What should be the biggest issues on an entrepreneur’s mind during the first fitful months of their company’s life?
Tech Trailblazers tried to answer the question in association with IP Expo at last week’s event.
They had a panel of experts available to talk through the challenges anyone trying to start their own business is likely to face, and to tell them why ‘no’ is the most important word in an entrepreneur’s vocabulary.
On the panel:
Steve O’Donnell, veteran CEO of numerous startups and tech analyst.
Hayley Connick, UK manager of Elance, Silicon Valley firm which connects startups with freelancers.
Tim Kay – KPMG startup evangelist
Matt Pfeil – co-founder of DataStax, helping companies like Spotify harness the power of big data.
The three biggest challenges in a startup
HC – One is finding the right people to work with, whether that is a co-founder to start with or whether it’s a bit further down the line and you need someone to develop a product or market it. Finding the right people who get your vision and who you can relate to is key.
I was talking to someone who runs an accelerator this week and they were making the analogy that the relationship with your co-founder is like a marriage and you can’t jump into it or you’ll end up having problems down the line so I think that’s really critical.
The second one is knowing from the start how you’re going to get to get around the big dip you’re going to have in your cash flow before you get to profitability and things start to become commercially viable, that big cliff edge you jump off when you get your product together and it’s not going to make any money straight away.
TK – Talent is obviously very important. You’re a startup and you can’t afford the best so you’re also going to have to draw on your own abilities and resources. But it’s worth noting that trying to attract talent isn’t always about cash.
With regards to business plans it’s great to have funding but never lose sight of the fact of why you’re in the business, what it is you’re going to do. Having funding is great but unless you’re going to do those three key things which are sell your product or service, deliver that product or service and get paid for it, if you don’t do any of those three things you’re not in business and you won’t last very long.
The third thing I would say is when you’re looking at your business plan, halve the revenue projections and double the costs.
MP – It’s very easy to get caught up in the things that don’t matter. The only advantage a startup has over the big players is willpower.
We’re going after Oracle and they have a lot more money than we do, a lot more people than we do, the only thing we can do is stay very nimble and move quickly. So stay focused on a very select things.
SO – Focus on the problem because the solution often changes because the market changes. The second thing you need to do is explain the problem to your customers and if they agree with you – they might not agree about the solution – then you have a huge amount of amplification by doing just that.
The third thing is, don’t do shotgun shooting – it’s very easy in a startup looking for every opportunity coming along, taking a bit of revenue here, saying that will fill a gap there – but if it’s not focused on your business plan then you’re diverting your resources and you’re going to fail.
So you need to focus on what you’re doing and the most important word for a startup is ‘no’. And you actually need a CEO who’s got balls. He’s prepared to say no and say ‘We’re not doing that. Yes, it’s a hundred grand of revenue, but we can do without it. We’re going to do this other thing.’
