So you think you can be a entrepreneur?
Starting your own company is one of the hardest decisions you’ll ever make. Friends, money and time will all be placed upon the alter of business and burned away for the sake of an idea. Are you tough enough to face the relentless challenges that await you and your vision?
Here are five standard startup hardships that could break your spirit — unless you really have the guts to carry out your vision.
1. Where’s the Money?
Challenge number one. Unless you’re starting with some hefty initial capital, your company needs to raise money. Whether that means badgering your family for seed capital or pleading with venture capitalists for another round, your need for money will always cause you to lose sleep at night. And as your company grows, you’ll find you’ll need still more money. Even though venture capital money has become easier to come by in recent years, you’re not in the clear yet. It’s become much harder recently to get that middle-stage venture money, right at that crucial make-or-break time for your business.
2. Wait, What’s a Server?
Are the words LAMP stack, Apache server and MySQL database unfamiliar to you? Do you understand the difference between Ruby and Python? I’ll give you a hint, it’s not a slithering creature or a valuable gem. If these terms are all foreign to you, good luck with that tech startup. Better find a competent chief technical officer to stand by your side.
But are you ready for plan B when your CTO quits and goes on to makes a better product than you? You’ll need to understand the technical aspects of your company so you can make smart hiring decisions. A technical consultant, someone to tell you if the work you’re getting is good quality, will save you time and money later.
3. Reinventing the Wheel
The tech world is saturated with copy-cat services. Finding a “blue ocean” is ideal … but then you have another problem. Too much success in a virgin market makes you a target for the big boys, established market players who can outspend you, out-resource you and undercut you with little effort. How do you stay viable?
All of this works in your favor if acquisition is your exit strategy. Take the personal finance space, for example, there are numerous personal finance related startups (Wesabe, Geezeo, Buxfer etc.) but one company came out on top: Mint.com. Using strategic timing, an easy interface and utilizing its connections well, it came up on top…. and in 2009 was acquired by Intuit for $170 million. Are you ready to be one of the competitors that companies like Mint overtake?
4. Pivoting is Cruel.
The numbers for startup failure rates are varied, depending on what your definition of failure is. All of them, however, are ugly. Between 80%-90% of startups fail to provide ROI or even meet projections. Ouch.
So get familiar with the concept of the pivot. Pivoting is taking your initial idea and bending (or breaking) it to fit the market and your investors. Successful entrepreneur Pano Anthos says that one lesson he took away from his most recent failed endeavor was this: “When you pivot, pivot hard and quickly and don’t look back.” Do you have the ability to take everything you’ve been working on for so long in a new direction?
5. Sleep is for the Weak.
You could have a baby. Or you could start a business. No more eight hours of sleep for you until you get your business up and running on its own. Tim Ferriss’ now infamous book The Four Hour Body emphasized polyphasic sleep, which means lots of naps.
Entrepreneurs seem to automatically take on this sleepless lifestyle since company problems can happen at any time. Investors and technical people may need your attention at 3 a.m. (entrepreneurs don’t care about time zones). You’re at the whim of your company. If you’re ready to feel like Kramer from Seinfeld, then you’ll probably be able to take the entrepreneurial life. But don’t say we didn’t warn you.