Entrepreneurial Q&A

[SecondCor521]

<deep breath> OK, so I'm seriously considering becoming an entrepreneur. </deep breath>

I have questions, and have come to consult my favorite mentors / board of directors. Here are the first eleven. Please feel free to give your feedback / answers to all or any subset:

1. How does one know if they are cut out to be an entrepreneur?
2. …Is there a particular Myers Briggs type or something?
3. …Is it necessary to be an extrovert?
4. How did you sustain yourself financially while in the initial “losing money” phase?
5. …How would you recommend someone sustain themselves?
6. What are the critical success factors to entrepreneurship?
7. It seems that many business owners don’t succeed until the fifth or sixth business. Do you have any suggestions for how to speed up the learning curve?
8. What are the key drawbacks to being an entrepreneur?
9. I have several business ideas. Which do you think is a better strategy and why: focus on the best idea or diversify among the top several?
10. How do you actually learn all the things you need to know to run a business, such as getting VC, getting a business sign, getting clients, negotiating deals, etc.?
11. How do you keep a million and one things organized, such as appointments, emails, tasks, financial records, mileage, continuing education, etc.?

Thanks as always,

2Cor521

 

[retire@40]

How does one know if they are cut out to be an entrepreneur?

It kinda feels like an itch that needs to be scratched.

Is it necessary to be an extrovert?

No, but it helps. Otherwise you have to play the part.

How did you sustain yourself financially while in the initial “losing money” phase?

Plan ahead and have an exit strategy.

How would you recommend someone sustain themselves?

Save prior to starting and/or part-time job while starting.

What are the critical success factors to entrepreneurship?

Persistance and determination.
Don't give up too easily.
Don't sweat the small stuff.
Take the road less taken.
Always have a plan B.
Don't depend on anyone, just depend on yourself.
Delegate when you can.
Keep the customer happy.

It seems that many business owners don’t succeed until the fifth or sixth business. Do you have any suggestions for how to speed up the learning curve?

Depends on the nature of your business, but...

Marketing and advertising.
Join local clubs.
Go to parties.
Meet as many people as you can.

Make it so when people see you, they think of your product or service.

What are the key drawbacks to being an entrepreneur?

Long hours to build the business.
Initial financial setback.

And this may sound funny, but....running your business.
Many entrepreneurs like to build the business, but they don't like operating it.

I have several business ideas. Which do you think is a better strategy and why: focus on the best idea or diversify among the top several?

Find the one you like the best and go with it.

Depending on the capital needed for startup, you many be able to start a lot of little businesses over time.

How do you actually learn all the things you need to know to run a business, such as getting VC, getting a business sign, getting clients, negotiating deals, etc.?

Education and Experience.

Work in a similar business and learn what not to do.

How do you keep a million and one things organized, such as appointments, emails, tasks, financial records, mileage, continuing education, etc.?

Get software and/or get a secretary.

I would initially opt for the software so you can do it yourself. Remember, it's OK to delegate, but the only person you should depend on is yourself.

 

[NotSoonEnough]

2Cor,

I started a software company with a co-worker, he had described some interesting ideas and I had the programming skills.

How does one know if they are cut out to be an entrepreneur?

Do you enjoy being independent and working alone? Knowing what I know now, I would do it alone next time rather than having a partner.

Is it necessary to be an extrovert?

Do you enjoy sales? I don't and would need to hire or farm it out to someone willing to do the schmoozing.

How did you sustain yourself financially while in the initial “losing money” phase?

I had saved one year's expenses beforehand, figured that would be enough to get the software written, have a web site up and running, and do an appearance at a conference or two.

How would you recommend someone sustain themselves?

Live way below your means and pray.

What are the critical success factors to entrepreneurship?

My little software company didn't really fail, we made enough money the first year to cover basic expenses. However, it was not enough to support two people for the long run. Had I done it alone it would have worked. My partner ended up not wanting to work much after the initial effort, he about drove me nuts, ruined a good friendship.

It seems that many business owners don’t succeed until the fifth or sixth business. Do you have any suggestions for how to speed up the learning curve?

Know your market, repeat, know your market.

What are the key drawbacks to being an entrepreneur?

Long days, days without end, no regular paycheck, and relentless uncertainty.

I have several business ideas. Which do you think is a better strategy and why: focus on the best idea or diversify among the top several?

We focused on what we thought was the best idea, which turned out to be a bet-the-farm approach. We were wrong (know your market), the idea wasn't as great as we imagined. [Edit] When the "best idea" fell flat we implemented one of the lesser ideas and ended up making as much on it as we did on the magic bullet.

How do you actually learn all the things you need to know to run a business, such as getting VC, getting a business sign, getting clients, negotiating deals, etc.?

Find a local SCORE mentor SCORE Counselors to America's Small Business

How do you keep a million and one things organized, such as appointments, emails, tasks, financial records, mileage, continuing education, etc.?

I never got any sleep, mostly 12 and 14 hour days, laid awake at night thinking about all the things that needed to be done, bought a bigger whiteboard.

 

[SecondCor521]

Plan ahead and have an exit strategy.

retire@40,

Thanks for the excellent replies. The only one I didn't understand completely was the above quote. Can you clarify?

2Cor521

 

[SecondCor521]

Do you enjoy being independent and working alone?

Do you enjoy sales?

Find a local SCORE mentor SCORE Counselors to America's Small Business.

NSE,

"YES!" to the first question, "Enough" to the second question.

I have two SCORE appointments set up already. They seem like a great resource.

2Cor521

 

[Marquette]

retire@40,

Thanks for the excellent replies. The only one I didn't understand completely was the above quote. Can you clarify?

2Cor521

You've got to know when to hold 'em, know when to fold 'em
Know when to walk away, and, know when to run

Now evry gambler knows that the secret to survivin
Is knowin what to throw away and knowing what to keep.

For instance, we're tossing around the idea of starting up a store. Because we're geeky-types, it'll be an online store. But, we'll need to carry inventory. We can start by doing the work part-time but, at some point, my wife will need to quit her job to work on this. That's the tipping point for us. We'll plan ahead to come up with a realistic picture of how long to stick with the business idea and then, if it doesn't work out, how we close up shop and liquidate.

You'll want to invest all of your effort into your venture, but you need to paint a realistic picture now so you know when you need to jump in the life raft.

 

[retire@40]

retire@40...The only one I didn't understand completely was the above quote [exit strategy]. Can you clarify?

When people go into business, they usually never think about how they are going to get out of the business.

How much will you invest before giving up? How long will you tough it out before you need to cut your losses?

Will you die at the helm? Will your kids inherit the business? Will you sell part or all of the business? Will you merge with a similar business?

When do you plan on leaving?

Will you finance part of the sale?

Do you need a buy/sell agreement if you just drop dead?

Will you stay on after the sale as an employee or consultant?

What is your contingent plan(s) if your original exit strategy doesn't pan out?

This should all be part of your business plan.

 

[SecondCor521]

When people go into business, they usually never think about how they are going to get out of the business.

How much will you invest before giving up? How long will you tough it out before you need to cut your losses?

Will you die at the helm? Will your kids inherit the business? Will you sell part or all of the business? Will you merge with a similar business?

When do you plan on leaving?

Will you finance part of the sale?

Do you need a buy/sell agreement if you just drop dead?

Will you stay on after the sale as an employee or consultant?

What is your contingent plan(s) if your original exit strategy doesn't pan out?

This should all be part of your business plan.

retire@40 (and Marquette),

OK, that's along the lines of what I thought you meant -- what confused me was that it followed my question about how to finance one's life before the business profits sustain me.

More stuff to figure out...

2Cor521

 

[socca]

There are a huge number of books on this topic - check out your local library.

If you want to have fun with the entrepreneurial lifestyle, it would be handy to be far enough along the road to FI that the low- or no-income startup phase doesn't cause you any stress. The counter-argument is that there is no more compelling motivation than imminent hunger / starvation.

Good luck.

 

[BunsGettingFirm]

There are a huge number of books on this topic - check out your local library.

If you want to have fun with the entrepreneurial lifestyle, it would be handy to be far enough along the road to FI that the low- or no-income startup phase doesn't cause you any stress. The counter-argument is that there is no more compelling motivation than imminent hunger / starvation.

Good luck.

If I were just putzing around living in my house, eating out, taking some local trips, yeah, I won't feel a lot of pressure, but if business expense is piling up without the revenue to show for all the expense, then I would still feel quite worried.

 

[socca]

If I were just putzing around living in my house, eating out, taking some local trips, yeah, I won't feel a lot of pressure, but if business expense is piling up without the revenue to show for all the expense, then I would still feel quite worried.

It all depends upon the particular situation. A home-based business with little the way of start-up or operating costs is one thing (my thing), a huge capital investment with outside investors, employees, contractors, etc. is another thing (not my thing).

 

[SecondCor521]

It all depends upon the particular situation. A home-based business with little the way of start-up or operating costs is one thing (my thing), a huge capital investment with outside investors, employees, contractors, etc. is another thing (not my thing).

My entrepreneurially spirited mother thinks I should buy a commercial office building. Umm, no, Mom.

The three ideas I've got on my plate require very little capital to get started. It's more just paying the bills for a while until they begin to produce income.

2Cor521

 

[TargaDave]

How many people who responded to this post actually got VC's involved, and invested more than at least a million? Just curious

 

[BunsGettingFirm]

How many people who responded to this post actually got VC's involved, and invested more than at least a million? Just curious

It would appear to be just you. I have heard that having VCs is just as bad as having bosses. Imagine the most self-important finance types from Ivy League universities sitting around telling you how to do your job. Wait, that describes my job. No thanks.

 

[midlifechange]

It's easy to be an entrepreneur with many businesses - the Internet, craft shows, small stuff that can turn large - if you have specialized skills this is good - the key is keep your job and start small - your idea may just grow - you do not need any specific traits - just try your idea out...of course everything I say has exceptions...entreprenuers in general have certain traits...but still all types of personalities can start a business. I started with 1K - there are tons of stories out there to read - just go to Google and start reading for inspiration.

 

[kumquat]

The three ideas I've got on my plate require very little capital to get started. It's more just paying the bills for a while until they begin to produce income.

2Cor521

The money you spend to live while starting the business is part of the capital required. New businesses tend to have a 'burn rate' meaning how much money they burn until they become profitable. One of those expenses is salaries. While you, as owner, may not get a salary, your expenses matter.

I've seen suggestions that a large percentage of business ventures that fail, fail because they were under-capitalized to begin with. Don't underestimate how long it will be before your business supports you.

If you go for it, good luck and best wishes.

 

[SecondCor521]

The money you spend to live while starting the business is part of the capital required. New businesses tend to have a 'burn rate' meaning how much money they burn until they become profitable. One of those expenses is salaries. While you, as owner, may not get a salary, your expenses matter.

I've seen suggestions that a large percentage of business ventures that fail, fail because they were under-capitalized to begin with. Don't underestimate how long it will be before your business supports you.

If you go for it, good luck and best wishes.

Thanks.

By way of an update, I've reluctantly decided that it is better for me to get another day job to support me and then try to start the business on the side. That way I avoid putting undue pressure on the business to support me too soon. (I think I possess the majority of the traits of an entrepreneur except that I am not much of a risk taker generally speaking.) "Keep your day job" was my parents' advice; it also was the unqualified advice of the SCORE counselor as well.

2Cor521

 

[Scrapr]

I think you are making the right decision. Less pressure. You can let the business grow at it's own rate. It's natural rate. While you figure out all the other stuff. Sales, marketing, networking, operations, etc

Re: Do you have to be an extrovert question

I am not. But have learned and been pushed by my wife to network. Even almost 20 years in I will find myself backing away from network opportunities. I usually can catch my self and step up. You have to sell your producyt/service in the style that fits you. I have a very low key personality and so I have a low key selling style. Wouldn't work for everyone or every product.

 

[TargaDave]

It would appear to be just you. I have heard that having VCs is just as bad as having bosses. Imagine the most self-important finance types from Ivy League universities sitting around telling you how to do your job. Wait, that describes my job. No thanks.

Sorry, Been away for awhile. VC's don't meddle too much in day-to-day if you learn the game and keep them at bay. When it comes time to do an exit (deal) they are absolute hogs and will risk everything for that last buck. Anytime spent with new owners and their mega-corp rules (usually part of the deal for key people) is typically hell on earth compared to life with VC's. That bout sums it up