I specialize in helping people setup new businesses. When you mention startups people often think of the old dot com model where millions of bucks were at stake. Wikipedia says, “A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. The term became popular internationally during the dot-com bubble when a great number of dot-com companies were founded”
I work with newly created businesses usually under $500k in funds. The startups I work with are started from dreams, money that’s been saved (unlike the dot-coms approach to OPM- other people’s money), lack a plan and think on their feet.
Some observations I’ve had about setting up new enterprises:
1. Think big but also have milestones so you will get some satisfaction by reaching them. There’s nothing more disillusioning to think a million dollars is in your reach in the first year when in fact it’ll be more like $50k after the startup process and implementation phase. Most people fail to get sustainable in the first year.
2. The big guys think about running lean and talk about burn rates. Forget the burn rate, but remember you will need your money for operating capital so be lean. Buy used equipment, make deals and don’t feel like you are a millionaire until you have it in your pocket. I have a client who had a great profit at the end of year one and spent the entire bundle on a new fleet of trucks, yikes! Not the thing to do. This was a good operating line for the beginning of year two.
3. My friend, Michael Gerber, says have a system and when you are setting up your system pretend it is for future expansion, so think big here. It takes a lot of work but can be as simple as a Procedures Manual. Wikipedia identifies a process similar called Iteration – ” Iteration means the act of repeating a process usually with the aim of approaching a desired goal or target or result. Each repetition of the process is also called an “iteration,” and the results of one iteration are used as the starting point for the next iteration.”
4. Spend an inordinate amount of time researching and developing your market and how you will get there. Gone are the days when you opened a store and people just came to shop. Maybe that would work if you were a general store in the old west but not today, sorry.
5. If you ask an entrepreneur how much time he works on his business each week it may seem ludicrous. I estimate a busy entrepreneur will easily spend 80 hours a week trying to make the business work. Being an entrepreneur is not for the faint of heart. What’s my point? Not to scare you off because all the work you do, will be for you. I’m suggesting you need a good balance between work and a life. How many marriages have blown up because of this? You started your business so you can have control so make sure you take time for yourself, maybe a golf game in the middle of the week or an early dinner with your wife. BTW lose the BlackBerry for the evening.
6. The thing I dream about when doing business is to be honourable in my dealings. If you’re an asshole you will attract bad karma, bad business and may make some quick money but you won’t last in business. You mess with me once and that’s the last time you will. The old adage, the golden rule, is so appropo in business, treat your customers and suppliers and even your competition with respect and honour.