How do you turn a twinkle in your mind's eye into a viable business? Here to cross that chasm is Doug Neal, managing director of the Center for Entrepreneurship at the University of Michigan's College of Engineering. This week he introduces some new terms of art: Velocity and entrepreneurship, and entrepreneurial distractions.
Post 2: Entrepreneurial Distractions
As I was sitting down to write about popular distractions that entrepreneurs run into on a regular basis, I remembered a presentation that I saw by a Microsoft manager in the early 90s. This guy is a very successful author and manager and did a great job in his presentation, but it was the comment he made about how he goes about writing a book that stuck with me all these years.
He explained that when he starts to write a book he always uses a yellow pad of paper and a pencil… he never uses a word processor to write the initial draft. Only after that draft is written will he then use a computer to create the final version.
The reason for this, he explained, was that when he sits down and opens Microsoft Word to start writing he'll spend most of the time adjusting the fonts, aligning the paragraphs, changing the layout, etc. instead of actually writing. There are just too many distractions that keep him from doing the hard work of creating a compelling book!
For entrepreneurs I think there is a very similar story to be told. There are far too many distractions that many entrepreneurs engage in when starting a company that waste valuable time and money and most importantly distract us from the important tasks of trying to identify a compelling business model that you can build a company around.
So, based on my own experience and talking to dozens and dozens of entrepreneurs I'd like to present the top 10 entrepreneurial distractions:
#10 - Building a website
Many people believe that before they can go out and talk to potential customers they must build the ultimate website. What's more, they believe they must do it in a custom way so that it can meet all potential future possibilities for online sales, support, and product updates.
This is crazy. If you absolutely must have a website today, spend 5 minutes setting up a turnkey one through a domain aggregator or popular search engine. You most likely don't need a custom website on day 1. You can always revisit this later.
#9 - Polishing your business plan
For some, their company exists only on paper and they believe the more they keep polishing their business plan the better the company will be.
The reality is that a business plan is rarely an accurate representation of what will happen in your business. As Steve Blank says – "no (business) plan survives first contact with customer".
#8 - Ordering business cards
Ordering business cards for some people is a sign of success. It's a way of telling the world – "look at me, I've lost my mind and started a business". Rarely are business cards essential in the first few months of company inception. I recommend you avoid all print until you have validated your messaging with customers, which won't happen until you have built some traction in your business.
At most, just spend 10 minutes ordering some generic card that has your name, email, and cell phone on it. Any more time spent on this is not worth it.
#7 - Delegating Sales
Delegating sales comes in many forms (hiring a VP of sales, hiring sales reps, signing a contract with a reseller, etc.). In the first few months of a company's life you (the founder) are the chief sales rep! Delegating this responsibility because you are too busy or don't like talking to customers (yes, that is a common complaint) is suicide for your business. How else can you find out if you are delivering the right value? This is too important to delegate – find the time, make the time and get out there!
It doesn't matter if you don't have experience in sales, btw, just get out there and talk to potential customers about your product and most importantly… listen to them! If you really listen carefully they will tell you their problems and you will see your opportunity.
After you figure out how to sell your product, then revisit this issue and figure out how to build your sales resources.
#6 - Pitching VCs
It's amazing how often I hear this… "I've decided to start a company so I need to go out and raise some money". Uh-uh. It doesn't work that way. You can't just expect people to throw money at you unless you have proven some aspects of your business model. Reducing risk is what VCs want to see you do and an "idea" usually doesn't cut it.
On top of that, pitching VCs and raising money is very time intensive. Not many will actually say "no" (which lets you move on) – many of them will give you words of encouragement and ask you to keep in touch, etc.
Don't get me wrong, venture capitalists and angels are very valuable to early stage companies… just don't start pitching them on day 1.
#5 - Getting a merchant account
The logic goes something like this… I'm going to sell a lot of this product, I better get ready to handle a lot of credit card transactions, etc. Worry about this the day you can't keep up with the sales volume.
#4 - Naming the company
Amazingly, this consumes a lot of time. I once saw this bring an entire company (3 founders plus the first 5 employees) to stop working for an entire week to debate what should be the company name.
The fear is that if you choose the wrong name you will send the wrong message and the brand will be wrong and the sky will fall and… relax. Pick some random name, get going with figuring out the business… you can always change the name once you get traction.
#3 - Getting a domain name
Same as naming the company and can consume countless hours. Pick something simple, even ridiculous, and move on. You can change this once you start getting traction. Yes, you will lose any SEO (search engine optimization) value if you switch domain names but come on, you don't have any customers yet, you just started… the time spent on this right now doesn't equal the lost SEO value.
#2 - Designing a logo
People seem to be fascinated by logos as if the logo will drive the entire customer experience… as if the logo is the brand of the company. Get over it, the logo is not your brand. The value you deliver and the experience the customer has with all aspects of the engagement of your company and product IS your brand… the logo is art. It can change later too.
#1 - Renting an office
Yes, in my opinion renting a physical office is the #1 distraction that I see with startups. There is a fixation on having a physical place to call home. A place to engage customers and work all night in and have pizza delivered to.
Reality check: you don't need an office for your business, you need a business model. You need to figure out what you are going to deliver and how customers will value that and is there enough profit in the process to sustain your business. The good news is that there are a lot of business incubators and accelerators popping up all over the world, and you should just grab some space at one of them and get going.
So, that is my top 10 list of entrepreneurial distractions. I hope they help you avoid some costly delays and keep driving forward.
In fact, when I'm trying to focus on creating a new business I find that the yellow pad and pencil work very well for that as well!