Just Ask Them

Thinking of starting up a business sometime soon? Know these five words first.

According to the National Venture Capital Association 82% of startups are self-funded. And according to a Harvard Business School Study the average age of a founding team is between 35-44 and 63% have two or more founders. In a capitalistic society, companies require capital. And capital comes in two forms: money and time. And both are equally important. When I started my company back in 1994 I had about two years of cash in the bank to survive while I grew it. But I needed something more important than cash. I needed my wife's blessing. Without her commitment and support I would fail. When you start a business you will be married to it. It will suck up your time and put pressure and your relationships. Your significant other needs to be part of your decision and 100% behind you. Otherwise you'll either be forced to take time from the business or your relationship and as a result one of them will fail.

Honesty.

The same Harvard Business School study mentioned above concluded that 50% of startups fail in their five years and 75% never make it past 10 years. Why? According to research site Statistic Brain it's mostly due to incompetence. I know many successful business people. And they all share one thing in common: they know how to buy something for a dollar and sell it for three. Running a business is a skill set. It takes math and common sense. Do you have those skills? Be honest with yourself. If you don't, then bring in someone who does. Get a partner. Hire a financial person. Focus on what you do best and make sure you have a team of people to help you do the rest. Know your weaknesses and compensate for them. If that means sharing a piece of the pie then share it.

Incompetence is a big reason for failure. But in a 2014 study done by research firm CB Insights it was found that 42% of startups failed because there was "no market need." These were people with great ideas, except no one wanted what they made. When I started my business, I did it in parallel while I held down a full time job (see above for making sure that your spouse supports your efforts!). When I eventually quit my job I had a handful of customers in place to make sure I had enough cash flow so that my bills would be paid. You need customers immediately. That means that you'll be giving away product or services for a much lower price than you ultimately intend to charge, or even for free. And that's fine. They'll get a deal. And you'll get an education, while building up a list of references and gaining experience that will help you become profitable with other customers in the future. Start selling on day one.

Source: inc

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