Lessons learned from the first 3 years of business

Lessons learned from the first 3 years of business

Running a business is challenging and rewarding at the same time.  You can never know how to or whether you can succeed unless you try.  And success and failure are very personal and subjective concepts.  Someone who grew up poor may be motivated by the drive to be upwardly class-mobile.  Another person may want to focus only on doing something meaningful to themselves and society and money may be unimportant as anything other than a means to continue working at what you love.  Working at a firm may teach you job-related skills and allow you to save up funds for your business launch, but there is no better education than throwing yourself in head first and doing your best no matter the outcome.  Here are 10 key things I’ve learned from the last 3 years of running my own company:

  1. Allowing business partners, advisors, employees, investors and customers to distract you from your vision will result in disappointment and feelings of failure. Know when not to listen even if they call you fools.

  2. Customers have many presuppositions that prevent you from being able to “connect the dots” toward your goal (something Steve Jobs talked about a lot).  They are not the visionary.  If you try to build exactly what they ask for, you will end up with a product that is very much like your competitors because all they are typically capable of imagining is what they have already seen.  This effect may creep up on you without you being aware of it and suddenly you cannot recognize your own product.  You will then become despondent and blame yourself for creating something non-unique.  Leave 50% of your decision making to your vision and 50% to actual customer data.  If you’re part of a team, other less visionary people in your company (who may be more grounded) can fill in any gaps – sales, marketing, branding, minor added features that give customers what they ask for while you work on your focus, etc.  If you’re alone, try and give customers what they want without sacrificing your vision.

  3. Don’t squeeze yourself out of doing the things you enjoy, for example skiing, adventure & travel, eating out occasionally, buying reasonable things that you like, dating, etc. as they are most likely a core reason why you were driven to build something in the first place. You simply cannot be enthused and productive by sitting in an office trying to dream up ideas.  That said, the less you spend, the less you have to make and the more you can enjoy running your business.  For the last three years I’ve used first my living space as an office and then my 10′ x 18′ office as both an office and a living space and have no plans to change that.  And I moved to a town where rents are cheap(er) than in the major cities, despite several people telling me it was dumb and stupid for my business, and I’m happier for it.

  4. Get a part time job or regular hobby that has a totally different set of skills to your primary job. For example, if your primary job is in an office-like environment, get a part time job guiding outdoors, or as a security guard, or as a laborer, or volunteer or join an at-least weekly club of some kind.  It promotes breadth of focus.  Creating links across disparate areas of knowledge is how entrepreneurs come up with ideas.  A permanent singular focus is death to a creative mind.

  5. Start a reasonable project that aligns well with the type of work environment you enjoy. For example, if you like working alone, don’t start a company that will naturally require lots of in person collaboration and large teams like a conventional product development company.  If you like hands-on work, don’t start a predominantly software company even if the freedom to work anywhere with just a laptop and internet is appealing.  If you want to be the full and complete owner, don’t start a company that requires millions of dollars to get off the ground (unless you have that much).

  6. Most of the time, investors are out for short term gain and are uninterested in your vision beyond what it can profit them. Take on investors as business partners if you want them involved, not as quick cash injections.  Investors can become your “boss” and you will wonder why you started a business in the first place, especially if their reporting requirements are very intense or they tightly control the purse strings.  Loans, grants, customer revenue etc. are much better than investment for pure cash needs.  Pick a project that doesn’t need millions to be viable, and when looking for external sources of funds, pick funders that don’t require more than a brief monthly progress report and quarterly financial reports.

  7. You must believe in what you are doing from a non-monetary perspective, to enable you to endure times when the financial situation looks impossible. Having a social, environmental, purely intellectual, physical or spiritual reason to do what you do helps.  Some of the greatest products are made by people who are really just making it for their own use.

  8. Drop the rush to get to market, don’t outsource core work like software development or machining if that’s what your company does, take the time to learn those things yourself and focus on building a long-term platform for success. Don’t pick a fad product or service that you don’t believe will be necessary several years down the road.  Money is earned by skilled labor, not by generating ideas and passing them on to someone else to do.  Skilled labor is learned by doing.  Ideas by themselves (even if they are patented) are nearly worthless.

  9. If you don’t want to be a person or a business that outsources work to countries with poor working conditions, then don’t.  Your customers will forgive you for charging higher prices if you explain why and there are plenty who will support the decision.  If you don’t feel comfortable charging $45 for a product you paid $8 to make, then don’t.  You will gain access to a huge number of new customers who respect your integrity and are far more loyal to you, even if investors tell you you are crazy.

  10. Competitors aren’t your enemy. They are most likely people very similar to you and the market is not a zero-sum game.  Companies that focus on fighting their competitors typically neglect their customers.