by Alex Lavidge
Prior to raising capital, there are a lot of steps a startup needs to take to set you up for success. Here’s what they are:
- Be honest and assess where you’re at.
Before you get ready to create the next billion-dollar unicorn startup, or open another coffee shop down the street, how much cash do you have tucked away in the bank? What’s your debt-to-limit ratio on your credit cards? Still carrying around your share of over $1.3 trillion student debt in the U.S?
One of the biggest mistakes aspiring entrepreneurs make is thinking that launching a new business could be instant relief from their money woes or that it is a shortcut from going back to joining 70% of Americans who hate their jobs.
Regardless of the outliers you have probably heard of, the majority of successful entrepreneurs focus on building “runway” and stabilizing their finances in their lives before launching a business. From there, creating a minimalist lifestyle that allows you to maximize your free time for personal development (and the checkboxes to follow in this article) is the first step.
- Develop skill sets on your natural strengths.
Trying to be good at everything won’t make you even average at anything.
But don’t feel guilty if there’s a side of you that’s a generalist. The good news is you’re most likely destined to be a successful entrepreneur. Just balance that passion to understand everything with becoming a specialist in something. It will make your entrepreneurial path easier.
If you’re unsure what that specialty should be, invest time in getting tested for your natural strengths and aptitudes. Discover your “flow.” This will help you identify a speciality you’re passionate about for when the day comes that you build your team.
- Launch your personal brand.
In advertising it is well known that a brand is a personality — so make your personality a brand that people want to get to know.
There’s a lot being written these days about how to be more likable. (However, don’t try to force it. In short, be authentic when you tell your story and focus on making other people feel good.)
Launch a blog, write articles for publications that already have audiences, and get your name out there so that when people search for you online the results accelerate the rate at which you’re trustworthy. Trust and credibility builds a solid foundation for any successful entrepreneurial path.
- Assess your area and find your tribe.
Don’t just go around posting in forums or show up at every business networking event where you pass out a bunch of business cards. What will quickly feel like tiring work probably won’t work out for you.
Instead, build meaningful relationships. Ask questions. Identify what motivates others. Developing your empathy will get your farther than mindless hustle.
From there, help solve problems and add value for other successful business owners and entrepreneurs you encounter without expecting anything in return. When you focus on solving problems facing prevalent industries or adding value to consumers in your region, you’re more likely to be successful. Eventually, you’ll develop a reputation and you’ll have a community of friends who feel as though your success is their success.
- Get paid to learn and pay to keep learning.
Whether you’re working full-time for another startup in an industry you’re passionate about or you’re consulting on the side, never stop discovering creative ways you can gets paid to learn.
From there, you’ll learn a lot about what works (and probably more on what doesn’t work) before launching a company. Take notes and pay particular attention toward what you can do to create a work culture that attracts the brightest talent.
From there, keep saving money that allows you to take time off to learn for free as well as pay to take courses online. Consider, for instance, enrolling inone of the top growth hacking bootcamps to help you stand apart from failing entrepreneurs who focus too much on building a product rather than focusing more on sales and marketing.
- Work on launching projects first.
Rather than falling into the trap of failing a bunch of times when launching a new company, consider launching short-term projects (ideally those that can make money) with as few moving parts as possible.
For instance, this could be as simple as putting an ebook online with a landing page, or launching an online course. (There are more ways you can make money that can be a part of the “getting paid to learn” lifestyle so important to every aspiring entrepreneur that only require an investment of time.)
These types of projects are a great way to turn acquaintances and friendships into trusted working relationships that over time keep pushing you to be at your best. (Start by signing up for events like 48 Hour Launch, Startup Weekend, or host your own.)
- Self-finance before thinking investors care.
Want to know how to get your business financed with instant approval, zero interest, and never having to worry about managing expectations with investors? Just make a withdrawal from your savings account.
It takes even less than $5,000 today to get a tech startup off the ground today compared to $5 million over 15 years ago.
But that’s money not necessarily going toward product development. Invest in a website, a CRM database, prototyping software (or 3-D printing to demonstrate a concept design), business cards and establish relationships that become commitments to buy your product or service before you launch. The biggest expenses should be measured in time, not money, in the early phases of your startup.
- Invest in market research until it hurts.
Fred Smith, CEO and founder of FedEx, most recently at 36|86 got on stage and told the story of how he funded three separate independent market research studies on the future of logistics, despite being tight on cash.
Most entrepreneurs don’t even fund one study before they start and will go through months, even years, blowing through raised capital (usually raised from friends and family) until they conduct tedious A/B tests and eventually determine the best product-market fit.
- Study checklists and systems of other successful companies.
There’s a saying in startup culture: “goals are for losers — systems are for winners.”
Don’t just study “business plans” and “pitchdecks” of other companies that have done well over the years. Analyze job descriptions, GANNT charts, workflow charts, audits and narratives (even if you have to put them together yourself) of how other companies went through a logical sequence of tasks to complete projects and reach key milestones.
In other words, don’t just visualize the outcome — visualize the process and habits that will take your company from good to great. This will help you avoid the trap of feeling like you’re “building the ship as it’s leaving the harbor,” another saying well-known by many veteran startup founders who have learned over the years that most of those ships end up sinking.
- Sell the outcome to customers before talking to investors.
Once you’re ready to scale, investors are going to place more value on a validated CRM database full of qualified sales leads than a vision with an unvalidated product-market fit.
When a pain point is prevalent, you’ll have no trouble finding people who want to talk to you about it and verify that if you had a solution that really solved the problem, they’d be likely to try it out.
You may even find that your customers end up being the best types of investors you can have.
These are just 10 checkboxes, but for additional reasons why (tech) startups fail check out the classic 18 Startup Mistakes That Lead To Failure created by Paul Graham, co-founder and partner at Y Combinator.