First-Time Entrepreneurs: 4 Things You Need to Consider
I’ve been an entrepreneur for 18 years now. In that time, I’ve been running the same entrepreneur and investor events business (FundingPost) for 15 years and a venture fund (ARC Angel Fund) for the last six years.
All told, I’ve learned a lot along the way.
Recently, I helped to start Crowded.com with Howard Schwartz and Mark Roth, two friends of mine and entrepreneurs for whom I have a lot of respect. This was a brand-new startup, birthed directly from the back-of-the-napkin phase over lunch. When the company began to take shape, I realized that all those little tidbits of advice I’ve been sharing with the startups that have attended my events and all those major and minor details that I’ve gleaned during due diligence on other companies as an investor were about to come in handy.
Fast-forward several months: We just closed on $3.3 million in funding, have a staff of 10, and are about to launch the next iteration of our product in a few weeks! You’d think this would be a breeze for me and my seasoned team of investors and exited entrepreneurs, but it’s not. Running a startup is a lot of hard work, even if we have the ability to take a step back and look at the business through our various other lenses.
If you’re a first-time entrepreneur ready to make your mark and change the world, there are a few things you need to consider first:
1. You Will Be Investing a Lot of Time in Your Company
Be sure to discuss this with your husband/wife to make sure they are on board. Your startup doesn’t just require a commitment from you, but a commitment from your entire family.
That being said, some people are very stern about making your startup your top priority, letting you know that you will not see your family for the next five years. I, on the other hand, always advise people to find a better balance than that. You can work late, but make sure you carve out some time for dinner with the family, especially if you have kids. Five years is a lot of time to miss.
2. You Will Be Taking a Pay Cut
Be prepared to live a different lifestyle than the one you’ve grown used to. It’s easier to do this at 22 than at 42.
If you’re married, you definitely need to discuss this with your spouse. They may not be as thrilled about the ramen noodle diet as they were in college.
And I don’t just mean that your paycheck will take a hit. During the beginning stages of your startup, the money will be flowing the other way – out of your pocket and into the business. Better warm up your credit cards.
3. Things Don’t Always Go Exactly as Planned
Actually, they never do. Plan on everything taking longer than you predicted and costing more money than you budgeted. If you don’t, you will run out of money before you make any meaningful progress.
4. Raising Capital Is a Crap-Load of Work
It takes a long time to do, requires a lot of attention (which you could otherwise be spending on the business), and comes with a lot of rejection. Then, once you’ve secured capital, you have to put a lot of effort into maintaining it.
Even for my team of seasoned entrepreneurs and investors, it took a lot of work. We had to put together all of the documents, presentations, and legal information, and then run around town pitching at investor meetings. Not every investor said yes, and sometimes we had to turn down those who did. We wanted all of our investors to be good fits for our business.
Starting and running a company is filled with tiny details, but you ultimately need to remember to keep the big picture in mind. Is this a great idea? A legitimate business? What’s the end game?
An investor once told me, “The path of failed companies is littered with great ideas.” I hear lots of great advice, but that one really stuck with me. As an entrepreneur, you need to ask yourself: Can I take my great idea, turn it into a great product, craft a solid business model, and then, eventually, sell that business and have a successful exit?
If so, I wish you the best of luck on your upcoming fun and bumpy ride!
Joe Rubin is cofounder and director of corporate development at Crowded.com.