Note : I don’t know all the answers around this. I’m putting my current thoughts in writing as it helps me get them out of my head and hopefully I can make more sense of them.
I’ve started way to many projects and not seen them through to the end. I think this could be happening for a couple of reasons:
– I’m not as interested in the project itself as I thought I’d be
– The project won’t take me to where I want to be
‘Where you want to be’ is an important question when starting a project that you hope to turn into a product or solution that you can sell. Without putting this thought in up front you risk being unhappy if your idea succeeds. I know it sounds weird – being unhappy if your ideas succeeds, but trust me it happens more often than you’d think. In fact I think it happens most often, because people end up taking the path they think they should be going along, rather than the path they want to. This can lead to:
– presuming you have to grow
– trying to grow too quickly
– building products nobody wants
How many company founders have you spoken to put a brave face on when you ask them how things are going – but when you dig deeper you find they are working 12 hour days and doing work within the businesses they hate?
There are 3 levels of company success I generally think about:
1, A successful Micropreneur working by themselves
2, A bootstrapped company
3, A company getting VC funding and shooting for the stars
Some thoughts around what each one means to me:
A term coined by Rob Wallling and Mike Taber, a single person company that owns one or a number of web solutions or sites. Tasks can be outsourced, but the company never grows past the founder and all profits generated are income for this person. This may be a person who values their time more than working their ass off for the big pay day. Often it is someone who enjoys all aspects of business from product development, marketing and sales. I think people quite often start a business with the micropreneur goal in mind, but end up moving to option 2 and 3 without evening realizing it.
Starting a company with little or no money, and investing the profits back into the company to grow. If you want to grow a company but keep your own destiny this is the road for you. Out of the three options – I think it’s probably the hardest, but also the one that offers the most reward – if done correctly. You can still decide to sell your company if you wish – or you can keep and run it for the long term. What you do need to be careful of is ending up running yourself into the ground. Many people start a company because they like doing a particular thing – but if you bootstrap and grow a company it is likely you’ll end up running a company rather than doing that thing. Be careful not to just create a job for yourself, but to build a business. A business that can run while you take the 4 week break you deserve!
3, VC funding
I know that getting VC funding itself isn’t a successful outcome – but that is the way many people think. Getting VC funding and selling the company in 5-10 years time is the big success. I’ve no experience of going this route – and I don’t think it is the route I’d choose to take myself. I’m not against funding – but the lottery the VC’s play of 1 or 2 big successes out of every 10 investments aren’t odds that I’d like to take.
It is easy to change your mind and go up the scale – from Micropreneur -> Bootstrapping -> VC funded. What is usually impossible is going back the other way. If you have taken VC funding the VC’s are going to want their payout or shut the company down. It is unlikely you would be able to move back to bootstrapping. If you are bootstrapping your company and have a number of employees and maybe co-founders, it is extremely hard to reduce that back to being a sole enterpreneur and a micropreneur business without a lot of pain while downsizing.
But it is easier to go the other way. If as a Micropreneur you are doing really well and have profits in the bank and you feel you want to grow, you can employ another person that will help achieve that growth and move into the bootstrapping category. If you’ve been bootstrapping and spot a real market opportunity you feel is worth playing the VC lottery for – there are always investors looking to back a good idea.
Of course it seems a natural progression to go up these steps, Micropreneur -> Bootstrapping -> VC backed. But this is where you need to start each project with the end in mind. If you want to stay as a single person company, take the decisions you need to so you can remain that way. If you are profitable and doing well, there is no point going after other opportunities that would require you to take on staff. That’s not what you want to do remember – you want the company to be just you.
Before starting a project
Begin with the end in mind. What do you want to be doing in 2, 5 or 10 years time? I know it may sound silly thinking this far ahead when you are yet to start investigating your market or building a product but the sooner you do it the better. Leave it later, and decisions you may have already taken about your product may be working against where you want to go. For example:
– you might build something that requires hiring support people
– it might need a sales team to sell
– the market might not be big enough to support a company with employees
So do yourself a favour. Go somewhere quiet where you do not normally go with a pen and your notebook. If the weather is nice get out in the countryside, maybe sitting by a lake (sounds nice eh?!) with the sun shining. If the weather is bad go to the coffee shop you have been meaning to try. Open your notepad and at the top of 3 pages write down 2 years, 5 years and 10 years. Then on each page write down how you’d like your life to be like at those times. Think about:
– where you’d like to live
– where you’d like to work
– how much you work
– how much you travel
– who you’d like to work with or without
– who you’d like to know
– how much yearly income you’d like to be making
– what you do in your spare time
This process becomes more difficult when you have co-founders involved. I think a company with co-founders can still be a Micropreneur company – it just needs to stay the size it is. The problem is the more people you have involved, the more chance their is of people changing their mind. This can lead to conflict and people being drawn down paths they do not really want to go.
But a company can’t be a stick in the mud – it needs to be flexible to change in conditions and market – how to find the balance? I don’t know the answer to this one – I’d suggest doing the same thing with the notebook and the 2, 5 and 10 year plan, and then comparing with the people you are looking to start the business with. If your ideas differ dramatically then maybe it’s not a good idea that you work together. And perhaps do the 2,5 and 10 year personal plan every 12 months and comparing again. At least then you will spot when peoples priorities have changed before they become and underlying issue in conversations.