Let’s start at the beginning. No one becomes great on their own. Along the way. you will meet lots of people (which can be very fun) and many of them can help you. But you need to know what you are doing, what kind of help you need, and how to present it to others. You’ll want to open a company.
The company is a separate entity dedicated to undertaking the projects you want to do. It provides a great way to structure things so others can get involved. Once you develop a clear mission and business plan, people will know what they are dealing with. When you raise money (by obtaining credit or selling shares), it will be clear what the deal is. After your company becomes profitable, you are able to sell shares, transfer control to others and exit. If your business fails, your personal life can go on just fine if you do things correctly.
In this blog, I will mostly try to distill what works, so you can take it and use it right away. In my experience, the difference between ongoing success and failure often has to do with focusing on the right things. So when it comes to topics I have figured out, I won’t mince words and will focus only on what you need to know to succeed.
Would you invest into this?
Most entrepreneurs start out with some amount money, time and other resources they can dedicate to the business. The business is an investment — and the founders are its first investors. So think like one. What are you going to get from this business, and how can you manage the risk? If you aren’t willing to invest into this business, don’t expect anyone else to be so generous.
Talk about your business idea with others and seriously consider their feedback. You may indeed have a great idea but might need to present it in a way that makes other people understand why it’s a good opportunity. Through feedback, you will refine both your presentation and the original idea. Before you commit to doing your business, make sure you can explain exactly how it will become profitable. As you get good at this, many people might get excited enough to want to get involved with your company and your project. This is great news for you because it a) shows that you have something valuable, and b) you get to choose who to bring on board based on what you need.
Make a name for yourself
It’s well known that a proven track record counts for a lot in this world. If you built and sold several successful companies, people will be more likely to fund your next venture. Not only that, but your name will be out there, associated with those successes, and everywhere you go, people will respect you.
Therefore, it is a good strategy to achieve your first major success early, and parlay it into other opportunities. You may think your idea is so great that you want to retain as much control of your company as possible. Remember, though, you are already the founder. It is more important that your venture succeed, because then you will be known for having founded a successful company. Chances are, if you came up with this idea, you will come up with more — and even if you don’t (which is unlikely), you can always invest in others who come to you with ideas. And they will love you for it. You’ll get your next ideas funded — and even if they fail, you can still find people who are impressed enough with your original, successful venture, to get involved.
Your first project should maximize the chances of success. You’ll have plenty to play with in your next projects if you succeed.
Chances are, though, it will take a lot for you to quit your job and devote yourself full-time to your company. When you have zero track record and connections, those kinds of resources aren’t raised overnight. So you have three options:
- Get a track record and connections by helping launch something successful first.
- Find someone who does have these things, get them excited about your project, and get them on board.
- Keep working and saving up money and resources, so you can afford to quit your job and devote yourself to the business.
The first two don’t carry nearly as much risk as the third, because at the end of the day, you have not risked everything you had on the business. Although all three let you maximize your chances of success, the first two allow you to minimize your risk.
It takes money to make money
Here is an interesting suggestion to consider: ideas are a dime a dozen compared to a track record of carrying out a successful venture. Perhaps you should consider first doing an idea that is straightforward and succeeds (such as taking advantage of a newly formed market, which I will discuss in a future blog post). It shows you can work with others. It gets you connections. And in the end, your name is associated with success.
Seriously, consider a business where people can make a lot of money, and think about partnering with someone who already had a lot of success in that business. You can get off to a running start in your business career by leveraging the success and goodwill of people who were already successful.
In business, knowing people and being able to sell them on your vision is a crucial skill.
Right now your idea may be just a gleam in your eye. Break it down into milestones: opening the company, completing the business plan, getting the people in place that can help you, getting the money in place. Those milestones will take time and effort to accomplish. But once reached, each milestone will unlock further possibilities for you.
There are few things more frustrating than not having enough resources to get basic things done. This includes time and money. For each milestone, make sure you have twice the amount of time and money you think you need to accomplish it. It is much better to say “I will definitely get the prototype completed in less than 6 months” than to say “I will hopefully get the prototype completed in 3 months.” The first one inspires confidence and gives you a guarantee you can work with.
So go ahead, pursue your idea, but do it in milestones — and don’t commit yourself fully to the next milestone until you can set aside double the time and money you think it’ll take to achieve it. At worst you’ll be pleasantly surprised. At best, you’ll find that all the extra time and money let you meet people along the way that you wouldn’t have been able to if you were back in your lab stressing out. People who can seriously help you.
As you reach milestones and get to know more people, your original idea may change. A good business venture should survive lots of these variations without becoming stupid or impossible to continue. Re-evaluate and refine your business plan at each juncture. Your final business may turn out to be very different from your original idea, and it’s okay. It is your first business. The most important thing is that it succeeds.
Naming the company
Lucky Apps started as a company that would make facebook applications. It was originally named during a brainstorming session I had with my girlfriend. The requirements were:
- Easy to pronounce and very hard to misspell
- Positive and helpful associations
- Available as a .com domain name
It’s often hard to find a good domain name that fits these requirements, and harder still to find one that’s composed of actual words. That’s why we have all these sites like Kazaa, Wufoo, Flikr, Bebo, and so forth. Still, these names are short, compared to, say, experts-exchange.com . (Without the dash, it can be mispronounced in a pretty funny way.)
Also consider conflicts in the following areas:
- Trademarks — you may get sued by a company in the exact same business if they have a very similar name. This happens much more rarely on the web because the courts recognize it’s a crowded space, but still. A trademark normally costs around $300 to obtain if you do it yourself.
- Search engines — when people search for your company by its exact spelling, what comes up? For example, if your company consists of two words (like Lucky Apps), chances are it will be harder to get results near the top in google. If you are making a software product, similar considerations apply. Ruby On Rails and symfony are a better names, search-engine-wise, than Cake.
Finally, get tools that will help you organize your company’s documents, finances, and more. Some things can bring with them a lot of headaches — as I found out the hard way. For example, when your company directly hires employees in New York State, you must get Workers’ Compensation insurance, unemployment insurance, and report your income four times a year. Be aware of the law (at the city, state and federal level) when you do something — you can often get the information via free consultations with lawyers and recruiters.
Products that can be very useful include a calendar/organizer, project management software, budgeting software, collaboration software and a revision control system for all your important files. They allow you to work with your information effectively, make the right connections, realize what’s actually happening, and get things done. Good tools are able to tremendously reduce one of the major sources of stress, namely the necessity to keep ad hoc information in your head rather than having easy access to it.
The other major source of stress is regret: you expect something to happen, and it doesn’t happen. That’s why my advice is to go easy on yourself — double the time and other resources you are willing to commit to a project. Make your expectations of yourself be lenient — assume there may be unforseen obstacles along the way. When it comes to others, though, make your expectations of them reasonable and firm. Once they are on board, it is their responsibility to manage your expectations if something comes up. But that is a topic for another time.