to a world wide database at the touch of a button?
We live in a culture full of tools that are constantly changing and defying our original expectations of where they would go. So, doesn't it stand to reason that our companies or products would have evolved?
There’s a reason why so much of the startup process is testing. In the best-case scenario, you will have pivoted or fine-tuned your way into a much better product than you could ever have hoped to build on your own. (In the worst-case scenario, your original team runs out of steam, or buys into the original pitch but not the process.)
5. That raising money makes you a success
Raising money is certainly a reassuring green light, to continue doing what you’re doing. However, it’s only a first step toward liquidity: That’s why it’s called Series A. You might have a working product and a nice user base, and you might not be eating oatmeal for every meal anymore, but there’s a long road ahead.
Only about one in every 10 companies that a firm invests in actually become successful; and typical portfolio company failure rates across tech are roughly 40 percent to 50 percent. The problem with viewing VC funding as the ultimate goal is that companies end up devoting too much attention to raising capital rather than building a good product.
This can result in over-inflating your capital figures or raising too much money (which raises expectations and comes with its own amount of legal baggage). Instead, think in milestones, and try to raise enough money, and a little bit more, to cover you until you get to your next milestone.
That you know who your customers are
The key to achieving a consistent view of your customer is talking through your product with members of your target demographic and adjusting as necessary. Always deliver the best user experience as possible: User loyalty can be lost in seconds, and customers aren’t likely to come back after a negative experience.
Above all, it’s important to let yourself dream, but don’t insist that reality has to be the way you dreamed it. After all, startups are about experimentation first, and then pivoting and tweaking as you go along.