Entrepreneurs make thousands of decisions over the lifetime of their businesses. It’s not hyperbole to say that many of those decisions are mission-critical, and there is never a finish line.
Founders can never say, “Phew. We made it. We can relax now.” At every milestone, stakes are high—but never more so than in the earliest days of a company.
We’ve seen this play out during more than a decade of guiding startups and emerging companies through every stage of business—from pre-launch to acquisition or IPO. How founding teams answer a few deceptively simple questions starting on day one can make a huge difference over the long run.
How you answer these questions will matter the most:
1. Who is the right co-founder?
The perfect business partner is one who is strong where you are not, who can equal your intensity but also recognize when it’s time to chill out, and who shares or spurs your vision for where the company could go. If you’re lucky, you’ll have a colleague or contact with deep experience in the same market you plan to enter, whose work ethic and entrepreneurial spirit matches your own. If not, you’ll need a matchmaker who can put you in touch with smart, collaborative people—and at least one of them will pass what one of our clients calls the “Chicago Airport Test.” There’s one question on that test: If we were stuck in a major airport together for hours, would I still want to hang out with you afterward?
2. Should we bootstrap the company or seek funding?
The question of whether to bootstrap your company or seek outside investment has a lot to do with what kind of business you want to start and how much it’s going to take to get the company to its first critical milestone. If you’re not focused on growth at all costs, bootstrapping might be ideal. When you’re self-funded, you have to earn revenue immediately, and that means you have to be hyper-focused on customer work and service—it will break you in the early days if you are not.
As Basecamp’s Jason Fried puts it, “On day one, a bootstrapped company sets out to make money…a funded company sets out to spend money…They practice spending, not making.” Bootstrap status spurs you toward strategic choices about everything, from hiring a team to opening office space to launching a product.
That said, if the business you’re building hinges on a complex engineering product, you might not have the same luxury. This is especially true if you need capital to support a long R&D effort, funds to pay a team beyond the founders, and runway to get you to the point of revenue.
If you decide that funding is a necessary path, remember that it will be much like tying yourself to a co-founder; finding a venture capitalist you can work with for the long haul is a lot like getting married. Pick the right financial partner—one that offers more than just deep pockets and can be a truly trusted advisor.
3. Can we fake it ‘til we make it?
When you’re starting your first business, some things could fall under the guise of faking it ‘til you make it, simply because you just don’t know what you don’t know. Everything feels new, even if your expertise in your actual market is solid. No matter where you’re lacking, learn and execute on this knowledge as fast as possible by:
- Asking lots of questions until you get smarter;
- Hiring people who know the things you don’t;
- Reading and researching; and
- Following influencers and learning from them.
4. Do we have the right people on the bus?
The team you put together as you get your business off the ground will have a lot to do with whether you sink or soar. This is one reason why it pays to spend time writing a mission statement that reflects your reality and your aspirations.
Gauge candidates by that statement, and ask questions of them that map back to your core values as a founder and a company. Do employees have the motivation, creativity, and self-discipline to help your company grow? Can they get sh*t done? When you find talent with that rare blend of qualities, foster it.
5. When should we launch?
We’ve counseled numerous companies not to launch at the moment they initially wanted to do so. There are several clues that indicate it’s the right time to launch your business, including:
- You have a strong, addressable market opportunity, but even more important, you have fulfilled a customer need and pain point.
- The market timing is just right; your prospects are ready for you, and you understand where the competition is in its development. You’re not too early, and you’re not too late.
- You know what success will look like. Before you launch, you have decided what the next company milestone will be, such as ramping up sales and marketing to support customer growth, hiring more talented team members, attracting additional funding, or something else.
- You’ve taken your solution and its value proposition and core messages out for a test drive with beta customers and industry analysts—and they’ve confirmed you’re on the right track.
- You have an internal marketing and support foundation complete with a strong plan for demand and lead generation. You’ve also established an outbound communications strategy. You’re already building a following on relevant platforms, and you’re engaging with people in an authentic way.
- You’ve been working on building relationships with media, analysts, and customers who can provide third-party validation for you.
Entrepreneurs make thousands of decisions that determine success. However, the choices founders make in the earliest days around these five questions are among the most pivotal for any business.
Source: AllBusiness