Ep 328: Best Startup Advice

What I want to talk about today is the most important start-up advice you will ever get. I’ve tried to put together about seven or eight pieces of advice that I think will absolutely help you, and if I could do it all over again, I wish I would have known these things when I first got started, because I knew none of this stuff except number one.

 

Know Your Why

Why do you want to be an entrepreneur in the first place? That is the most important thing, because there is a drastic difference between being an employee and being an entrepreneur.

An employee has some degree of security, barring getting fired or doing something really stupid. They have a job as long as they keep going to it. Second, they have financial consistency. Notice I call it consistency, because you get the same thing every week, nearly. They typically work in a very systematic system, told what to do, and do not have a tremendous degree of flexibility. Unless you’re at the very top and CEO or upper management, you’re getting told what to do and you do what people tell you, and you keep your mouth shut. You just rinse and repeat, and you do it 40 hours a week. And that is why you’re an employee.

Then there’s the entrepreneur. The entrepreneur wants to take a risk. The entrepreneur wants to control the game and all the pieces on the board. He or she wants to control what they can get paid, how they get paid, and who’s on the team, what the strategy is, what the tactics are, etc. That’s what excites an entrepreneur. So the first thing you need to decide, and the best piece of start-up advice I would give you, is why do you want to be an entrepreneur in the first place?

If you tell me it’s money, that’s going to be the last thing you probably get…When I started my company, I didn’t really start making money until about two years into it. Even when I started making money, I brought on a partner and I had to guarantee him a certain amount of money to leave his business. I bought his business and brought him in as a partner. So I took my profit at the time and to scale it, I had to reinvest. So I kept my day job a lot longer, but my passion was to be an entrepreneur. I knew what I wanted and I could see it. I knew a few years down the road, I was going to have flexibility. I was going to have a very nice income, I was going to be able to put together the team that I wanted. There was just a lot of things that appealed to me because I wanted to be an entrepreneur. That was very clear to me

 

Get Validation

What does that mean? That means validate your business idea in some form or fashion. You can beta test simply by going to a few bars and talking to 10 different people.

I’m not even joking, just take your business idea, go to each bar and tell them “Hey, listen, I’m starting a business. You just tell me if it’s a great idea to XYZ…

If you just went to ask 10 people in all sincerity, you would get incredible feedback. If you did that, I’d be impressed, because I’m convinced 0% of business owners even do that. They have no validation. They have no idea if the market is going to be receptive of their idea. If you just ask 10 people, you would get a percentage of them that say, “It sounds okay”.  And then you follow up with this: “But what would pay for it?” and now you are gaining information on what to charge for you product or service.

 

Don’t Quit Your Day Job

Remember I told you I kept my job so I could bring on a business partner. I always kept re-investing my money that would otherwise come to me. I invested it back into the company to scale it.

If you suck all the money out of it as fast as it starts, then you have no reserve. You have no money to put back into innovation, research, and development. If you’re creating a product, you’re not going to be able to hire the best team your could because you’re taking the money out of the business. A lot of companies are built around a single person, where every spoke runs through that person and he or she is the hub. I don’t want everything to go through me. It’s hard to scale that.

 

Hunt for the Big Game

Look for a big market where you make big money, because you know what?.. It’s pretty much the same amount of work.

There’s some businesses that might be exceptionally hard, but starting a business in general is hard. You’re going to take a risk and you’re going to work your tail off, so why not go big game hunting? Look for a big market where you can make big money.

 

Focus

The tendency is you start your business and you’re going to get bored with it, or you’re going to think there’s going to be something else that you think is better. There’s always something better in your mind because it’s difficult to start a business. Your relentless focus on your startup needs to be guarded. You’ve must be as passionate about it as a new born child.

I joke with my daughter when she was born that she looked like they beat her around like a soccer ball and I thought I was going to be her senior prom date…but I adored her from day one! That’s the way you gotta be with your startups. It’s going to get beat around a little bit, but you’ve got to keep your relentless focus on it. You can’t just keep moving to the next shiny object.

 

Growth, Not Survival

The tendency in a startup is to focus on survival.

No, I want growth.  My goal has always been 20% growth every year. Allowing me to have a complete 100% growth within five years. But more importantly, it allowed something to fail. It allowed me to take risks on other things that didn’t work well. If over five years, I have 100% growth and I try something that fails at 20% I’m still have 80%. If I have five new ventures and two fail and three work, I win. Heck, if four fail and one succeeds, I win. The problem is we get in a survival mode and then what happens is we do a Hail Mary there when it’s getting ready to go under, like we have one big chance or one good idea that we think will save the company, and that’s a lot of pressure.

I’m always thinking growth, not survival.

 

Be Customer-centric

The hub of the business initially, absolutely has to be the customer.

What do I mean by that?

• What do they want?
• What do they want that they don’t even know they want?

Your trying to create the perfect customer experience.

 

See Around the Corner

That’s innovation. It’s not just what they want today, you need to see the next step. What do you think your target customer would want next?

My company has eight divisions now, and it’s been over 11 years, why? Because I’ve always asked my customers what do you want next?. I see patterns in what they’ve been requesting, and we beta-tested different things to see what stuck. It’s part of being customer-centric.