Rookie Mistakes: A Start-Up Guide

During this time of economic woe, many are lamenting their current circumstances and despairing for their future. As the owner of a baby company who has been struggling for several years against the fierce odds that face all entrepreneurs, I seem to be less daunted than many by the prospect of the future. I have been through so much, and learned so much in recent years, that I feel strong and prepared when looking ahead.

The economy is in shambles, and we will all have hard days ahead, but I still believe that new businesses must be established, grow, and succeed for all of our future days to be brighter. In the spirit of moving forward together, I have decided to jot down a few of the mistakes I have made and the lessons I have learned in my quest for success, in the hopes that others will be able to benefit from my experiences, and avoid the worst of entrepreneurship themselves.

Building the Team
The most important part of any business is the people which make it up. When recruiting a team to help you strive for your dreams, remember that they have dreams of their own which they may not be sharing with you, and which may conflict directly with what you are trying to accomplish. You may not think that each individual’s ambitions, priorities, and morality will affect your venture, but they will.

Each member of your initial team is a member of your family. Get to know their dreams, their fears, their priorities, goals, and ambitions as well as you know your own. When your team is happy, healthy, and productive, so is your venture; when they are fearful, miserable, and depressed your company will begin to fall apart under the strain. Do not be fooled by a winning personality and unflinching optimism. If an individual cannot give you an honest and scathing critique, then they will not be an asset to your company. They will smile and tell you how amazing you are while the actual function of your company flounders and your dream dies.

You are responsible for your team. Just by dedicating their time and energy to your project, they are investing in your company. Keep that in mind, and respect it when they say they cannot invest any more in a given day, week, or month. You are the source of their morale. If they are not inspired to do good work for you, then you have to ask yourself some basic questions:
* Have I conveyed the gravity of my Big Idea to them clearly and completely?
* Have I put too much weight on their shoulders without insuring that they have the support and resources they need to succeed?
* Am I sure that I understand what’s important to this person?
* Has something about their life changed that I am failing to take into account?

Sometimes you will end up with a team member that is a detriment to your venture. If you’ve been responsible in your recruiting methods then you may be so invested in this person that you will not want to admit to yourself that they cannot be made to be an asset to the venture. It’s important in these situations to have an accurate idea of how much time you have spent working with them on their productivity issues, and how many tactics you have attempted to get them up to speed. Once you have spent as much time trying to get a single team member productive as it would have taken you to recruit and train two team members, it’s time to stop spending your business’s time on them. You can still be their friend, and you can still spend your personal time trying to help them work through their issues, but it is best to let go of the idea of their ever making a significant contribution to your venture.

Connecting with Your Tribe
Next to your core team, your support network is your most important asset as an entrepreneur. Even if you do not live in a start-up hive like Silicon Valley, you will still find the most diverse and dedicated supporters in your local community. Get involved in local business associations and build relationships with effective people in your community. When you find yourself in need of contacts and resources, they are likely to be the first to answer, because the economic success of your venture will bring economic prosperity to the community you share.

Depending on the size of your community, there maybe more associations, organizations, and networking events than you can possibly attend and still attend to the needs of your business. Perhaps you will find that one of your team members has the right kind of personality to be your representative at events, but you will probably find that you are the best face for your company. It’s important to prioritize what events you attend and what organizations you involve yourself with.

Free events are superior to events you have to pay to attend for the most part, as they will present opportunities for you to make and build on relationships without putting a financial burden on you or your new business. Look for organizations whose premise you personally support, or which are geared specifically to business owners. Limit the amount of time you dedicate to attending new events, but find an organization or two which meets regularly so that you can form a long term connection with the entire group. Remember, bigger is not always better when networking for your business. You will not have a chance to meet and get to know many people in an event with hundreds of people in attendance. If you walk into an event and there are fifty people in attendance, then you have hit the sweet spot. With a good attitude and a little energy, you can share a significant one on one meeting with each person there and end up with lots of new contacts to follow up with later.

Value and Expertise
Once you have established yourself as the owner of a start-up business, it will seem like everyone and their cousin has some product or service which they absolutely have to sell your company. Do not pay a single penny unless you know for certain what value will be added to your company through your purchase. If the value is speculative, do not pay. If you have to rely on the seller’s word for the value, do not pay. If they are rushing you to make a decision, do not pay. When in doubt, do not pay.

Some services do add value to your company, but for the most part they only come in two forms: legal and accounting. You should be prepared to pay for some amount of legal counsel and some accounting work during your first year as a business owner, even if you have not put out a single product. It is absolutely better to be safe than sorry when dealing with law or when dealing with money; however, not all attorneys or accountants are created equal. Get a recommendation from someone that you trust. The best recommendations will come from business owners who have already gone through the start-up struggle you’re experiencing. Do not be afraid to approach a successful business owner who you trust for a recommendation, even if you have only spoken with them at local meetings or events.

Expert advice is pricey. As an entrepreneur, it is best for you to do the research and train yourself to do everything you think you want an attorney or accountant to do for you, and then have the paid expert check your work. They may have to start over from scratch, but they will be able to explain to you why which will give you a better handle for doing it yourself the next time. There are a lot of valuable resources out there, but it takes a lot of reading and cross checking to be sure you’re following the right instructions. Being a business owner means doing a lot of research and learning. Remember, when you figure out that you have to start over at a critical task, that’s not the time to slow down! The faster you pick yourself up and tackle the task again, the sooner you will see success.

Finding Funding
I cannot offer you a map to the treasure chest which is investment for a start-up company, but I can tell you the routes which will never lead to success and some which might. The aspect of American capitalism most in need of retooling is the connection between start-up companies and investors, so be prepared for this to be the most grueling task you will face. There are a huge number of investors in the U.S. and exponentially more individuals with business plans who want investors’ attention. If you jump in the deep end with your Big Idea and your need for funding, the most likely result is your business plan lining very nice trash cans without ever being opened. The next most likely result is you annoying an investor and then having your business plan ignored.

There are more con artists than can possibly be quantified in this world. Half are stealing attention that might otherwise belong to your business by trying to con investors out of their money. The other half are trying to put squeeze money out of entrepreneurs by promising a sure-fire way to get Your special and perfect business proposal in front of hordes of investors who are sure to burry you in cash. Do not pay them a single dollar.

I know it will be tempting to try anything and everything to get your business the investment it needs, so I’m going to list all of the ways that I can personally guarantee are less likely to work than buying a lottery ticket. When someone tries to sell you one of these strategies, either ignore them or laugh, whichever gives you the energy you need to work on your company without them.

Cold calling, call centers, and accredited investor lists. Investors hate this. Think about it. As soon as you embrace this technique, you are becoming the telemarketer that disturbs your dinner to try and sell you something you knew you didn’t want before you picked up the phone. Paying for a call center is even worse. Then you can be sure that the people calling the investors will not care about your business or the investor. The only way that cold calling is ever productive is if you call people In Your Area and set up an appointment to meet with them in person to present your venture to them at a later date.

Direct mail and email. Sending VCs or Angel investors your business plan without any referral or introduction is a great way to fill up trash cans without your venture ever being looked at. Investors are so overwhelmed with unsolicited submissions that they either throw them away, or pay someone to throw them away. Email is ever so slightly more likely to be seen, but only the email itself and not whatever attached presentation you have labored on for hours. If you want to try pursuing a promising investment lead through email, be sure that the email itself attracts and builds interest in your company. Being concise is very important. If you can boil down the essence of your Big Idea into a single sentence, then you may get some real attention, but do not count on it. VC firms which allow the submission of business plans also go in this category, although they are more likely to reply. If you do get a reply, they will either want upfront fees (it’s a scam, walk away) or they will let you know that they are uninterested in the venture. Do not just let them say “no,” always try to get an honest review of your submission so that you can improve your business plan and personal presentation.

Websites and online communities. You can easily find twenty different web communities that purport themselves to be the solution to the entrepreneur / investor problem. They will perform matchmaking, business rating, plan polishing, pitch tuning, and any number of other services. They make their websites appear to make it easier for the investors to select the business ideas that are most suited to them, but in reality these websites do not have investors to offer. Either they do not screen “investors” which will result in your business being inundated with advertisements from con artists claiming to be investors, investor representatives, or brokers; or they will screen investors and will have a handful of investor members who never check the site for every 300,000 entrepreneurs posting business plans.

In the end, there are few good ways to connect with potential investors. The best way to get an investor to give your business real attention is to have it personally recommended to them by someone that they trust. Build relationships with a variety of effective people, letting them know how great your business is and how important it is to you. If you’re working hard, working smart, and building solid relationships eventually someone you know will be inspired to tell someone they know who will tell someone they know, etc. If you get frustrated, just take some deep breaths, get out there, and connect with more people.

I hope you find this information useful and will be able to avoid some of the disappointment I have had to experience figuring all this out the hard way. If you’ve learned other lessons about entrepreneurship, or have any questions, I would love to hear them.