Prepare to be an entrepreneur – Doing a startup is one of those things that people think they can just do. I guess this is caused by all the hype and history of living the America dream and all. But it’s really a thing that deserves some training and preparation just like anything else worth pursuing. You should at least devour the Top 5 Must Read Books for Entrepreneurs and join something like the National StartUp Association. Or go all way and get a college degree in entrepreneurship. The Princeton Review & Entrepreneur Name The Top 25 Undergrad & Grad Schools For Entrepreneurship Studies For 2017
It will take longer than you think – What will take longer? Everything! Raising money will be harder and take longer than think. Making enough sales to break even will take longer than you think. Building (fill in the blank) will cost more and take longer than you think. I don’t say this to dissuade you from pursuing your dreams… just be prepared for a marathon NOT a sprint.
Do your homework – There are multiple statistics on the failure rate of startups ranging from 70% to 90%+. When digging into WHY, they all boil down to research, preparation, and planning. Entrepreneurs didn’t prepare for how long it would take; they didn’t research the market or competition properly; they didn’t have a business plan or strategy; etc.
Focus on your key competencies and outsource everything else – As the leader you need to focus every second on things like sales, relationships, execution, and raising money. You should NOT be dealing with anything that doesn’t directly progress your startup. Most things are ridiculously cheap to get off your plate. Outsource bookkeeping and marketing, find a temp admin assistant, etc. When you get some cash flow continue to outsource things like a temp CFO and other advisory/assistance.
Be careful who you partner with – Think three times before taking on a partner/investor you don’t like or trust. This person will have equity and a say in your company. Even if your investor agreements say they don’t (have a say) they can and will be a PIA. It will be a partnership; a marriage… no amount of money is worth constant misery.
You have the best chance of getting money from your inner circle – If you are serious and prepared; you have a better chance of getting money from someone you know. If you are uncomfortable about taking money from friends and family, you are uncomfortable about your business.
Investors and Lenders look for reasons NOT to – Entrepreneurs are positive people and have trouble fathoming this but… investors and lenders are conservative. They look for reasons not to give money. Only when they can’t find any after looking 3 times do they give in. All the more reason to make sure you are prepared and all your assumptions are backed by research.
Take the money – This is where the list of wisdom came from. I can’t tell you how many entrepreneurs don’t take money that is offered to them because it’s not the full ask, or the valuation differs from what you gave your dad, or that things have changed since last week. Raising funds is hard. If someone offers money with fair terms take it! Just about ANY other problem is more easily dealt with than not having money in the first place.
Use experts to raise capital and handle investor documents – Approaching investors is something that requires experience. You have one chance to make a first impression and you don’t want to whip through investors when one of them could have been THE ONE. If you have interested investors, or a list of investors you want to approach, hire someone who is an expert in funding preparation and strategy. If you don’t have anyone, find someone who finds money. Term sheets, investor contracts, cap tables, etc. should all be handled by attorneys or financial experts who specialize in these areas. This is not an area you want to bootstrap.
Have fun, be healthy, and stay focused – Do whatever you have to do to stay focused. Make adjustments to your relationships, exercise daily, take yoga, get 8 hours of sleep EVERY night and try to laugh as many times a day as possible… but avoid distractions and excuses to goof off!