I was recently asked to give a talk on being an Entrepreneur. Part of me felt like the SNL character, Stuart Smalley, sitting on a sofa delivering "Daily Affirmations" on business, but I really did enjoy organizing my experiences into little “snippets”. While you might not agree with all of my thoughts, they do come from direct experience or observation. There is at least one story behind each of them.
I recognize that there are many ways to “skin a cat”. Ultimately you will determine what works for you. Like I said in my first post, I hope you can learn from my mistakes!
On Becoming an Entrepreneur…There are easier ways to make a living.
It will take longer. It will cost more. You will sell less at the start.
Support of family is crucial.
Be prepared to redefine the “work week”. You may be working at 2AM or 2PM.
Be prepared for the unintended consequences of being an Entrepreneur…mine is sleeplessness. Weight gain, health issues, marriage stress, less time with your children...all are far more likely when you are an entrepreneur.
On Business…
I have networked well with people on my team, not as well networking outside my team. This was the biggest opportunity I did not take full advantage of at Stryker. “F” the competition mentality was shortsighted and juvenile. I could have had a lot more clients when Understand started if I had focused on building relationships outside of Stryker.
When it is time to leave your job, leave with professionalism and dignity. Stryker was my first corporate client and gave me the traction I needed to get going.
On Family…
If your spouse is not behind you, you will be miserable. I can’t imagine doing what I do everyday and then coming home and having a spouse who questions or resents the decision to start a business. Also make sure your spouse is ready to make these sacrifices in your relationship…tired, stressed, sleeplessness, no vacations, attached to your computer…HOWEVER, while a spouse may be understanding, kids should not have to be. Suck it up when you don’t feel like going to the park or playing with dollies.
I think your chances of success are even better if you are single.
On Partners…Take the time and money to have a good attorney draft an Operating Agreement. This can be an invaluable tool to solve disputes and manage expectations. It will provide a good platform for you and your partner to discuss uncomfortable questions. It will also force you to work through “What if’s”.
I have phenomenal partners, but I’m the exception. Try and maintain complete ownership of your business.
If you do have a 50/50 partner it may cause paralysis of the business. Define the decision making process early.
Have an agreed upon time frame and general exit strategy.
Most partner problems arise from success, not failure.
On Finances…The stress of meeting payroll is unique and there is an unspoken respect business owners have for one another for meeting this awesome responsibility.
I had a working spouse, cash from the sale of stock options, no debt, and a consulting job when I first started Understand AND it was still financially challenging at times.
I know this will be controversial and there are exceptions but, DO NOT borrow from “Friends & Family”. I would be more inclined to use high interest credit cards. The extra money in interest will be well worth the awkwardness at Christmas or Birthdays if things don’t go well.
Get access to a bank or other credit line ASAP. It can be a life line and certainly help you sleep better at night.
Cash-flow, cash-flow, cash-flow.
Don’t be shy about calling up past due accounts. My slowest accounts are my biggest. So-and-so is on vacation. We changed accounting people. Your invoice is sitting on the CFO’s desk. We changed accounting software. The squeaky wheel gets the grease.
I am a big fan of residual business models. If yours is not, think of ways to make it that way.
Banks probably won’t lend you money. You are probably going to be far too small, inexperienced and risky to attract any VC interest at the start. Angels are an option, and can provide some good counsel; however you will lose equity and control. Friends and family are options, but this can come with serious baggage (see above). In my opinion the best option for entrepreneurs is there own money with their living expenses supplemented by another job/income source while the business grows.
On Expenses…It will cost more. You will sell less. By minimizing expenses you allow yourself the ability to take risks and make mistakes. You will make mistakes.
Use Contract Labor as much as you can at the start. It is easier to manage as a young business expands and contracts.
Avoid an office until you absolutely need one. When you need one, demand a flexible lease. I know many people that have been bankrupted (or nearly bankrupted) by poor office decisions.
New furniture is a waste of money. Craig’s list is a great place to find what you need for less.
On Sales and Marketing…
Be obsessive about knowing your numbers. Sales, sales growth, margins, expenses…
One of my marketing professors, Doug Cords used to say “Nothing happens until someone sells something.” Sales are the life blood of an organization.
Worship your top sales people.
A great salesman will probably not make a great Sales Manager.
Don’t cut corners on logo design, business cards, web site development. These things speak volumes about your company.
On Hiring…
Hiring has been the most challenging part of my job and currently my single greatest achievement.
Accessing talent and interviewing is like anything else…the more you do it the better you get.
Generally, the more people who interview an applicant, the better perspective you will get and ultimately a better decision.
Wrong hiring decisions have cost me more money, sleep, and frustration than any thing else.
Ask the question, “We do an extensive background check on anyone we extend an offer to. Is there anything I should know about now?” Don’t forget to do the background check.
On Employees…
Most of the grey hairs on my head are from employees, not my daughters.
No one will care as much as you. Let me say that again, no one will care as much as you.
Make sure everyone fills out the appropriate paperwork: Work for Hire, NDA, Confidentially, non-compete.
Do not get in the habit of socializing with employees after hours. Nothing good happens after 10 PM.
When employees travel overnight for business, put them up in a decent place. Don’t stress out about room service.
Don’t forget the spouse. A dinner, a bottle of wine, flowers from the office… can go a long way.
Be on time with performance reviews.
On Firing…It is never fun, but it does get easier.
When it happens be respectful, be gracious, be generous.
It should never come as a surprise to an underperformer.
I have always felt a sense of relief when it is over and wished I would have done it sooner.
On the Economy…
Worry about things you can control. You can’t control the Dow, the strength of the dollar, real estate trends…
This is still the greatest country in the world to do business.
Opportunity is still out there, even in a challenging economy. The 1970’s with double digit inflation, gas rationing and a prime interest rate of 20% still birthed Apple, Microsoft, Southwest Airlines, Fed Ex, and Genetech to name a few!
On Success…
There are many ways to define success, the least satisfying is in monetary terms.
Money will not make you happier. It’s cliché and will mean little until you have some. In fact, it may make you less happy, suspicious, and worried you will lose it. What it will do is provide you security and give you more options if you manage it correctly.
“Big Hat, No Cattle” is a sorry way to live your life.
Jealousy is real, sometimes from people you would not expect it. Be aware that some friends and family may be hyper sensitive to things you say given your apparent “success”.
Be humble. Things can change.
Some Favorite Books…
Dig Your Well Before You Are Thirsty, Harvey McKay
How to Get Rich, Felix Dennis (the real message is on page 253)
The Art of the Start, Guy Kawasaki
Legend of the Golden Scrolls, Glenn Bland
Darik
Capital is precious. Capital is precious. 
