What to ask yourself before starting a company
Before launching a startup, an entrepreneur must ask him or herself the following question: Can I support myself for the next 18-24 months? This is specially important if you’re in your late twenties or early thirties.
It doesn’t matter where support comes from. It could be your parents, your own savings, your partner’s job, or a liquid asset you’re willing to sell at some point. It could even come from your first investor, such as an angel, although very rarely outside investors are willing to pay you a (decent) salary, especially in the early days of a startup. The important thing to remember is that it will take longer than you think before your company is making money to pay you, or an institutional investor joins in with a paycheck.
Don’t expect short-term returns when starting a company
Drawn into the excitement of launching their ventures, entrepreneurs usually underestimate the sacrifices to come. Optimists by nature, they assume that something great is going to happen within a year: a successful pilot or beta launch, an investor, even a first client. Not gonna happen. Success stories about entrepreneurs who dropped out of college or left a job to support themselves on credit card debts are very sexy but incredibly rare. They do however get all the media attention. You won’t read a piece on TechCrunch about the entrepreneur who ran out of steam, shut down his company, broke up with his girlfriend in the process, and had to go back to his parents house.
The concept of time is very different for bootstrapping entrepreneurs and… well, the rest of the world! While you’re bleeding and resources are drying up, potential investors and clients will tell you comfortably: “Come back in six months or when you have more clients”. It’s a brutal catch-22 and it will drive you crazy unless you can’t support yourself and get into real world’s time.
If you’re in the early twenties or otherwise can afford it, screw it, take all risks! Starting a company – successfully or not – will be a great school anyways. If that’s not you, by all means, do also go ahead and pursue your dreams. But make sure you first do some planning on the personal front, soldier.
See also MBA For Entrepreneurs Can Still Matter. Image: fotolia.com
Keep them coming, great blog! I love your perspective on things
Thanks, brother! All best!
Pour ma part je constate que le mode veille est plus gourmand en bapverie.Autaratant mon tÃ©lÃ©phone perdait 1% en une nuit contre 4 a 5% aprÃ¨s mise Ã jour. Avez vous les mÃªmes rÃ©sultats ?
good, honest insights…bill gates dropped out of college (harvard) to launch the predecessor to microsoft…but, guess what? – his father, a prominent attorney, backed the start-up with several hundred thousand dollars…go figure – “the rich get richer”, sound familiar?….then there are the stories of the founders of hersheys chocolate, mcdonalds, etc…you won’t find these stories unless you read biographies or study the “full story” – they all FAILED several times at various ventures BEFORE success could find the light of day…
Yes, good examples! Thanks for contributing. Hope to see you around here often…
Startup in the evenings! It takes the risk out of the process. 🙂
Sure, evenings and weekends. BUT, it gets to a point where you need to go full-time or the biz doesn’t fly. And the 18-24 months start counting…
Thanks for contributing and come back often!
1. Consulting – 9 months PT over FT job – used credit cards/lines for cash-flow dips.
2. Newsletter – used revenues from and while consulting – used credit cards/lines for cash-flow dips.
3. Environmental product sales – jumped in cold – made a living
4. Book 1 – sold ads quickly to live
5. Books 2-6 – sold ads quickly to live, and build an association and website
6. Real Estate rehab – borrowed money from three sources
7. Large project development and sales – life expenses paid from SSA
The rest of the comment was:
You might want to expand this blog entry or make a parts 2-5 to give a full list of “What ask yourself before starting a company” such as one’s aversion to risk, reaction to stress, near-future family needs (time and money), spouse’s income, number of months of savings, sales ability and desire (is SELL a dirty four-letter word?), management experience, interested co-Founders, networking ability, writing, typing, computer skills … you’ll need ’em all.
Thanks, Kenton. Sure. A lot could be written on the topic. Maybe I’ll leave some for a next post. Cheer.
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This economic crisis due to the corona-virus pandemic can feel challenging and terrifying, but the current environment can be an ambitious time for young entrepreneurs to launch the startup of their dreams. Pitching an idea and raising capital for your startup may be harder than before, but understanding the market and the needs of the consumer can help you stay in the game.