Our President (Brandon) and I (Brent, CEO) spent three hours last night as guest lecturers for the University of San Diego’s undergraduate and graduate Entrepreneurship classes. It was a great experience and we look forward to going back soon. The general MBA curriculum often lacks knowledge transfer on some of the hard core truths of owning a business, having a start-up, learning from mistakes, and understanding what it really takes to succeed. The word “sacrifice” comes to mind!
Whether you are in the Internet marketing business, biotech field, or launchig a new brand of energy drinks you must understand your goals and what it will actually take to achieve them. It doesn’t matter if you are graduating from Wharton MBA or launching a business while you are an undergrad. There are certain things you will have to give up in order to gain long term success.
I learned these hard truths during Navy SEAL training here in San Diego. I spent five years in the Navy SEAL teams and completed multiple combat tours in Iraq, Afgh, and Northeast Africa. SEAL training is much like entering the world of entrepreneurship. Many people want to give it a shot, and very few are left standing when its all said and done. In my BUD/s class (Basic Underwater Demolition/SEALS – the initial 6 months of hell) we started with 200 people and 20 of us graduated and made it to a Team. You have to be physically and mentally strong and really want to be there…otherwise the pain and stress will take over.
I truly believe that my experiences in combat have added value to my ability to build a company and lead a team to success. When starting any kind of business you have to believe you are “phyiscally” and mentally stronger than the competition, be dynamic and willing to adapt, and embrace the stress and long hours.
Here is a short start-up check list:
- Step One – Self analysis: Talk to other entrepreneurs and gain a sound understanding of the sacrifices they made to get their businesses off the ground. Ask yourself “Do I really want this and am I passionate about this endevour?” If the answer is not a definite YES, then you my have some soul searching to do. If the answer is YES then move on to step 2.
- Step 2 – Discovery: Before you even start business planning, learn as much as you can about the industry you are entering. Read blogs, chat in forums, read white papers, review the competition and their websites. Get your hands on as much information as possible so you can define how you are as good, better, and different than the competition.
- Step 3 – Business Modeling: You can spend months on a business plan but in my opinion the core factors are: market research, competitive analysis, define product and service, revenue/profit goals, fundraising (how much money you need and what you need it for), etc. At some point you are going to have to execute so don’t get too hung up on the minutia…the principal element that differentiates successful entrepreneurs from “wannabes” is execution.
- Step 4 – Define your team: Who are you going to battle with and do they have what it takes to succeed? Before you place any legal documents, incorporate, finalize an LLC, etc. you need to know who is going to be in this for the long haul (and who is just riding the wave to see if it works out). The last thing you want to happen is to have people that are not fully committed owning a large percentage of your company. It can get messy later on.
- Step 5 – Long hours: Be prepared to give up free time and work 90 hours a week 7 days a week. You will be glad you did.
- Step 6 – Bootstrapping and fundraising money: It is very tough to get money and the following comments are just my opinion based on experience. If it is appropriate for your company and growth plans, stay away from VCs…at least initially. That is a long road and can end in disappointment while sucking away time and resources you could be putting towards launching your business. Additionally, if you like the idea of being the boss and owning your own business (i.e. calling the shots), VCs are not the way to go. Bootstrapping is the most realistic method at first. Once you have some headway and a solid business plan, engage friends and family. I recommend offering a debt scenario where they lend you X amount and in 12 months you give them X plus the determined interest. If you are successful in the process, then you can launch and build revenue. Once you have some revenue it will be easier to present your company to angel investors. Again, you need to update your business plan so that it is current and reflects how much money you need, the use of funds, the burn rate, profitability, exit strategy, and the offer itself (i.e. how are you currently valuing your company and how much equity are you giving them for their hard earned money).
- Step 7 – Execution: Once you raise angel capital it is time to really execute. Now its not just your friends and family expecting to at least get their loan back, but you have investors seeking a return. Every situation is different and sometimes the investors are passive, and other times they want to have a lot of involvement. Either way, this does not change the fact that they expect a return at some point in time depending on your exit strategy.
- Step 8 – Leadership: Entrepreneurs earning initial success quickly find their role changing from hard working “start-up” guy to leader/manager/inspiration driver. As your company grows the head count will grow. Your head count will be made up of real people with different goals, personalities, aspirations, and needs. Having a great management team in place will help make this part of the grow process easier. If it is just you at the beginning I suggest reading books about leadership and learn as much as you can from peers, mentors, and other professionals.
This is obviously a very short list and there are MANY factors involved in starting a business. Hope this is helpful.