Archive for May, 2008

You are your own enemy. Yes, you are.
May 29, 2008

One of the unfortunate parts of starting your own business is that from the “inside” you often lack the necessary perspective to succeed.  In other words, you see all the good and not enough of the bad.  And the place you are most likely to only see the good and not see the bad is with yourself.  It’s hard to know your own limitations, but I’d encourage figuring out what they are and addressing them immediately.

Granted, being an eternal pessimist is not much fun, and building a business should at least be a little fun, but the longer you act like everything is rainbows and unicorns, the worse it’s going to be when you finally understand the reality of the business world.

Once upon a time, I embarked on starting a business that was essentially building a better mousetrap.  We were going to offer a software solution to a niche market.  We were sure our success was imminent based on the idea that what we had built was a significantly upgraded version of what already existed in the market.  Yea!  Confetti!  Champagne!  We’re going to succeed!

We were further assured of our eventual success by spending countless hours over a number of months doing product and market research, talking with potential customers, consulting with similar businesses in other industries, etc. and finding that our ideas and execution were so impressive that folks simply couldn’t wait to cancel their accounts with our competitors and use our service.

And of course we believed every bit of it, walking around with our heads held high.  We were impressed with ourselves for being so brilliant as to envision a product that would put the competition to shame.  What we didn’t properly take in to account was our own limitations.  Our limitations as programmers, designers, salespeople, managers, accountants, etc.  We thought that building an awesome product would carry the day.  I even recall saying a number of times when facing a problem, “LIsten…if we start getting some money coming through sales of (Awesome Product), these little problems will work themselves out.”  What we didn’t realize, what I didn’t realize, is that the only way your product is going to ever get off the ground – much less experience stratospheric success – is if you are organized. diligent, and responsible.  And the only way to be those things is to be honest with yourself.

My latest venture, by far my most successful to date, has two partners that lack the financial organization to by a cup of coffee with a dollar bill.  So, to keep payments from getting lost and credit terms from being breached and tax payments from being late, we brought in a partner who is strong in these areas.  The two disorganized partners focus on their strengths and the financial person handles the books.  Everyone wins.

This seems obvious, yes?  Well then why is your company still counting on non-experts to do critical things?  Why is your design process in some amateur’s hands?  Why is your database being worked on by a B grade engineer?  Why are you maintaining your Quickbooks at midnight after an 18 hour coding session?

Get organized.  Be responsible.  Recognize your limitations.  Because if you don’t see them now, the market will point them out to you eventually and it will probably be too late to do anything about it.


Where to spend your money
May 2, 2008

This is a pretty simple lesson but one that is often overlooked by over-eager entrepreneurs.  In the event you have any money in the bank, either through venture money or revenue or whatever, the last check you should write is to yourself.  I mean, the LAST check.  If you are in this for the long haul the smartest thing you can do is to continue living on bread and water for as long as possible while your company grows and stabilizes.  Go get a second job if needbe to pay your own bills rather then rely on your company for income for as long as possible.

Any cash you have on hand should obviously be used to pay current obligations (i.e. rent, utilities) and then should be plowed back in to your company.  Money reinvested – in other talented people, in assets, in technology – will only serve to grow your company AND make it more stable.  Writing yourself a paycheck, much less a BIG paycheck as a reward for all of your hard work is a downright stupid idea.

Put the company’s money in to the company.  Your time will come.