Pack Your Parachute Before Taking the Entrepreneurial Leap
In the United States alone, nearly half a million startups are born every year. Some get off the ground, but fewer figure out how to stay afloat. While the barrier to entry is a lot lower than it was pre-internet, the competition is exponentially greater, making it that much harder to succeed. A good idea isn’t good enough to guarantee prosperity.
As someone who’s been through the process of building and selling four startups, as well as currently running another thriving startup, I believe every startup needs to take three key steps to maximize chances for success. They are what I’ve always done before I start any new venture. They are my proverbial parachute, empowering me to chase greatness while minimizing the chance of falling flat on my face.
1. Pursue the right solution.
Before going from ideation to implementation, you’ll want to do a rigorous deep dive on the industry you’re pursuing. You must know the industry inside and out, including who your competition is and how you differ from them, as well as the market’s growth potential.
Assembling this knowledge will help you initially determine if the idea holds up and whether to pursue it or move on to the next project. Too many startups fail to do their due diligence early on, and it comes back to haunt them in the end.
This reminds me of the time that I was working with a restauranteur to prove out a business model. We built out the model together, and six weeks in, the restaurant was fully packed, but the restaurant was losing money, so I voiced my concern. The restaurateur explained that he wasn’t supposed to be making money yet because the restaurant was only six weeks old. What he didn’t realize, though, is that since the place was full of customers, the age of the restaurant wasn’t a factor on his bottom line. There was a fundamental problem with the business model, so we had to go back to the drawing board to reconcile the discrepancy.
2. Choose a compatible business partner.
OK, you’ve done your homework, and your idea is sound and ready to go. Now it’s time to choose a business partner. Some entrepreneurs prefer to work alone on a new venture, but I cannot stress enough the importance of having a strong co-pilot. It’s one of the smartest decisions you can make as an entrepreneur. Why? Because a partner extends the reach, the options and overall capabilities of your company.
The fear that business owners have about partners typically stems from their reluctance to cede any control to somebody else. That fear becomes irrelevant with someone along for the ride who truly shares the vision of the company. I met Scott Litman, my longtime business partner, through a mutual friend. We began as trading partners, and over time we built trust and became official co-leaders.
We divide and conquer everything, and we trust each other’s decision-making. For example, I went to New York to pursue a new business lead a couple of years ago. While there, I met someone in the client’s office, and we hit it off so much that I decided, on the spot, to bring him in to build the New York office of our current company at the time without consulting Litman. When I came back to Minnesota, I told Litman and everyone else the good news, and not one of them questioned my decision. And the employee I hired back then is one of the co-founders and the CTO of Equals 3 today.
As with a marriage, trust, patience and communication make up the fundamentals of a winning partnership. This is not an easy feat. You won’t always see eye-to-eye, and there will be the occasional argument. As long as you both prioritize the success of the business, you can be assured that your collective decision-making will be strong.
It’s also important to make sure to spend some time thinking about personality types that mesh with your style. Litman and I are opposites on all aspects of the Myers-Briggs scale; we’re a true yin and yang. This is a key reason why we’ve done so well together. We see things differently and have mutual respect for each other’s opinions, so the best ideas generally rise to the top.
3. Operate in a united manner.
The biggest benefit an entrepreneurial partner provides lies within the fact that they can keep you in check. Having a clear, independent voice to bounce ideas off of helps each of you make better strategic decisions. Partnership also increases the collective level of thinking, which, in turn, sparks and inspires even more ideas that can benefit the direction of the business.
Taking the plunge into entrepreneurship isn’t easy. What separates the truly great entrepreneurs from the rest of the pack is the fundamental understanding of what it takes to be successful, using that knowledge to inform your plan and then executing that plan accordingly.
Positioning yourself in the right situation, backed by intensive research, should always be your first priority. Aligning with a partner that complements your personality type, maximizes your capabilities and shares in the ultimate vision of the company should follow closely behind. With those key elements in place, you’ll have the necessary parachute to move forward and grow a sustainable business. Don’t be afraid to take the leap.