So, you want to start a company?
Awesome. That’s a very exciting decision but first you must make sure it’s the right decision.
Startups are hard and have been referred to as “a full contact sport” by others so deciding to be a founder is only the right decision if you are ready and willing to except what comes with founding a startup.
Coincidently I am going through this same thinking process right now. Even though I have started a few companies before, I find myself at the starting line once again evaluating a new “dent in the universe” idea with a fellow co-founder. Here are five questions I am asking myself right now to help determine if it’s the right decision. I believe they can that help you too along your path to starting your next company.
Risk is the heart of entrepreneurship — which is defined as “the pursuit of opportunity without regard to resources currently controlled.” Your relationship with risk is the sole determinant whether you will succeed or fail as an entrepreneur.
Are you ready to take a risk? I encourage you to think of yourself as an entrepreneur in the adjective form, not a verb. What do I mean? Well, during my first startup I struggled – a lot, and for a long time – and it really bothered me because I didn’t really know why I was struggling.
Then it finally hit me.
It all changed when I re-thought what the dream actually was. I realized my dream wasn’t about what I was working on at the time, but more about the person I was becoming in the process. The dream is about being an entrepreneur – the adjective – not the noun.
Entrepreneur – noun. A proprietor who owns their own business. A title.
Entrepreneur – adjective. A person who embodies the qualities of being Courageous. Risk Taker. Innovative. Persistent. Agile. Intelligent. Savvy. Strong. Personable. Creative. Excellent. Fighter. Winner.
Once I realized all I needed to do is change me perspective of who I was, everything changed. Also, I realize being an entrepreneur was all about how I viewed and embraced the world of risk.
Fellow entrepreneur and billionaire Sir Richard Branson follows a principle called “protecting the downside,” which means that by looking at any situation and determining all options before making a decision, one can identify the worst case scenario and work backwards from there to find the optimal route forward. Protecting the downside is really just identifying and understanding risk.
So your first step is all about asking if you can handle a world full of risk.
Am I ready?
Once you determine you are cut from the entrepreneurial cloth, you must ask yourself if you are actually ready. Is it the right time to embrace a life of high risk and high reward?
Question yourself on things like: Do I have more important responsibilities, such as family obligations, debt to repay, volunteer work, coaching youth sports, or things that require your time and energy?
The reality is startups take pretty much all of your time and energy. They are like rockets going to space – it takes A LOT of energy to take off but based on physics it takes less energy to keep going as it gets higher and farther away from earth.
Step 2: sideline some of these major responsibilities if you are to start a high growth company, and then pick them back up once things really get going.
Am I passionate about the idea?
Once the commitment has been made and you believe you are ready to take the plunge, you should ask if this is something you are really interested in, passionate about, and willing to give it 5-10 years of your life.
This is somewhat of a controversial topic. Some say founders need not be passionate about a startup, simply because only possessing passion for a subject does not guarantee success. And I agree. Just being fanatic and uber-excited about something is not a shoe-in for startup success. But consider the opposite: if a person is not particularly interested in a subject and not emotionally driven to solve a particular problem in the world, will they be able to make it through the trough of sorrow?
I think not.
Step 3 requires asking yourself if you posses energy, curiosity and passion about what you are doing so you can withstand the inevitable challenges and be able to push through the hardships you will face.
Is it a big and growing market?
Startup fact: Investors are looking for home runs, not singles.
One of the biggest mistakes first time founders make is not evaluating markets correctly and picking a market with low potential for growth. Most investors and potential acquirers evaluate startups on the recipe of future potential. A founder who desires a successful outcome for their company should look for solutions to problems in growing markets.
What is a growing market?
Growing markets are ones with an accelerating rate of competitors, users, revenue potential, and aligned with emerging technologies/platforms. Founders should build their solution with forward thinking perspectives on technology and societal norms. (ie: mobile usage vs desktop usage, network platforms vs non viral sites, portable vs non portable tech, etc…)
Even if a founder is not planning to accept outside investment and wants grow from a bootstrapped position, it still makes sense to look for market that is big and growing.
Step 4 requires one to ask themselves, “no matter the size of my ambition, am I building for tomorrow, not just today?”
What are my unique gifts?
Startups are difficult and require one to utilize their unique talents and gift in ways they may have never imagined before. When a founder starts their company, it’s important they take some time and take into account their naturally gifts. Are you uniquely technical and have the ability to quickly whip together a simple prototype? Or are you more social, amazing with people, a natural salesman and can easily work a room full of investors? Are you a visionary or an operations person?
This is probably the hardest question of the bunch, but the most important because the answer to these questions will point to your next phase of the company – recruiting others. If you are non-technical and (most likely) better with leading people, you will need to find a technical person to balance your founding team out and help you build products. If you are highly technical and can easily hack together websites and mobile apps, you will need to find someone who is less technical but more gifted in the business and people operations.
The last step pulls you inward to understand yourself, what your talents are, and who you should look to bring on and join you in your new venture.
Asking yourself these 5 tough questions should not only help determine if this decision is a good one, but if it is the right one for you at this time.