How Hard Is It To Be An Entrepreneur?
Being an entrepreneur is easy.
Every day people decide to start up businesses. And voilà, you are an entrepreneur.
And voilà, most of these new entrepreneurs will fail.
So why do so many entrepreneurs fail? Let me click off the reasons, stream of consciousness style:
A. You haven’t validated your business idea.
I’ve talked to way too many entrepreneurs over the past couple years with the same story:
“I’ve got this great idea. The product/business is going to do X.”
Then I ask, “What have you done to validate your business?”
The answers usually fall way too short. The goal should always be to get to paying customers. That’s the best validation you can get.
B. You don’t have a plan.
I’ve seen this criminal act repeated way too many times as well. You have a great idea, you start implementing your idea, and you are just flying by the seat of your pants.
Talk about a recipe for disaster.
Every entrepreneur needs a plan. Now your plan doesn’t have to a 50 page single-spaced written document.
But you do need a simple plan:
- You need a sales plan of how much you’re going to sell, and…
- You need an expense plan of how much you’re going to spend, and…
- You need a hiring plan.
The result is you will know how far your cash is going to take you.
Of course your plan will have mistakes. But the mere process of planning will give you a better handle on how your business operates. For more, read: How Do You Know It's Time To Hire Your First Employee?
C. You aren’t committed to being an entrepreneur.
Maybe I should have put this as the first reason, but way too many people don’t take being an entrepreneur seriously enough. It’s easy, as I said, to become an entrepreneur, but it’s hard to stick with it.
You’re going to be pushed to your limits, and you have to be prepared to take a punch right in the mouth.
D. You have to the wrong team.
Founders, many times, don’t work out. I’ve lived through this one, and it sucks when you lose at a founder at exactly the wrong time.
So the trick is to do as much vetting as possible as early on as possible. Spend at least three months prior to officially starting your company working with your cofounder on a “we’ll see how it goes” basis.
If things work out, great. If things don’t work out, you can part company as friends.
For more, read: What Are Some Good Questions To Ask A Potential Cofounder?
E. You have the wrong investors.
Every company (even bootstrapped companies) has investors. The one absolutely, nearly 100% guaranteed company killer is a bad investor
What if Apple had 50% of its shareholders wanting the company to sell?
Or, let’s say you received a loan from your parents to start your company. All of the sudden, your father wants his money back?
Or, let’s say one of your investors can no longer support the company? And you have no money left to operate?
How do you recover if you are in any of these situations? The answer is you usually don’t.
So choose your investors wisely.
Make sure your family understands up front how long it’s going to take for you to pay them back if you take money from your family. Be honest because it likely will take several years.
Make sure your vision for the company is the same your investor if you take money from an Angel or VC. Really observe how you are being treated during the fund raising process.
Do your diligence on your investors. Talk to other people that have taken money from them. Did the investors hang in for the long run or did the investors cut bait at the first sign of trouble?
And, most importantly of all, get a lawyer! Even if you’re taking money from your family you should get a good, knowledgeable lawyer to draft (or evaluate) the agreement so it is fair. I know getting a lawyer can be expensive, but this will be money well spent.
For more, read: 7 Survival Tips For Startup CEOs
Is Your Business Stuck? Maybe I Can Help. Click Here.
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