7 Principles Every Startup Entrepreneur Should Follow
Are you a real entrepreneur? Everybody dreams of being an entrepreneur, owning a successful business, working on their own terms and not having to answer to a boss. The more courageous types go ahead and quit their job to pursue a startup, and possibly carrying a hope that they could reinvent the world (in 3 easy steps).
If you’re not afraid to fail in your startup, like how the greats have failed in their time, then you’ve taken the first step into entrepreneurship. The journey ahead will be long and ardous, and you will make plenty of mistakes along the way. But if this is what you are destined for, then take with you these 7 principles to aid you in your journey!
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1. Don’t Look For Approval
Creating a business from scratch takes monumental effort. Praise to you my friend for choosing to do this, but you must understand, not all people want you to succeed. Not even your family or friends. Not because they don’t like you. They might even love you. And exactly because of that, they want you to stay the same.
Your parents or spouse might not want you to succeed just because you’ll be gone on business more of the time, and at a subconscious level they know that will be detrimental to the relationship.
Your friends might be scared that you’ll change as a person (which will surely happen). They might think of what other people will say about themselves, considering that you all come from the same place, but yet you’ll probably end up richer than them.
You’re better off taking a break from friend’s opinions and family advice for the time being and focusing on your new venture. Don’t seek approval, you don’t need any. This is a crucial step, which most often is overlooked. The ability to isolate yourself from other people’s approval will determine if you’re a winner or a loser.
“People who want the most approval get the least and people who need approval the least get the most.” – Wayne Dyer
2. Leave Investments For Later
Looking for money at an early stage in your company’s life is a really, really bad idea. You’ll only get part of the money you’re looking for and you’ll end up giving away too much of your company assets or even worse, you’ll give away shares.
Shares are your company’s soul. Be gentle with it and always remember that, when and if the time for an exit comes, those shares will determine the amount you get paid. So you should only look for outside investments once you’ve proven the concept of your startup, when you already have a decent revenue with at least a 3-6 month track record.
3. Business Incubators, Angel Investors Or Venture Capital?
This one is really tough. I would always advice against partnerships too early on, as already stated. The business world is much like the animal kingdom. Usually the small fish gets eaten by the giant shark, no matter how good the deal you’re offering. That’s just because this early in the game, you don’t really have that much leverage in order to negotiate an advantageous deal.
If you do decide to partner with somebody, by all means try to go for somebody in the same industry. That is, if you’re in the online space, you don’t want to partner with venture capitalists who just care about quarter or yearly profits.
You’ll want to do business with somebody who can actually add value, who can actually spend some time with you at least once a week and who knows his stuff in your startup’s niche.
And The Answer Is…
Business incubators and local angel investors are the best way to go. You’ll have more freedom, as opposed to working with a big investment fund. The term local is key, here.
You’ll want to go looking for these people at your local university. According to Bob Tosterud, Freeman Chair for Entrepreneurial Studies at the University of South Dakota, angel investors are usually looking to invest in businesses started by bright young students. Approach the teachers, they usually either are personally involved in business endeavours, or they know somebody who is.
You might also try and find angel investors by asking:
- Your accountant
- Your lawyer
- Local chamber of commerce
- Business publications, blogs, magazines. Ring them up, they’ll be interested in talking to a businessman!
- Your bank, they have loads of contacts!
- Search for your local government agency which deals with commerce or business
If you want to read a great guide on how to find angel investors, check out this article.
4. Make Use Of A PNL Spreadsheet
So many startups forget to manage their finances correctly. A Profit ‘n’ Loss spreadsheet is a must. Don’t trust your accountant to do it for you. This is the entrepreneur’s job! Keep a really close eye to it, because every penny counts in these inception stages.
List all your expenditures. And I do mean all! Be honest with yourself, even if it’s hard seeing that you’re working 12 hours a day and your company is barely breaking even. This honesty will again make the difference between losing or winning.
5. Share Your Vision Daily
Your early employees will probably be underpaid. As such, you’re really looking to motivate them by other means. You’ll want to inspire them, and the only way to do that effectively is with your vision. Have daily meetings in which you talk about your company goals.
Since you are a startup, these meetings will consist of 2-10 people. Look each of them in the eye whilst repeating your company’s dreams. Don’t talk about shallow things such as profits or trashing your competition. Give your company a soul. Talk about how the work they are doing will impact your clients lives, will add value to other people in ways you all can’t begin to fathom.
Talk about how great it is to be involved in something so noble. Come up with a great, simple and memorable slogan. Use if often when talking to your people and clients alike. You’ll want something similar to TNT’s “Yes we can!”. If you need ideas for a great slogan, check out this article:
6. Bond With Your Employees
"If you want to change the way people respond to you, change the way you respond to people." - Timothy Leary
Treat your employees well, especially considering they do show faith in your entrepreneurial skills, as they are working for you. Don’t be afraid to share some personal stories with them; just enough to show your human side.
Follow the two principles below:
- Only praise them in front of their colleagues
- Discipline/critique only in ‘one-on-one’ talks
Nobody likes to be made to look like a fool in front of other people. So don’t do that, it will only affect your personnel’s productivity. But don’t let mistakes slide, it will hinder your credibility as a manager. Make sure you get your point across strong, without his or her colleagues hearing your critique. When it comes time for praise, be generous with it, and let them all hear.
7. Specialization Is For Ants
As the great Robert A. Heinlein used to say:
“A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.”
And ants, my friend, make for lousy entrepreneurs. Owning a startup makes you a jack of all trades. You’ll be understaffed, underbudgeted, underdeveloped and looking for a massive insight or miracle constantly. You will personally need to do marketing, customer support, finance, client acquisition, billing and well, almost everything.
That’s considering you didn’t go for a massive investment (which as you probably already know by now, is a bad idea!) And doing all this work on your own is a good thing. It will teach you volumes in terms of knowing what to ask from your future employees. So don’t be afraid to get your hands dirty! You’ll be grateful that you did later on!
Adhere to these 7 key rules and you’ll be on your way to having a great business. Do you know about any other golden rules for startups to follow?