As a serial entrepreneur and a co-organiser of a crowd sourced startup ecosystem enabler, I often meet wannabe entrepreneurs who want to quit their jobs and do something cool. They are either bored in their jobs, not paid what they think they deserve, lack work-life balance etc etc. They believe that entrepreneurship provides a romantic path to freedom, an escape from the monotony of being a worker bee. There might be some truth to these visions, but I am not going to dwell on that. The purpose of this article is to share some perspective - based on my own experiences - on what not to do when you are starting up and how not to get carried away. Here are five common fallacies that could spell trouble for your business.
Fallacy 1: We will get angel or VC funding since our idea is cool.
Even if you have a solution for the perennial water shortage problem, it does not mean anyone will buy it. It takes time to sell products, services and expertise. It takes time for the creation of the perfect storm where your startup is scaling up nicely and the marketability of your product or service is proven. You can then look forward to your idea being cool to prospective angels and venture capitalists. We too developed a product, filed a patent and expected that stakeholders would sit up and take notice. It was a mistake.
Fallacy 2: My alumni network, my classmates and my friends will help me when I start up.
I remember speaking with many, many friends about my startup concept. We met to discuss possibilities and collaboration ideas and they were all supportive, positive and extremely polite. Fast forward a few months to when I did eventually start up. What did I get from the majority? Not much except maybe a cup of coffee and some biscuits. While you are trying to build your confidence and telling yourself that you have what it takes to run a successful startup, the very friends that supported you in the concept phase will not return your calls when you are actually executing your ideas. It may shake your confidence to go through that, but mark my words, it will make you stronger. It helps you clean out your phone contacts list, but it also helps you know who your true friends are.
Fallacy 3: A school friend will make a good co-founder.
My first entrepreneurial venture was with my classmates and although we were friends, working together on a startup was a very challenging, intense and emotional game to play. It's very important that the ideals and value systems match up. Dynamics between friends change once they start doing business together. I have seen startups struggle due to intense undercurrents between the founders. In my case, I found out that there were some borderline ethical issues around how funding was getting used and decided that this was not a game for me to continue playing.
Fallacy 4: I have seen projections of my target market and I will aim for X% of the market and the startup will move quickly.
The problem with that assumption is the notion that our idea is on an island and we control all access to it. Unfortunately, it does not work that way. Leveraging alliances, partnerships or joint ventures is a long process. When you start, your venture is a non-entity and creating recognition takes time... a lot of time. I remember at one point we were working with a large automobiles firm and convinced them to use our product. We expected contracts to be in place and the purchase order by the next two weeks. Instead, it took us around two months before we got anywhere close to the purchase order as the customer wanted us to keep meeting them so that they could gain confidence in us. Just because your startup can move fast does not in any way translate into all elements of your strategy moving fast. Prepare to learn why patience is a virtue and will always be a virtue.
Fallacy 5: I will be working over the weekends for as long as it takes and doing what I love doing, therefore I will get a BIG break soon
You do get to work long hours on things you love doing but unfortunately running a business is much more than that. You need to get used to doing all the things you hate doing but which are critical for a business (for example, you may hate accounting but without accounting for expenses, your business is doomed; you may be a techie and hate to do sales calls but if you don't pick up the phone, your business will go down faster than the Titanic).
Once you look like you can crack a large business account, that's when you find that your operating model and your infrastructure are sorely tested because of the scope of work and increased expectations. It has nothing to do with a lack of confidence or whether or not your product is great, but it has everything to do with the stars aligning and being at the right place at the right time. You will face monumental challenges. The first big break is only a starting point and hence you cannot afford to sit on your rear for too long. Failure often stares you in the face once you believe that you are a success, so it's always good to be a little wary of big breaks.
Given that the statistics are loaded against you, I recommend you review these common fallacies thoroughly and make adjustments to ensure the success of your venture.Suggest a correction