Startups

Startups are fundamentally different from anything else you can do in business.

In many ways a starting a company is just like raising a child. Everything is for the first time - new and untried. No matter how much experience the people have designing the product or servicing the customer; with a startup it’s still the first time that particular task has ever been done with those people in exactly that way.

Just as an established company has to build a relationship and reputation with a new customer, a new company has to build a relationship and reputation with every customer. An established company has staff interrelationships that are just being built in a startup and will inevitably impact how and how well those people work together.

Every new product or service will have problems to solve. Just think about the last time you bought a new TV or a new car. You had a learning curve just to figure out how to set the clock or the date since every TV or car has a slightly different procedure.

An established company has processes and procedures for most of its day-to-day operations. A policy for handling customer complaints and refunds, and a set dollar amount that the service person is authorized to spend without asking permission and so on.

The first key lesson for a startup to learn comes from the French philosopher Rene Descartes – Each problem that I solved became a rule, which served afterwards to solve other problems.

The takeaway from this is for you to keep close track of problems and successes to develop processes, procedures and guidelines to deal with future issues. This deceptively simple practice is the key to scaling your business and allowing you to add staff without losing the very things that set you apart from the competition.

Every startup begins with an idea and that must be turned into a plan to actually create a product or to deliver a service. Depending on the business that plan might be very simple or complex but just like planning a trip to the grocery store without a list you end up forgetting the lunchmeat!

While a better plan generally leads to better results, its far too easy for you to get caught up in trying to write the perfect plan and to account for every possibility, leading to the well known “analysis paralysis”.

The second key lesson for a start up is - A good plan implemented today is better than a perfect plan implemented tomorrow.

George Patton

Your takeaway this time is that while you must do enough planning to know were to start, what you need to start with and where you are going, you should start actually doing something as soon as practical. Just like that mythical trip to the grocery store I mentioned earlier, you can always add or subtract items from the during your shopping trip, but start filling your cart!

Reading the startup advice in most business magazines you will see the reoccurring theme to not let finance hold you back. While this is good advice in the main you still need some cash to get started.

I can start a ditch digging service with a car or truck (or a bus ticket) to get to the job and a $15 shovel. Without that transportation and the shovel I can’t start a ditch digging business! I specifically chose a ditch digging business since the cost of tools is just about as low as you can get, but as you can see there is a minimum you need to get started.

How many times have you seen a need for a service or product that you’ve thought “I could make a lot of money building that or doing that for that customer”? In looking at exactly how you could make the product or deliver the service you find that you need some cash up front to buy the raw materials and tools to actually build the product or deliver the service (and by the way feed yourself till you get paid) and decide that you just don’t have the cash to make it work?

Most of us have shelved the idea and moved on looking for something we can do with the resources we already have or use what we do have to get a sample together to get more funding.

Its OK to look for opportunities within your budget or skill set, it is also OK to look for ways to expand your budget or acquire new skills but to you really only have those two choices. My business experience has taught me that more ideas fail for lack of funding than funding is wasted on bad ideas.

The key to places like Silicon Valley and Austin, Texas is not the universities that turn out educated people, although that helps, Its not the co-location of research and development branches of big businesses although that helps too. The “secret sauce” is the people willing to risk their cash on new ideas!

The last takeaway is that you should never saddle yourself with so much debt that you lose control; but never borrow just enough to give yourself a case of the shorts. You've got to have enough cash to finish!