Throughout the years I have observed many of my peers & colleagues start their own businesses as an impulse which was triggered by various reasons. Some grasped an opportunity, some utilized their best skill & some even got bored with their day jobs. At the same time I have founded and managed both successfully and unsuccessfully many ventures. One thing for sure – the entrepreneurial journey never lives up to your expectation of that hypothetical “ideal world”.
Entrepreneurs who embark upon that journey with clouded judgements and unrealistic expectations usually experience that struggle of surviving the one-year mark and then the five- year mark. According to Forbes only about half of businesses survive passed the five-year mark, ranging from 45.4% to 51% while 75% businesses fail in the first year. Most common case is limited knowledge on how to build a business & manage day to day operations successfully. Evidently I have experienced the same situation when reality was not even close to my expectations, due to misjudgments & miscalculations.
There is nothing more tempting than to start a business if you feel stuck at your day job, if you feel pressure of financial needs or the opportunity is just there in front of you. Therefore things I would consider at idea stage of the business is as follows.
1. Purpose- the why, the what & the how
Regardless of your initial trigger or temptation to start a business, the bottomline should be creation of a product/service which will appeal to the potential customer. However most importantly you need to figure out what is the “why” factor, what kind of values do you represent & what differs you from the competition. Following that, you should analyze what will you be delivering to the market and how. You should focus on not only the physical delivery of the product/service but also on the message it will be accompanied by, which at the end of the day will become your company’s identity.
2. Understand the business
What I mean by this headline is, not only to understand what you trying to create but also trying to understand and evaluate the market & the competition. Even if your genius business opportunity does not see or project any validated competition, it is worth to understand why previous players have failed in this field or why this market is untapped to this day. Long story short, research and data is the key! In this modern world your research should be backed up by data & information, it should not be solely comprised of brainstorming sessions and discussions with people in the relevant fields. Sometimes your area of research may end up so small that, the “minimized sample size” may provide you with false data, false expectations & incorrect understanding of the ecosystem.
3. Dont be a one man show
In my personal experience I have always tried to pick the best teammates possible. I used services of headhunting firms to relocate chief operating officers from eastern Europe, chief financial officers from India, executives with degrees and mba’s from best universities in UK & europe & succesfully attracted best technical team Azerbaijan can offer. However this might not be the case for each and everyone of you. The team you build regardless of its size or partnerships you engage regardless of the equity division should be complimenting each other. Every team member must add value to the organization it is part of. Moreover those added values should compliment each other. For instance if you are building a startup and no one in your team has understanding of digital marketing or finance, then you should definitely reconsider your actions and strategy to fill that gap. While we are on this topic I would like to thank each team member who is or was part of ATL Group, I have learned a lot from you and I am proud to be part of such talented team.
Simple and easy. Identify what you are going to do in order to achieve in year1,2,3 & 5. Make them realistic and achievable. Cross check it with your research and benchmarks. Subsequently if the risk is worth to take, go for it.
5. Risks & execution challenges
Now that we have mentioned the risk factor. You should be aware of the possible risks you may encounter with. Furthermore, after you launch your business it might need some changes or “brush-ups” along the way, which may be generated from customer experience and expectations. In this sense you need to be agile & elastic if you need to be. Remember you always need to listen to the customer and comprise your data, do not cling to your own initial setup/idea if it pulls you down.
Before starting a business it is important to clearly understand your financial position & evaluate the source(s) of funds you are going to allocate to business. If you can attract investment that definately is a good idea but you have to evaluate the outcomes of that approach very precisely. Firstly evaluation stage has to be very professionally calculated & finally any partner you onboard to your business has to add value one way or another.
Moreover you have to keep in mind that, you need to have certain liquidity for at least 6 months of operations, whilst understanding that you are not going to be generating revenue or become profitable right away. This part of my advice must be approached “by the book”, you must utilize all standart financial calculations and formulas to evaluate and create projections of your financial decisions. Furthermore keep in mind that being passionate about enteprenership alone will not be sufficient enough in converting your dream idea into a scalable business. Starting a new business needs more than passion & integrity. Once the entepreneurial journey has been taken, measured risk taking abilities and understanding of the clear picture sets apart the succesful entepreneurs from their peers, as they scale up their idea into a fruitful business venture.